A pair of hot pharma stocks are on the move and could become the next buzz on Wall Street. Sorrento Therapeutics NASDAQ: SRNE, through its subsidiary Scilex Holding Company NASDAQ: SCLX, is making money. That’s a big deal for a company whose stock just hit penny-stock levels and is at risk of NASDAQ delisting.
What this means for investors is cash flow, and that is always good news. Assuming the momentum continues to build, shares of Sorrento Therapeutics and Scilex could sustain a rally well into the back half of the year.
What Is The News With Sorrento Therapeutics?
Sorrento Therapeutics is a clinical-stage biopharma company that operates in 2 segments. These are Sorrento Therapeutics and Scilex which is also a publicly listed company.
Scilex is in the business of non-opioid pain relief and has recently had a product hit the market. The news here is that sales in 2022 were much better than expected. The company released its preliminary results, which expect 2022 net revenue to come in the range of $37 to $42 million.
That’s good for a gain of 18% over last year, and it could be better if the accounts receivable are caught up before the accounting is finished.
Scilex came to market only a few months ago. The company IPOd via a reverse merger with SPAC Vickers Vantage Corp in November 2022, and the action has been less than bullish.
The revenue news has the stock on the move, but a reversal could be in play. The risk for investors in Silex is resistance at the $1.40 level, which could be fierce. Assuming the company’s sales can gain traction in 2023 as they did in 2022, the ultimate trajectory for the stock should be upward.
Catalysts Are In The Works For Scilex
Scilex has not 1 but 2 approved treatments. Its product Gloperba is an oral solution for the treatment of gout. Gout is a debilitating condition and one that is fueling a growth market. The current outlook is for a CAGR near 8.5% through 2030, which could be a cautious estimate. Scilex plans to launch the treatment in the US in 2023, and other candidates are in the pipeline. The 3 most noteworthy include 2 treatments for lower back pain/sciatica and 1 for fibromyalgia.
No analysts are covering Scilex, showing up on Marketbeat.com’s tracking tools, but at least 2 are covering Sorrento Therapeutics. They have the stock pegged at a Moderate Buy with a price target at least 300% above the current price action. The range is quite wide, but the low end is at $5, and the consensus is near $12.50, which implies more than a 1000% upside for investors. Sorrento also has a robust pipeline of products, including 5 on the brink of FDA approval. If even one makes it to the market, it will be a game-changing event for the company and the stock price.
The Technical Outlook: Sorrento Might Have Bottomed
Shares of Sorrento Therapeutics cratered in the wake of the IPO under short-selling pressure. Now the stock appears to be at a bottom that could turn into a reversal, given the latest news. Assuming the company and/or its subsidiary can follow through with another win, upward price movement is assured. Until then, price action will be driven by the latest news and may be capped near the $1.80 or $3.00 level. 
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