It’s not often that stock nearly doubles in a week and gains more than 69% in a single day, as Inovio Pharmaceuticals (NASDAQ:INO) did on Tuesday, March 3, and rarer still that stock leaves the impression there’s more to come after such an impressive showing. But these are unusual times, and Inovio is proving ideally suited for a market gripped by the novel coronavirus outbreak.
INO stock has been a volatile name this year thanks to the coronavirus, taking investors on a bumpy ride of breathless anticipation and hopes for new highs, including an intriguing late January run.
“The Coalition for Epidemic Preparedness Innovations (CEPI) awarded Inovio Pharmaceuticals (INO) a $9 million grant to develop a vaccine for 2019-nCoV (now known as COVID-19),” according to ARK Investment Management. “Using the 2019-nCoV sequence, Inovio will leverage its computational biology platform to identify potential immunotherapies which will prevent contagion.”
These days, speculation is running rampant about Inovio’s future with market participants pondering the probabilities of the rise of another Gilead Sciences (NASDAQ:GILD) or Regeneron Pharmaceuticals (NASDAQ:REGN) or INO stock is simply a 2020 biotechnology version of a cannabis stock circa 2018.
And The Answer Is…
Well, not to evasive, but the answer regarding Inovio’s future is hard to answer right now. Obviously, the coronavirus is acting as a credible catalyst for the stock, but there is significant risk involved with any biotech company that is an “all eggs in one basket” type of play.
The bad news is the coronavirus isn’t going away tomorrow and the good news, particularly for anyone that bought INO stock on Monday or prior, is that Inovio is speeding up its DNA vaccine INO-4800 treatment, which was the catalyst behind the epic March 3 rally by the shares.
“We plan to begin human clinical trials in the U.S. in April and soon thereafter in China and South Korea, where the outbreak is impacting the most people,” said Inovio President and CEO Dr. J. Joseph Kim in a statement issued March 3. “We plan on delivering one million doses by year end with existing resources and capacity. However, we will need additional resources to scale up to make enough doses to help protect Americans from COVID-19 as well as to lead global efforts to curtail this virus.”
What’s interesting about Kim’s needing “additional resources” comment is that the money-losing company isn’t even a month removed from tacking an additional $100 million to a share offering, doubling the size of that sale.
At this point, it’s speculation regarding whether or not Inovio reveals an upsized offering. However, adding up that the stock price has surged – meaning a higher sale price even when discounted as secondaries usually – and Inovio loses money, meaning it probably doesn’t want debt obligations, another capital raise via equity isn’t a far flung concept.
While Inovio is attempting to capitalize on the need for a coronavirus treatment, there’s more to its story. The company’s HPV treatment – VGX-3100 – is in Stage 3 clinical trials. HPV is a major cause of cervical cancer and the market for treatments is potentially lucrative.
“The global HPV associated disorders market size is expected to reach $23.2 billion by 2026,” according to Grand View Research.
Bottom Line on INO Stock
Expect more volatility out of Inovio over the coming days. The company reports earnings on March 12, but that event won’t be as much about financial results as it’ll be about Kim and team have to say about advancements, if any, in the company’s coronavirus treatment efforts.
With Inovio, the risk is clear and real: if its COVID-19 efforts don’t prove fruitful or the virus is suddenly contained without help from the company, the stock’s recently rally likely evaporates in short order. In other words, Inovio probably isn’t a retirement stock at this point. It’s one for traders.
As of this writing, Todd Shriber did not own any of the aforementioned securities. He has been an InvestorPlace contributor since 2014.
