What happened
Shares of Sorrento Therapeutics (NASDAQ: SRNE) refused on Monday after a new competing saliva-based COVID-19 test authorization for emergency use was obtained from the Food and Drug Administration. By the end of the trade, Sorrento’s share had fallen 3% to 18% earlier in the day.
So what
Sorrento’s share price rose sharply in late July and early August after the biopharmaceutical company signed a license agreement with Columbia University for a species based on rapid diagnostic tests that detect the new coronavirus in as little as 30 minutes. Sorrento believed that, if approved by regulators, the test could be used in a wide variety of settings, such as airports and sporting events, as well as for home testing.
Sorrento Therapeutics’ stock fell when a new competitor entered the coronavirus testing market. Image Source: Getty Images.
But on Saturday, the Yale School of Public Health said the FDA had approved a saliva-based diagnostic test (which was funded in part by the NBA and National Basketball Players Association) for a license to use drugs. Yale says the test, called SalivaDirect, is “highly sensitive” and produces results similar to nasal swab tests. It is also inexpensive, with an expected cost of about $ 10 per sample.
Well what
The emergence of Yale’s COVID-19 test could reduce the potential market potential for Sorrento’s test. But it is important to note that Sorrento’s procedure does not have to be completed in a laboratory, which could make it more attractive than Yale’s method in certain settings. Perhaps that is why Sorrento’s share recovered most of its losses due to the near market.
