Inovio (NASDAQ:INO) stock is up almost 21% in the last month, despite the biotech company becoming an afterthought in the race for a Covid-19 vaccine. Although it was one of the first companies to develop a SARS-Cov 2 vaccine candidate, INO stock could not sustain the momentum.
So, what’s driving the recent uptick in INO share price? Well, there are a couple of things at play here.
Firstly, Inovio isn’t a one-trick pony. It has several other products in its pipeline that are highly valued, which we will get to in a second. Secondly, the company hasn’t scrapped working on its Covid-19 vaccine.
Although progress remains stalled at the phase 2/3 trial stage, Inovio’s CELLECTRA based administration system is unique and offers benefits over traditional administration methods.
The Covid-19 vaccine race is a bit more complicated than just being first. The safest and more effective long-term solution will ultimately win the day. Moreover, stocks relying solely on a Covid-19 medicine to secure their future will be in for a rude awakening next year.
That’s why I wouldn’t write off Inovio anytime soon.
Early Lead Pushed INO Stock
Almost immediately after Covid-19 emerged, pharmaceutical and biopharmaceutical companies scrambled to develop a vaccine to end the crisis. Investors poured a hefty amount of capital in these companies, with hopes that they would come up with a potential drug or a vaccine.
At the start, as many as 23 companies were working on a vaccine, but now clear winners are emerging. The U.S. Government’s Operation Warp Speed (OWS) program has chosen AstraZeneca (NYSE:AZN), Johnson & Johnson (NYSE:JNJ), Moderna (NASDAQ:MRNA), GlaxoSmithKline (NYSE:GSK), and Pfizer (NYSE:PFE) as “finalists” of this race. Naturally, these companies are on a bull run, while several biotech stocks are freefalling.
Considering the candidates chosen, the U.S. government is banking on established pharmaceutical names. That’s why I believe the biotech selloff seems unfair. In the case of INO stock, specifically, you will find the markets have been brutal because of delays in its latest clinical trials.
Inovio was one of the first to develop a commercial Covid-19 vaccine. As soon as Chinese scientists provided the genetic sequence of the coronavirus, the company went to work. The resulting vaccine, INO-4800, was manufactured in January and went into the pre-clinical trials immediately.
As a result of its response time, the markets pushed INO stock northward. Shares spiked to $16 in early May, when pre-clinical data showed robust antibody and T cell immune responses in test mice and guinea pigs.
It’s important to note here that Inovio’s proprietary CELLECTRA smart device will administer the medicine. The device uses electric pulses to create temporary pores in the cell membrane, allowing the administration to nucleic acids into the cell. Inovio claims that this method is superior to a regular injection.
What Went Wrong?
Despite the strong initial performance, Inovio could not keep up with the competition. Any bit of positive news can send shares skyrocketing. On the contrary, any bit of bad news will lead to a rapid fall in share prices.
In Inovio’s case, it’s not that the company had a spell of bad news. It’s just that the markets were hoping for some more information after a very positive July.
The only new thing we know since August is that the company’s phase 2/3 trial will take place in September. Meanwhile, Moderna is commencing phase 3 trials shortly. Sanofi (NASDAQ:SNY) and GSK are also collaborating on human trials.
I do not doubt that when the trial results come out, the Inovio’s stock will skyrocket once again. However, the company still lost a lot of momentum along the way.
Not a One-Trick Pony
Many analysts and commentators may have gotten to know about Inovio as a result of this crisis. In reality, the company has been around for 30 years. The company has a unique vaccine design and administration system that will help in speeding up the process of commercializing DNA medicines.
The company’s proprietary immunotherapy platform SynCon optimizes antigens or transgene proteins into close-circular DNA plasmids. This process leads to the generation of preventive antibodies and the activation of therapeutic CD8+ T cells. You are essentially Rewriting your DNA to make your immune system stronger.
Also, the company’s CELLECTRA smart device is a winner in many eyes. That’s why the Department of Defense allocated $71 million of funding to support the large-scale manufacture of CELLECTRA® 3PSP — a next-generation device that will administer the company’s Covid-19 vaccine.
My Final Word
The recent fall in INO stock makes sense. Biotech stocks are susceptible to good or bad news these days. And a spell of a few months where nothing is happening is disastrous for anyone in the space. Inovio’s lack of news over the last few months has hurt it badly, but there are several reasons to remain bullish on the stock.
Shares will likely spike in September when we have the results of the latest clinical trials. If you are a day trader, you need to keep your eyes peeled for that bit of news. But even if you value fundamentals, INO stock is an excellent investment that should hold you in good stead.
Its vaccine design and administration system offer a critical competitive advantage in developing medicines to treat diseases associated with human papillomavirus, cancer, and infectious diseases. So, with or without the Covid-19 vaccine, the company possesses a long term growth story.
To sum up, INO stock is not a bad bet.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. He has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.