(SRNE) – Sorrento Shares Rebound As Biopharma Denies Short Seller Allegations, Threatens Legal Action
Sorrento’s Rally, Retreat: Sorrento’s stock saw some strong upward momentum in the aftermath of its July 29 announcement regarding a licensing agreement with the Columbia University for a rapid saliva test for SARS-CoV-2, the virus that causes COVID-19.
From a low of $7.62 July 29, the stock raced to a high of $19.39 Aug. 10, netting a gain of 154% in eight sessions.
The good times did not last for the biopharma, as the stock reversed course on Aug. 11 in reaction a tweet by hedge fund Hindenburg Research. The company tweeted that a source at the Columbia University rubbished Sorrento’s claims.
$SRNE is up ~120%, adding ~$2.2B in market cap on relentless CNBC hype of its COVID spit test that it bought from Columbia for just $5m + royalties.
We spoke with a senior administration official at Columbia who completely debunked the test, telling us: pic.twitter.com/vDzWk06uhE
— Hindenburg Research (@HindenburgRes) August 11, 2020
The short seller termed the announcement from Sorrento as “the latest pump” and warned of the stock pulling back to single digits in the near term.
In another tweet, the short seller said Sorrento’s test is undergoing only a preliminary study, even as Yale University announced a competing COVID-19 saliva test that is almost through FDA approval.
Hindenburg also said there are multiple competitors in the pipeline.
Incidentally, Hindenburg had called out Sorrento in a report released May 20, alleging the company is indulging in pandemic profiteering.
Sorrento Hits Back: Sorrento issued a statement late Wednesday that said Hindenburg’s claims are “false and/or misleading” and made with the sole apparent purpose of negatively manipulating its stock price.
The company said it has demanded through its legal counsel, Paul Hastings LLP, that Hindenbirg cease and desist from illegal and wrongful activity and retract false and/or misleading statements. Legal action is also being considered, the company said.
Hindenburg Research said in a tweet posted Thursday that it stands by its source.
SRNE Price Action: At last check, Sorrento shares were adding 6.41% to $13.20.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.