Inovio (NASDAQ:INO) stock may have once been one of the hottest vaccine plays out there. But now? Not so much. Rival novel coronavirus vaccine candidates are pulling ahead of the pack. And “also-rans” like this company’s contender, are falling behind.
So, does that mean we can write this company off completely? Yes and no. One one hand, recent news points to names like Moderna (NASDAQ:MRNA) having the edge. On the other hand, it’s not as if this company’s INO-4800 candidate is completely out of the running.
What do I mean? Sure, Moderna, along with AstraZeneca (NYSE:AZN) and Pfizer (NYSE:PFE), look much further down the pipeline when it comes to bringing a vaccine to market. But, Inovio is anything but a straggler. The company is still on track to start Phase 2/3 clinical trials next month.
Yet, this acceptable level of progress may not be enough. If confidence in its candidate continues to dwindle, shares will do likewise. The stock is already down around 64% off its highs. And, given where shares trade today (around $12 per share) versus where they were pre-outbreak (under $5 per share), there’s plenty more room to head lower if things don’t pan out.
INO Stock and Vaccine Odds
What’s the current takeaway on Inovio’s vaccine prospects? Plenty of room for concern. Namely, the lack of information regarding the strengths of INO-4800. As this commentator recently noted, the company has yet to confirm the details of a late-stage study on the candidate. Considering this factor, it’s tough to feel confident that the company truly has a winner in its hands.
InvestorPlace’s Dana Blankenhorn shared similar sentiments in his recent article on INO stock. Blankenhorn also discussed how the company has a history of making plenty of promises, but showing little tangible results.
Granted, past failure doesn’t rule out future success. But, given this history of over-promising and under-delivering, coupled with underwhelming results, it’s clear why this isn’t the most compelling vaccine play right now.
Yet, while it’s wise to be cautious about INO stock, it may be short-sided to be too bearish on the company. Not only because it could surprise with subsequent INO-4800 results. But also, the potential of another vaccine candidate in the pipeline.
What Could Save the Day for Inovio
Sure, this company’s pandemic vaccine prospects could be fading. But, as our own Josh Enomoto put it Aug 18, it’s still an open field. That is to say, the company still has a shot at success with its candidate.
How so? Namely, while the company may have little edge in the U.S. market, it could succeed selling its vaccine in markets with less developed infrastructure (storage facilities, for example).
In short, the potential for moderate success may mean INO stock is a worthwhile play at today’s prices. But, the company’s coronavirus prospects aren’t the only factor to consider here. There’s a non-pandemic related catalyst that could be hiding in plain sight.
What am I talking about? As this analyst recently wrote, Inovio’s VGX-3100 HPV treatment could be its lead pipeline candidate. If all goes well with Phase 2 and 3 studies on VGX-3100, it may be enough to move the needle for the company’s shares. Even if its pandemic catalyst fails to deliver.
So, does that make this a worthwhile buy at today’s prices? It depends. Like with any biotech play, unless you are well-versed in handicapping potential winners from losers, it’s largely a game of predicting the unpredictable.
But one thing’s for sure: INO is less a binary play on the coronavirus than it appears at first glance. Unlike other pandemic plays, whom have very little to fall back on, at least with this company, there are additional factors in motion that could help support its current valuation.
It May be Best to Skip Out for Now
With names like Moderna making significantly more progress in recent weeks, it makes sense Wall Street has fallen out of love with Inovio shares. Yet, as I discussed above, there’s a lot more going for this company than Mr. Market currently gives it credit.
Firstly, the company’s pandemic catalyst remains in motion. While it’s odds of success are getting longer, the company could still surprise with results due in the next few months. Any sign of even moderate success bringing a vaccine to market may just be enough to put some life back into share.
In addition, with strong non-coronavirus catalysts like its VGX-3100 treatment, the company at least has other candidates in its pipeline to fall back on.
Nevertheless, while it’s not out of the running just yet, it may be best not to take a gamble with INO stock. Sit on the sidelines for now, and wait for a more compelling entry point.
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. Thomas Niel, contributor to InvestorPlace, has written single-stock analysis since 2016.