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Sorrento (SRNE) to Report Q2 Earnings: What's in the Cards?

Zacks.com logo Zacks.com 7/28/2021

Sorrento Therapeutics, Inc. SRNE will provide updates on revenues from ZTlido and its other pipeline developments when it reports second-quarter 2021 results.

The company has a poor earnings surprise history, wherein its earnings surpassed the Zacks Consensus Estimate in one of the trailing four quarters while missing the same on the other three occasions, delivering a negative earnings surprise of 34.22%, on average. In the last-reported quarter, the company delivered a negative earnings surprise of 95.83%.

Shares of Sorrento have rallied 18.5% in the year so far against the industry’s decline of 1.9%.

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Let's see how things are shaping up for this announcement.

Factors to Consider

Sorrento’s revenues in the second quarter are likely to have been driven by higher contract manufacturing service revenues.

Revenues in the Scilex segment increased in the last-reported quarter, and the trend is expected to continue in the second quarter due to an anticipated increase in product sales of ZTlido, which has been approved by the FDA for the treatment of postherpetic neuralgia, a severe neuropathic pain condition.

The company is expected to have made a rapid progress with its COVID-19-related developments in the to-be-reported quarter. It is conducting preclinical/clinical development of multiple therapeutic, vaccine and diagnostic candidates for the potential treatment, prevention and detection of COVID-19.

In June 2021, Sorrento received Emergency Use Authorization or EUA from Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS) – the health regulatory authority for Mexico – for its COVI-STIX rapid diagnostic test for the detection of the SARS-CoV-2 virus nucleocapsid antigen in nasal samples of patients.

The company is developing the highly potent STI-2020 in two outpatient formations – COVI-AMG (intravenous -push injection) and COVI-DROPS (nasal). Sorrento has received an FDA clearance to begin phase I study (IV) STI-2020 (COVI-AMG) on healthy volunteers, and is currently awaiting FDA clearance for a phase I study of COVIDROPS in healthy volunteers and patients with mild COVID-19.

The company is also developing several other pipeline candidates for treating moderate to severe hospitalized COVID-19 patients and COVID-19-induced acute respiratory distress. We expect management to provide more updates on its COVID-19-related pipeline candidates at the upcoming earnings call.

Sorrento has already started dosing in a phase II study on COVIDROPS against COVID-19 infection, including the Delta and Alpha variants of the same, in the United Kingdom.

In early June 2021, Sorrento completed the acquisition of ACEA Therapeutics Inc. With this acquisition, the company is looking to create a major oncology franchise. The company also added abivertinib, which is in late-stage development for non-small cell lung cancer and b-cell lymphoma. The product candidate is also being developed for other cancer and autoimmune disease indications. Sorrento is seeking global partnerships to co-develop and co-commercialize abivertinib. Investors will be keen to get more updates on the same at the second-quarter earnings call.

Sorrento has completed enrollment in the phase II study evaluating abivertinib for treating hospitalized COVID-19 patients in the United States. Top-line data from the same is expected by the end of third-quarter 2021. Activities corresponding to the development of its COVID-19-related and other pipeline candidates are likely to have escalated operating expenses in the to-be-reported quarter.

What Our Model Indicates

Our proven model does not conclusively predict an earnings beat for Sorrento this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: Sorrento has an Earnings ESP of 0.00%. Both the Zacks Consensus Estimate and the Most Accurate Estimate stand at a loss of 20 cents each. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sorrento currently carries a Zacks Rank #5 (Strong Sell).

Sorrento Therapeutics, Inc. Price and EPS Surprise

chart, line chart: Sorrento Therapeutics, Inc. Price and EPS Surprise © Provided by Zacks.com Sorrento Therapeutics, Inc. Price and EPS Surprise

Sorrento Therapeutics, Inc. price-eps-surprise | Sorrento Therapeutics, Inc. Quote

Stocks to Consider

Here are a few stocks you may want to consider as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Sarepta Therapeutics, Inc. SRPT has an Earnings ESP of +25.10% and carries a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aptose Biosciences Inc. APTO has an Earnings ESP of +12.73% and carries a Zacks Rank #3, currently. The company is scheduled to report earnings on Aug 3.

Illumina, Inc. ILMN has an Earnings ESP of +2.36% and carries a Zacks Rank #2 at present. The company is scheduled to report earnings on Aug 5.

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