$SONN A Pillar For Immuno Oncology

1 июн. 2023 г.

Some drugs address specific illnesses, while others enhance the pharmacokinetic responses of other drugs, which basically means that it assists other drugs. Sonnet BioTherapeutics Holdings, Inc. (NASDAQ: SONN)’s FHAB™ compound does both by causing swelling around tumors which assists in the immune response and catalyzes the effect of other treatments. As is, SONN has secured a path free of cash burn worry while developing its aforementioned treatments thanks to its existing cash balance which is nearly worth the company’s entire market cap. With a phase 1-2 trial expected to conclude in October, SONN stock could be one of the undervalued stocks to watch closely.

SONN Fundamentals

The field of Immuno-oncology is home to many notable biotech stocks like IN8bio, Inc. (Nasdaq: INAB) for a reason. It is developing rapidly, and as a result, many new and exciting treatments are introduced reflecting a brighter and more exciting future. SONN stock is notable among them due to the fact that its products not only treat tumors but also work hand in hand with other immuno-oncology treatments to catalyze the effects of other products. A prominent example of this is the use of FHAB™ with the immuno-oncology treatment recombinant interleukins which increased efficacy by more than 30-fold.

The Future of Immuno Oncology

It is almost poetic that SONN is developing a treatment for Chemotherapy-induced Peripheral Neuropathy. If the field of immuno-oncology develops substantially, it is likely that society will eventually view chemotherapy as a barbaric medical practice. As is, immuno-oncology treatment is poised to acquire substantial chunks of the chemotherapies gargantuan market which is projected to grow from $157 billion in 2022 to $331 billion by the end of 2032.

Furthermore, SONN stock is in a unique position thanks to its FHAB™ compound which enhances the pharmacokinetics of active immuno-oncology treatments. That basically means that in the future FHAB™ oriented treatments might be prescribed to aid other immuno-oncology treatments. In this way, SONN’s revenues could be tied to the progression of the entire immuno-oncology field in case its treatment is approved by the FDA which might lead to SONN stock soaring.

Currently, SONN’s SON 080 is in phase 1-2 clinical trials for treating chemotherapy-induced peripheral neuropathy and this trial is expected to conclude in October 2023. As trial results may come out in the coming months, SONN stock could surge on positive data since its treatment would be a step closer to FDA approval.

An Undervalued Gem?

According to its Q2 report, SONN has $11.3 million in its cash balance, which is promising since its market cap is $14 million. Due to this fact, SONN stock could be undervalued at current levels as it is trading near its cash per share value. Additionally, SONN stated that its cash is projected to last until January 2024 which indicates that SONN might not resort to dilution anytime soon.

Short Data

There is a possibility that SONN Stock may experience a short squeeze due to its increasing short data. Currently, SONN has a short interest of 14.4%, 14.5% of its float on loan, and its cost to borrow is 115.4%. Considering the momentum SONN stock is witnessing, a short squeeze could occur sending the stock near the $1 mark – especially with the SON 080 trial results potentially being shared in the coming months.

SONN Financials

SONN’s Q2 Balance sheet is very promising. Its assets ballooned from $5.8 million at the beginning of the year, to $13.3 million in Q2. This was mostly due to its growing cash balance which increased from $3 million to $11.39 million. Meanwhile, its liabilities decreased from $8.3 million to $7.9 million.

The most positive note in SONN’s income statement is its decreasing expenses, which decreased from $8.3 million to $5.7 million YoY. This decrease resulted in SONN stock’s net loss waning substantially from $8.2 million to $5.6 million. That said, its decreasing expenses is also a positive indicator of the longevity of its cash balance.

Technical Analysis

SONN stock is in a bullish trend with the stock trading in an upwards channel. Looking at the indicators, SONN is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is neutral at 60 and the MACD is bearish. It is worth noting that there are gaps on the chart near $.59, $.7, and $1.06 which could be filled as SONN continues to gain momentum.

As for the fundamentals, SONN is seeing an increasingly bullish sentiment as it might be undervalued at current levels thanks to its cash balance. With the SON 080 trial set expected to be completed in October, SONN could soar on positive results especially since it has a low float of 20.9 million.

SONN Forecast

One of the most common problems for biotech companies is cash burn, that being said, SONN mitigated that issue because of its $11.3 million cash balance and its shrinking expenses. As is, it can focus on its immuno-oncology treatments which both treat cancer and catalyze the effects of other oncological drugs. SONN’s trial for chemotherapy-induced peripheral neuropathy is expected to be completed in October and the results might come out soon afterward triggering a short squeeze. That said, in the long run, SONN’s growth could become tied to the entirety of the immuno-oncology field due to FHAB™’s catalyzing effect which translates to more revenues and a higher PPS.