Inovio Stock Is a Longshot Covid-19 Bet

The steep decline of Inovio (NASDAQ:INO) stock is continuing. Earlier this year, Inovio electrified traders when it announced that it had a potential vaccine candidate for the novel coronavirus. Following the disclosure, INO stock shot up to as high as $33 this summer, versus its 52-week low of $1.92.

inovio (INO) logo next to pills and face masks

Source: Ascannio /

However, the magic is wearing off. Since late July, Inovio’s shares have plummeted from $27 to just $10.65 today,  and they have rarely bounced along the way. While Inovio is still up big in 2020, the stock is rapidly losing altitude. What’s going wrong?

Simply put, it looks like Inovio is not going to manage to get its vaccine to market faster than it rivals. Almost every week, we hear news of a leading biotech or pharma company launching advanced trials of its vaccine candidate.

On Monday, for example, AstraZeneca (NYSE:AZN) began Phase III testing of its vaccine in the U.S. Washington  will be funding a gigantic 30,000 patient study of AstraZeneca’s AZD1222 vaccine candidate.

Not on the Fast Track

As I have previously showed, it was negative for Inovio when the U.S. government didn’t include the company’s vaccine in its fast-track program. The Trump Administration has offered substantial resources to many Covid-19 vaccine makers through a program called Operation Warp Speed.

But the government didn’t end up doing much for Inovio, choosing instead to back the vaccines of drug makers that are generally more well-known and better-funded than Inovio.

The government’s decision could provide insight about Inovio’s competitive prospects. It definitely shows the challenges that a small upstart like Inovio faces when trying to compete against the leading pharmaceutical and biotech companies.

Initially, it seemed like Inovio got off to a hot start in the race to commercialize a vaccine. But now it’s falling behind as other vaccines could launch within a few months.

How Can Inovio Justify Its Valuation Going Forward?

Against that backdrop, it’s hard to see what role Inovio will play in the coming months. Even assuming that Inovio’s vaccine is effective and safe, will there be any demand for it by the time it is ready to go?

It’s hard to overstate just how much money and scientific effort is being harnessed to fight Covid-19. As of this writing, according to the U.S. National Library of Medicine’s database, more than 3,100 trials are being conducted on various drugs to treat or prevent Covid-19.

Although only a handful or perhaps a few dozen companies’ efforts to investigate the disease have gotten a great deal of publicity,  a ton of little-recognized research is going on.

According to that database, nearly 700 clinical trials of coronavirus treatments and vaccines are taking place — in part or fully — in U.S. research labs. And federal funds alone are supporting 79 different trials. With all this research capacity facing off against Covid-19, how likely do you think it is that Inovio will be the company to come up with the first, best vaccine?

Inovio’s Small Research Budget

If you answered affirmatively to that previous question, there’s still another issue: Inovio only spends around $80 million per year on research. And, interestingly, that figure hasn’t budged even after the coronavirus pandemic began. Given the government’s funding of trials such as AstraZeneca’s 30,000-patient study, Inovio is facing tough competition. 

If Inovio had received a huge government grant, this would be a different story. INO stock would be flying high, like Novavax (NASDAQ:NVAX) or Moderna (NASDAQ:MRNA) as investors seriously contemplated the possibility of a big breakthrough. But with well-funded competition pulling closer to the finish line, the window of opportunity for Inovio is rapidly shutting.

The Verdict on INO Stock

Inovio has been listed on the public markets for ages. It has previously created vaccine candidates for other pandemics. Yet, despite its many press releases, it has not been able to convert its activity into meaningful profitability. With Covid-19, it appears to risk going down the same path.

This time might be different. Inovio could manage to develop a successful COVID-19 vaccine. However, the companies with substantial governmental support, like Moderna or AstraZeneca, are more likely to take the prize.

Inovio still has a market capitalization of almost $2 billion. That’s an awful lot for a company whose Covid-19 vaccine doesn’t seem especially likely to end up being a big money maker.

And aside from that, Inovio does not have much else to support its stock price. Inovio generated just $4 million of revenue last year, after all. So Inovio stock should continue to trend lower unless its vaccine makes rapid progress in clinical trials.

On the date of publication, Ian Bezek held a long position in AZN stock.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. 

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