Sorrento Therapeutics, Inc. SRNE announced that it has signed a merger agreement with privately-held SmartPharm Therapeutics. Under the agreement, Sorrento will acquire SmartPharm in exchange for its common stock worth up to $19.4 million to be issued to the latter’s equity holders. The transaction is expected to close in September.

Please note that SmartPharm is a gene-encoded therapeutics company focused on developing non-viral DNA and RNA gene delivery platforms for COVID-19 and rare diseases.

Sorrento expects that the acquisition will provide a vast product pipeline of novel, long-acting therapeutic proteins for treating a broad range of diseases, including cancer, following the combination of Sorrento’s proprietary, fully-human G-MAB antibody library and SmartPharm’s Gene-Encoded Therapeutics (GET) platform.

Previously, the companies have entered into a research and development collaboration for developing a treatment for COVID-19 using Sorrento’s proprietary SARS-CoV-2 neutralizing monoclonal antibodies and SmartPharm’s Gene Mab plasmid nanoparticle platform. Sorrento has identified an antibody encoded DNA plasmid candidate, STI-2020dna (DNA plasmid injection), derived from its proprietary coronavirus candidate STI-1499 (COVI-GUARD). The company has filed an investigational new drug application seeking approval to start a clinical study to evaluate STI-1499 as a potential treatment for COVID-19.

STI-2020dna has been optimized for DNA plasmid delivery to generate antibodies in vivo directed against the SARS-CoV-2 virus and its highly contagious D614G variant. The candidate is currently in pre-clinical development, using SmartPharm’s Gene Mab gene-encoded in vivo expression system. Sorrento believes that it has the potential to generate long-lasting anti-viral protection with a single intramuscular administration. The company anticipates that the antibody candidate may provide an attractive alternative to vaccines under development against the emerging and highly contagious variants of the virus.

Shares of Sorrento have surged 223.3% so far this year compared with the industry’s increase of 2.6%.

Sorrento is also developing another candidate to treat COVID-19. In July, the company received clearance from the FDA to initiate a phase II study on abivertinib in patients with COVID-19 who have moderate-to-severe pulmonary symptoms. The company also selected a targeted protein vaccine candidate, T-VIVA-19, for SARS-CoV-2, last month. The candidate is currently in the pre-clinical stage. The company is developing several other therapies for COVID-19 either alone or in collaboration with other companies.

In June, Sorrento had announced that an application for Emergency Use Authorization (EUA) is under review with the FDA for its COVI-TRACK in vitro diagnostic test kit for the independent detection of IgG and IgM antibodies in sera of patients exposed to the SARS-CoV-2 virus.

Apart from coronavirus-related treatments, the company has a few other candidates in its pipeline. The company is developing abivertinib also for non-small cell lung cancer. It is developing a CAR T therapy candidate for treating multiple myeloma and an antibody-drug conjugate for amyloidosis. Sorrento also has a few pain candidates in its pipeline.

Zacks Rank & Stocks to Consider

Sorrento currently carries a Zacks Rank #3 (Hold). Some stocks to consider in the biotech sector include Emergent Biosolutions Inc. EBS, Horizon Therapeutics HZNP and Repligen Corporation RGEN, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Emergent’s earnings estimates have moved 56.4% north for 2020 and 44.1% for 2021 over the past 30 days. The stock has soared 143% so far this year.

Horizon’s earnings per share estimates have moved up 58% for 2020 and 55.4% for 2021 over the past 30 days. The company’s shares have increased 107.5% year to date.

Repligen’s earnings estimates have been revised 10.6% upward for 2020 and 7.6% for 2021 over the past 30 days. The stock has gained 63.1% so far this year.

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