There are certain companies that remain on the stock exchange for years. They frequently issue press releases, they often get some speculative chatter going, their share prices periodically surge. Yet, over the long haul, those press releases never seem to amount to anything more concrete. Unfortunately, Inovio (NASDAQ:INO) is one such company. Inovio has traded on the Nasdaq for more than 20 years. And INO stock peaked at nearly $200 per share at one point.
Now, however, Inovio struggles to stay out of penny stock land, and the company survives primarily by diluting its shareholder base. Since 2010, Inovio’s shares outstanding have nearly quadrupled, rising from 26 million shares then to over 100 million shares.
Meanwhile, Inovio hasn’t turned a profit in even one of those ten years. In fact, it’s never even had positive gross margins once over that span. Now, revenues have slumped to less than $10 million, and annual losses have ballooned past $100 million per year.
Yet, hope seemingly never dies. Inovio stock spiked again a couple weeks ago as traders linked the vaccine development company to hopes of a potential treatment for the coronavirus from China. Yet, that trading pop quickly faded away. And folks were right to dump the stock — Inovio has a long road ahead of it, and there’s a good chance it will never reach profitability.
At the end of January, Inovio announced a partnership with Beijing Advaccine to develop the INO-4800 vaccine for the coronavirus from China. InvestorPlace’s Chris Lau laid out the details of how things happened subsequently. To make a long story short, despite receiving just $9 million of funding related to this development, Inovio’s market capitalization surged by $300 million.
Also, I’d note that Phase I clinical trials are a dime a dozen. The purpose of a Phase 1 trial is merely to demonstrate that a compound is safe within humans and to determine what is a proper dosage to generate immune response. Scientists often perform Phase 1 trials in healthy volunteers. And the purpose is not to determine whether the drug is effective to a statistically significant degree. The majority of Phase 1 trials are successful, and the drug in question can proceed to a more rigorous Phase 2 trial.
All that to say that putting a vaccine into Phase 1 trials against the coronavirus means very little. Over the years, Inovio has put potential vaccines into trials for a ton of different indications, and generated scant success for its efforts.
My Verdict on INO Stock
It’s important to separate the impact of the coronavirus on Inovio’s stock price from the rest of the business. Look what’s happened with Alpha Pro Tech (NYSEMKT:APT), Lakeland Industries (NASDAQ:LAKE), and other such companies that could generate more revenues thanks to the coronavirus. Even as the virus has picked up momentum in recent days, those shares remain far below their recent trading highs.
Inovio stock is traveling on the same trajectory. While the company could certainly turn things around over time, traders buying it merely for the coronavirus effect are likely to be disappointed.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. At the time of this writing, he held no positions in any of the aforementioned securities.