Ever since the outbreak of the COVID-19 virus (i.e., the coronavirus), Inovio (NASDAQ:INO) stock has spiked on a couple of occasions. Unfortunately in both cases it appeared to be because of investors trading on the news. In both cases the stock quickly gave up any gains. Nevertheless, the stock is up about 10% in 2020 as of this writing.
Investors cheered the company’s announcement that they have developed a potential vaccine to help combat the COVID-19 virus. However, approval for any vaccine will take months, if not years. And that quickly dampened investor enthusiasm.
But for the investors who are sticking with INO stock, there may be a payoff coming. Although they made recent headlines because of their ability to quickly develop a potential vaccine, the company has a broad pipeline that includes some cancer treatment drugs that may serve as a catalyst for the stock.
Traders Have Profited From COVID-19
Between Jan. 24 and Jan. 27, INO stock jumped nearly 70%. This was in the early days of the virus outbreak. As InvestorPlace’s Chris Lau wrote, traders flooded money into the stock but pulled it out just as quickly.
This is because traders quickly realized any vaccine would take a long time to develop. And by Feb. 7, INO stock was trading just below its Jan. 2 level. This cycle repeated itself when news of a potential vaccine broke out. However, this time the gain was a more muted 30%. Once again, the stock failed to hold that level.
While the stock is currently up about 15% for the year, it is in a downward trend that shows the precarious nature of “trading the news.”
Inovio’s Product Pipeline Should be Drawing More Attention
Whenever you evaluate a pharmaceutical stock, you must pay attention to its pipeline. And just as important as its pipeline is what marketing types like to call a Unique Selling Proposition (USP). In other words, what makes one company uniquely different from another?
Inovio is planting its flag around the promise of immunotherapy. They call it Immuno-Ingenuity and the company defines it as (in part) “the drive to develop novel immunotherapies to fight cancer and infectious diseases.”
This is significant because of research from Market Research Future that suggests the drug market for pediatric brain tumors is showing tremendous growth and could reach $1.65 million by 2023. Inovio is one of the companies at the leading edge of this sector.
Inovio recently announced that the U.S. Food and Drug Administration (FDA) accepted its application to evaluate its DNA medicine INO-3107 in a Phase 1/2 trial. Inovio is studying INO-1307 for its ability to treat Recurrent Respiratory Papllomatosis (RPP). This is a rare disease caused by the human papillomavirus (HPV). The disease causes noncancerous tumor growths that lead to life-threatening obstruction of airways. The growths can occasionally progress to cancer.
Two devastating facets of this disease are that it is currently incurable and is recurrent. Therefore, even though surgery can open the airway, it is only a temporary fix. This can result in multiple surgeries every year.
In the Phase 1/2 trial, the FDA will be measuring primary efficacy by a doubling or more in the time a patient needs surgical intervention following their first dose of the drug relative to the frequency of surgery prior to the trial. If the trial is successful with adults, the company plans to expand it to pediatric patients.
Invest in Inovio for the Long-Term
There is a difference between trading and investing. If you’re looking at Inovio for short-term growth, InvestorPlace’s Ian Bezek writes that you may be disappointed. The timeline on any effective vaccine for COVID-19 is probably a year away, at least. And as vaccines go, Inovio may not be there at the end.
However, there is other news about Inovio that is worth monitoring. If the Phase 1/2 trial goes well, INO-1307 and other cancer treatment drugs in the company’s pipeline may serve as a real catalyst. But those are also a year or more away. If you’re going to invest in Inovio, buy it for the long term or don’t buy it at all.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
