Few stocks have had as big a run this year as Inovio Pharmaceuticals (NASDAQ:INO). Fueled by hopes that the company’s vaccine against the novel coronavirus will be a winner, INO stock at one point was up nearly 1,000% for the year.
At the start of trading on Jan. 2, INO stock was worth $3.21. It has since risen to a peak of $33.79 and is now just over $20 per share.
However, with no guarantee that the company’s Covid-19 vaccine will make it to market, the party may come to an end for Inovio shareholders in this year’s second half.
A Crowded Market
As we’ve said repeatedly here at InvestorPlace, the market to develop a Covid-19 vaccine is extremely crowded. There are currently 25 legitimate Covid-19 vaccine candidates in the clinical trial phase of testing around the world. Dozens more potential vaccines are in earlier stages of development – by some counts there are as many as 170 vaccines currently being developed.
With its INO-4800 vaccine against Covid-19, Inovio faces stiff competition from companies ranging from Moderna (NASDAQ:MRNA) and Pfizer (NYSE:PFE) to Johnson & Johnson (NYSE:JNJ) and GlaxoSmithKline (NYSE:GSK). Which company crosses the finish line first is literally a billion-dollar question.
What is clear is that many of Inovio’s competitors are further along in their vaccine development. Moderna is now in Phase 3 clinical trials with its mRNA-1273 vaccine. Pfizer already signed an agreement with the U.S. government to supply an initial 100 million doses of its BNT162 vaccine at a cost of $1.95 billion, with an option to provide up to 500 million additional doses to Americans.
Inovio has reported successful outcomes from its Phase 1 study, noting that 94% of the 40 participants in its clinical trial had positive immune responses to the experimental Covid-19 vaccine. However, Inovio still remains far behind many of its larger and better funded competitors when it comes to the race to cure the global pandemic.
It increasingly looks like the U.S. government’s drive to develop a Covid-19 vaccine, dubbed “Operation Warp Speed,” may be passing Inovio by. The Plymouth, Pennsylvania-based company’s best chance at developing a vaccine for Covid-19 might be partnering with another pharmaceutical company.
Neither Inovio nor its investors should put all their eggs in the Covid-19 basket. Investors who don’t want to quickly trade INO stock, should look at the company’s full range of vaccine offerings.
A Decent Pipeline for INO Stock
While reaping billions of dollars in profits by curing coronavirus might be a longshot for Inovio, the company does have a fairly decent pipeline of products to carry it forward. The more promising pharmaceuticals include Inovio’s lead candidate, VGX-3100, which is a treatment for precancerous cervical dysplasia that is now in Phase 3 clinical trials.
Other candidates include experimental immunotherapy treatments against cancers caused by HPV and vaccines to against HIV and the Zika virus.
Additionally, Inovio uses cutting-edge DNA medicines technology to develop many of its vaccines, including the one against Covid-19. In laymen’s terms, Inovio uses computer sequencing to reorganize parts of people’s DNA called “DNA plasmids” that then trigger an immune response in people.
Inovio uses a proprietary hand-held smart device called the “Cellectra” to deliver the DNA plasmids into the human body. This approach is viewed by many in the biopharmaceutical and medical communities as the future of vaccine development, which bodes well for Inovio Pharmaceuticals long-term.
Declining INO Stock Price
While INO’s stock price is still up more than 500% for the year, it has come down nearly 30% since the start of July. INO stock is currently trading at just above $20 per share but is well off its 52-week high of $33.79 reached in late June.
Whether the stock is able to muster another big rally remains to be seen. But INO stock tends to move on any positive news related to a Covid-19 vaccine, even if that news doesn’t directly involve Inovio.
With the world gripped by the prospects of a vaccine against coronavirus, this is likely to be the case for INO stock over the near term. Investors with a longer-term time horizon should look more broadly at all of Inovio’s products in development.
Analysts who cover Inovio they seem to feel that INO stock is currently trading right around where it should be given the company’s fundamentals. Among eight analysts who have 12-month price forecasts for INO stock, the median price target is $20.50, with a high estimate of $45 and a low estimate of $8 per share. The consensus view is to “hold” INO stock. There are currently two “buy” ratings and one “sell” recommendation on the stock.
While there is a lot to like about Inovio, investors who are buying the stock purely on hopes that the company will deliver a vaccine to cure Covid-19 may be deluding themselves.
People interested in INO stock should perform their due diligence on the company and decide if there are enough products in Inovio’s product development pipeline to justify an investment of their hard-earned money.
As of this writing, Joel Baglole held shares of MRNA.
