What happened
What goes up usually comes down, and that's exactly what happened with Sorrento Therapeutics (SRNE.Q -16.67%) today. Shares of Sorrento were crashing 30.4% as of 3:38 p.m. ET on Wednesday after soaring more than 60% on Tuesday.
Sorrento's huge surge yesterday came after the company announced that a court granted interim approval for a $75 million loan from JMB Capital Partners. Assuming this decision is finalized, Sorrento will be able to continue normal business operations during its bankruptcy process. However, investors today appeared to realize that the prospect of additional cash doesn't change anything about Sorrento's challenges.
So what
There's not much good news for Sorrento these days. The small drugmaker is embroiled in a legal battle with NantCell. After losing in court in December 2022, Sorrento filed for Chapter 11 bankruptcy.
Obtaining the $75 million loan won't solve Sorrento's near-term problems. The court ruled in December that the company owes more than $170 million, most of which is due to NantCell. Another decision earlier this month confirmed the previous ruling but issued a stay that will allow NantCell to initially only collect $50 million.
Now what
Sorrento is far from out of the woods. The biotech could even face delisting by the Nasdaq stock exchange if its shares remain below $1 much longer. Nasdaq warns companies when their shares close below $1 for 30 consecutive business days. Sorrento's shares have closed below the threshold 10 days in a row before today. The company could be forced to conduct a reverse stock split to regain compliance with Nasdaq's listing requirements.
