Inovio Pharmaceuticals (NASDAQ:INO) and its CEO, Andrew Kim, have had some impressive achievements. Nonetheless, after reviewing the company’s history and Kim’s background, I am not confident enough in Inovio to recommend buying INO stock.
Inovio says that it “is the first and only company to have clinically demonstrated that a DNA medicine can be delivered directly into cells in the body via a proprietary smart device to produce a robust and tolerable immune response.”
And, using that technology, the company has developed a vaccine, VGX-3100, which “utilizes the patient’s own immune system to eliminate infections caused by HPV-16 and HPV-18 and to destroy pre-cancerous cells,” Immuno-Oncology News reported.
In a Phase 2 study, nearly 50% of the women who received the vaccine showed a reduction of lesions triggered by HPV, versus 30.6% who received a placebo. The vaccine is currently in a Phase 3 trial which is supposed to determine its effectiveness as a treatment for cervical cancer that is triggered by HPV.
Meanwhile, to help Inovio develop a vaccine for Covid-19, the Coalition for Epidemic Preparedness Innovations gave the company $6.9 million of funding, and the Korea National Institute of Health is assisting with a Phase I/II trial of the company’s vaccine.
Inovio also received funding for its vaccine from the Bill and Melinda Gates Foundation and the U.S. Department of Defense. Specifically, Inovio shared a $250 million grant from the Gates Foundation with six other companies, and Inovio and Ology Biosciences received a $11.9 million contract from the Pentagon to develop a Covid-19 vaccine.
Kim is an immunologist who “holds numerous patents” and has a Ph.D. in biochemical engineering/immunology from the University Pennsylvania.
Inovio’s Limited Achievements and the 3-Hour Vaccine
Inovio was founded in 1983, and Kim has been its CEO since 2009. Yet the company does not appear to have any products on the market. Further, its only current vaccine that showed efficacy seems to be its HPV vaccine, VGX-3100, which only produced favorable results in about 50% of women with pre-cancerous cells in their cervixes, versus 30% for a placebo. That’s not a very high efficacy rate.
Meanwhile, Kim founded DNA vaccine developer VGX Pharmaceuticals, which merged with Inovio Biomedical in 2008. (Inovio Biomedical later became Inovio Pharmaceuticals). But aside from that all-stock transaction, Kim has apparently never sold a company. And there’s no indication that he has any experience in a large drug company or that he ever led an initial public offering.
Importantly, Inovio said that it had developed its Covid-19 vaccine in three hours. Citron Research, a research firm that also shorts stocks, called the assertion “ludicrous” and “dangerous.” Given the backing that Inovio received for its vaccine for the coronavirus, I’m sure that the vaccine could potentially work. Still, the fact that it developed the product in just three hours makes me less confident in its effectiveness.
A Better Choice Than INO Stock
Moderna (NASDAQ:MRNA), another company looking to develop a Covid-19 vaccine, announced that it had received an award of up to $483 million from the U.S. government to accelerate the development of its vaccine. That amount of money represents a huge vote of confidence in Moderna and its technology.
Further, as I pointed out in a previous piece, Moderna’s vaccine for a type of herpes in infants has shown efficacy in a Phase 1 trial, while its Zika vaccine, which has generated positive data in a trial, received fast-track status from the FDA. The company also recently reported that it has “demonstrated neutralizing immunogenicity against all eight viruses targeted in clinical trials to date using {its} innovative vaccine platform.” Finally, I noted in my previous column that “it’s…working with Merck (NYSE:MRK) on another cancer treatment.”
Inovio has multiple drugs in Phase I and Phase II trials, and it sold the rights to its VGX-3100 immunotherapy for head and neck cancer to AstraZeneca (NYSE:AZN). It’s also partnering with Regeneron (NASDAQ:RGN) on a treatment for Glioblastoma. But the only positive data it reported on its website came from the trial of VGX-3100, for the prevention of cervical cancer.
Moderna’s CEO, Stephane Bancel, was previously a managing director at Eli Lilly’s (NYSE:LLY) Belgium unit and was executive director of its global manufacturing strategy and supply chain. Before joining Moderna, the head of the company’s R&D, Stephen Hoge, was “a partner in the health care practice” of prestigious consulting firm McKinsey.
The Bottom Line on INO Stock
Inovio has a market cap of more than $2 billion, almost entirely based on its Covid-19 vaccine candidate. But it, like Moderna, is competing with much larger companies that are also trying to develop a vaccine for the virus. Additionally, Inovio’s track record is not very strong, it only has one vaccine that has shown effectiveness in a trial, and it hasn’t received a great deal of financial backing from the U.S. government.
Moderna has multiple vaccines that have been shown to be effective in trials, and it received much more backing from Washington than Inovio. Finally, its leaders have more impressive backgrounds than Kim.
Moderna’s market cap is $16.6 billion. The valuations of both Moderna and Inovio are steep at this point. As I wrote in a previous column, I’d recommend selling Moderna and waiting for it to drop below $37 before pulling the trigger on it. But if I had to choose between INO stock and Moderna at this point, I’d definitely tell investors to buy Moderna.
Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks and Snap. You can reach him on StockTwits at @larryramer. As of this writing, he did not own any shares of the aforementioned companies.
