Sorrento ousts CFO as long-running Covid-19 drama continues
The wild ride at Sorrento keeps charging ahead, though now with one less participant.
CFO Jiong Shao has been unceremoniously booted from the California-based biotech, “effective immediately,” according to a company SEC filing Tuesday. Replacing him is Najjam Asghar, Sorrento’s chief accounting officer since June 2019. Shao’s firing took place Monday and Asghar was named his successor Tuesday, the filing said.
News of the ouster caused Sorrento’s stock to slide around 12% in after hours trading. The company’s stock is up over 260% for the year.
Asghar will earn a salary of $300,000. He came to Sorrento from the medical devices company NuVasive, where he worked from 2015 to 2019. Prior to that, he spent nearly a dozen years at powerhouse accounting firm PricewaterhouseCoopers.
Sorrento has been in the news frequently over the last few months, as it is developing a monoclonal antibody that binds to and neutralizes SARS-CoV-2, the virus that causes Covid-19. Back in May, the company hyped up the antibody as a potential “cure” for the disease despite not testing the compound in animals or humans, drawing heavy criticism from bioethicists.
“We want to emphasize there is a cure. There is a solution that works 100 percent,” CEO Henry Ji told a Fox News reporter at the time. “If we have the neutralizing antibody in your body, you don’t need the social distancing. You can open up a society without fear.”
Those grand statements caused Sorrento to briefly triple in value and prompted concern from investors that the biotech is putting out flashy statements for the sake of keeping money flowing. Independent biotech investor Brad Loncar said at the time Sorrento is “known for having that reputation.”
Then in late July, the company announced a $5 million licensing deal with Columbia University for a saliva-based Covid-19 test, which aims to provide a result within 30 minutes. A preliminary study showed the test has sensitivity and specificity rates of 97% and 100%, respectively.
However, a few weeks later, investment research firm Hindenburg Research released parts of a quote from an anonymous senior Columbia official calling Sorrento’s claims about the test “a complete joke.”
“Columbia wasn’t under the assumption they were getting involved in a stock pump and dump,” the unnamed administrator went on to say. “Why would we sell something for 5 million and royalties that has market potential? And it’s because it doesn’t have market potential — everyone internally knows that.”
In response to that development, Sorrento announced last Wednesday it is considering taking legal action against Hindenburg, claiming without evidence that the firm is attempting to manipulate the company’s stock price with “false and/or misleading statements.” The spit test issue was compounded following the FDA’s emergency use authorization last Friday of a competing program at Yale, and it remains unclear if Shao’s ouster is connected to that situation.