If you’re an Inovio Pharmaceuticals (NASDAQ:INO) investor, hopefully you acquired a position earlier in the year. Because frankly, the last several weeks have been rough for INO stock. At one point, shares were trading at over $30 a pop. Now, they’ve received more than a 50% haircut. As well, the headlines continue to pressure the once-darling biotech firm of Wall Street.
With a typical brazen bombast, Russian President Vladimir Putin announced that his countrymen produced the world’s first novel coronavirus vaccine. Though quickly derided by the scientific community for skipping late-stage clinical trials, Putin’s response was basically this: if it’s good enough for my daughter, it’s good enough for you.
He even went so far as to offer the U.S. help in its development of a Covid-19 vaccine. No matter what you think about Putin and the Russians, they never leave home without their troll game at maximum.
Of course, this wasn’t going to hurt INO stock due to the lack of credibility. Instead, what did hurt was the debut of German biotech CureVac (NASDAQ:CVAC). Thanks to significant backing from the Bill & Melinda Gates Foundation, CureVac is throwing its name into the COVID-19 vaccine race, going up against the likes of Moderna (NASDAQ:MRNA), Novavax (NASDAQ:NVAX) and Pfizer (NYSE:PFE).
While Inovio is still a viable competitor, it doesn’t enjoy the same financial support that its rivals have. Thus, it’s going to be harder for the company to keep up with clinical trials and other necessary adjustments. Based on the probabilities of success, investors likely saw the writing on the wall and gave up on INO stock.
But does that mean you should follow suit?
INO Stock is a Daring Bet for the Bold
I’m not going to beat around the bush: this is going to be a tough proposition should you decide to gamble on INO stock. Really, that’s what Inovio is: a largely speculative bet. However, even with its elevated price point relative to the start of this year, it’s not entirely crazy.
The more I research this topic and brainstorm with my colleagues in the biotech space, the more I’m arriving at the conclusion that this vaccine race will be a marathon rather than a sprint. Certainly, if I could bet on such a thing, I doubt that we’d get a vaccine before election day.
While I applaud the Trump administration for its unprecedented Operation Warp Speed, what many Americans don’t realize is that this initiative is an all-hands-on-deck strategy. Meaning, participating pharmaceutical and biotech firms are approaching a vaccine from multiple angles. There will not be any one single vaccine type, nor will there be a single platform.
As it relates to INO stock, Inovio focuses on nucleic-acid-based vaccines. In a nutshell, Inovio delivers genetic material to your system, which acts as a microbiological “recipe.” This instructs your body to produce the appropriate antibodies to protect against the virus.
While Inovio is competing against Moderna and Pfizer (among others) in this methodology, INO has three key advantages:
- Inovio specializes in coronaviruses.
- It has superior capabilities in scaling up its vaccine candidate, which is “thermo-stable.”
- INO developed an intradermal DNA delivery device called Cellectra.
The first point is an obvious advantage. As for scale, this is critical since no one company will be able to feed global demand. And with Cellectra, Inovio has an efficient, and from what I’m told a less-painful, delivery mechanism.
Risk and Reward
Given the urgent need and the fast-tracking of a viable vaccine, it’s also clear that there won’t be a one-size-fits-all solution. Therefore, it’s more than possible that several companies with credible candidates can enjoy robust financial success.
Yes, at some point, the vaccination machinery will be dominated by a small handful of big pharmaceuticals. Until that time, though, investments like INO stock have room to grow.
In particular, speculators should think globally. When they do, they’ll quickly realize the distinct advantage Inovio could lever in the international space. Because the biotech’s vaccine candidate and delivery system do not require frozen storage and transport, the company can administer its solution to areas which may not have sophisticated storage facilities and transportation networks.
As well, its rapid-fire scaling capabilities relative to the competition would further facilitate such a global ambition. Of course, not everything is rosy with INO stock.
Mainly, investors should be aware of the wholesale risks associated with the nucleic-acid approach. The Food and Drug Administration has never approved such a methodology. Why? The tragic death of a teenager named Jesse Gelsinger.
Gelsinger submitted himself for human testing of a solution toward a rare disease which afflicted him. Similar in principle to Inovio’s method of DNA delivery, the idea was for scientists to inject a biological recipe to produce a positive outcome. Prior to Gelsinger, scientists tested mice, monkeys, baboons and one human patient.
In these tests, subjects temporarily incurred flu-like symptoms as well as mild liver inflammation. In Gelsinger’s case, he suffered multiple-organ-system failure and died at age 18.
There’s a reason why the FDA hasn’t approved nucleic-acid-based vaccines: the regulatory agency wants to make damn sure participating biotechs have their crap together.
Smart Speculation
On the other hand, it’s been over two decades since Gelsinger’s tragic death. Due to this terrible loss, the biotech community has sharpened its resolve. Additionally, the FDA is keeping close tabs on nucleic-acid methodologies.
Ultimately, though, we’re in a devastating pandemic. Without a solution, it’s very possible that major sectors of the economy could collapse. Perhaps I’m thinking cynically here but the FDA has the incentive to explore all avenues. Indeed, we could see biotech history being made with the approval of a first-time platform.
Certainly, INO stock could be a beneficiary. While Inovio may not outright win against a Pfizer or similarly funded organization, it has key advantages — production, scale, and stability — that appeal to vaccine markets with less-than-stellar infrastructure.
That said, please don’t go crazy with INO stock. At the end of the day, this is still a speculative venture. But as wagers with “dumb” money go, it’s actually a smart one.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.
