The coronavirus from China is spreading, and at an accelerating rate. As it does, investors’ fears also seem to be accelerating. Its outbreak in Italy and South Korea may give biotechnology stocks a lift. Specifically, Inovio Pharmaceuticals (NASDAQ:INO) may continue attracting buyers for the next few weeks.
INO stock began an uptrend in November 2019, ahead of news that it is working on a vaccine for Covid-19. Though Inovio is not the only drug company in this space, speculators should continue holding a position in INO stock to hedge against the falling market.
On Jan. 30, Inovio announced a collaboration with Beijing Advaccine to advance INO-4800. The $9 million grant from the Coalition for Epidemic Preparedness Innovations (CEPI) will fund Phase 1 human testing in the U.S.
The purpose of the clinical study is to evaluate the drug’s safety and immunogenicity — its ability to trigger an immune response. If the vaccine is safe and subjects respond positively, Inovio Pharmaceuticals will be in a better position.
Inovio said in its press release that it is developing treatments against Covid-19 because its effort “is based on the ideal suitability of its DNA medicine platform to rapidly develop vaccines against emerging viruses with pandemic potential, proven vaccine development capabilities, and a strong track record of rapidly generating promising countermeasures against previous pandemic threats.”
The firm has the needed experience in this space because it is the only company to deliver DNA medicine into cells. This is done through a proprietary smart device.
This device may also deliver a treatment for human papillomavirus (HPV 16 and HPV 18). Its most advanced clinical program is VGX-3100. In Phase 3 development, the product treats HPV-related cervical cancer. Inovio’s Phase 2 immuno-oncology program targets glioblastoma and other HPV-related cancers. The company completed enrollment for a VGX-3100 study in July 2019. This trial looks at treating HPV-Related vulvar dysplasia (VIN).
More recently on Feb. 10, the U.S. Federal Drug Administration (FDA) authorized the company to start trials for INO-3107. This is DNA medicine for treating recurrent respiratory papillomatosis (RRP). RRP is caused by an HPV infection that leads to noncancerous tumor growths. It is life-threatening because it may progress to cancer and may also cause airway obstruction. Currently, those with RRP require surgery to clear the airway but they might need multiple surgeries each year.
INO-3107 isn’t the company’s first attempt at treating RRP. In its recent study of INO-3106, it found that its treatment did generate an immune response. Inovio said that two patients were able to delay surgery as a result of the program. One delayed surgery by 584 days and one by 915 days.
Valuation and My Takeaway on INO Stock
According to TipRanks, analysts have a $9.43 price target on INO stock. According to Stock Rover, the stock has low overall scores. Despite a momentum score of 91, the company has unfavorable financial strength. Its growth, valuation and efficiency versus its peers is also unfavorable. Stock Rover also has 12 alerts on the stock.
For example, 10.8% of the float is being sold short. So, bears are betting against the latest rally in INO stock.
Inovio does not make money on an earnings per share basis. It is still in the clinical exploratory phase of drug development. Money may become an issue if these clinical trials advance and costs to support them rise.
Those looking to invest in a coronavirus vaccine supplier should watch Inovio over the next few months.
Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns. As of this writing, Chris did not hold a position in any of the aforementioned securities.