The last time I wrote about Inovio Pharmaceuticals (NASDAQ:INO), it had just doubled its shelf offering for INO stock to $200 million. Investors loved the news sending its share price higher. At the time, it was trading around $3.30 a share.
A month later, the coronavirus has spread throughout the world; people are getting antsier by the day. Businesses are closing down. This fast-moving virus is crippling entire industries.
The company that cracks the coronavirus code is expected to benefit significantly from future revenues generated by the vaccine’s development and rollout to the general population.
The only problem?
12-18 Months to Commercialization
It’s not likely to hit someone’s system until sometime in 2021 at the earliest. The standard estimate for a vaccine to be approved for commercial usage is between 12 and 18 months from today. That’s according to both the UK’s chief scientific adviser, Sir Patrick Vallance and here in the U.S. from Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Disease.
So, the winner of this 21st-century version of the Yukon gold rush isn’t likely to benefit very much in the near term, something I said about Moderna (NASDAQ:MRNA) earlier in March.
As I write this, Inovio’s stock is up almost 19% in March 17 trading, more than double where it was in mid-February when I last wrote about it. Meanwhile, Moderna’s stock is up more than 10% today and almost 40% over the past month.
I guess when the markets are in a nosedive, stocks moving in the right direction are irresistible to investors.
Go West to Seattle
Positive comments about Inovio appeared in the news on March 16. That’s helping push its stock much higher. While it seems it’s got a shot at finding gold at the end of this rainbow, which is excellent news for owners of its stock, I’m not sure there’s anything tangible at present other than a lot of news media discussing what might happen in due course. Myself included.
On Monday in Seattle, healthy volunteers received the first of two injections of an experimental coronavirus vaccine (mRNA-1273) developed by Moderna. Inovio’s candidate will begin its safety study in April in three countries, including the U.S., China, and South Korea.
Unless you’re a top-notch infectious diseases scientist or medical practitioner, I’m not sure how you could handicap all of the groups vying for victory.
“We don’t know whether this vaccine will induce an immune response or whether it will be safe. That’s why we’re doing a trial,” Dr. Lisa Jackson, the head of the Kaiser Permanente study, said. “It’s not at the stage where it would be possible or prudent to give it to the general population.”
Other Potential Winners
On March 16, I mentioned that Medicago Inc., a Canadian biopharmaceutical company, had developed a viable vaccine for COVID-19. While it won’t likely have human trials begin until the summer, a few months after both Moderna and Inovio have started their own, it’s more than possible that Medicago could leapfrog past both of them and be the eventual winner.
Of course, by the time the winner is crowned, the coronavirus will likely have burned itself out.
What then?
Companies like Moderna, Inovio, and Medicago would likely use the victory as bragging rights to develop future vaccines for other super viruses. The development of these things costs significant amounts of money. If you’re the one to crack the coronavirus code in an amazingly rapid amount of time, that will likely translate into billions of future funding, whether debt or equity.
The Bottom Line on INO Stock
Maxim Group analyst Jason McCarthy recently mentioned that Inovio had got a lot going for it beyond the coronavirus vaccine. He feels its DNA-based immunotherapies such as VGX-300, which treats cervical dysplasia, could be worth more than $1 billion down the road.
If you’re looking to bet on one of these prospective winners, it makes sense to consider how they will generate revenue without the coronavirus. That way, if they don’t win the pot of gold that is COVID-19, at least they’re on a pathway to profitability.
I wouldn’t buy any of these coronavirus vaccine candidates, but that doesn’t mean Inovio isn’t worth considering if you can afford to speculate on this 20th-century gold rush.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
