Editor’s note: This article was updated on Oct. 26, 2020, from its previous version.
It’s been a month since the Food and Drug Administration put a partial clinical hold on INO-4800, Inovio Pharmaceuticals’ (NASDAQ:INO) Covid-19 vaccine. I wrote about this issue shortly after the FDA’s announcement. At the time, I suggested that only speculative investors should invest in INO stock, reminding readers there were better options.
Well, one month later, the old adage “No news is good news” definitely doesn’t apply in Inovio’s situation. If anything, the delay should be a red flag to even the most speculative investors that all is not right at Inovio.
Here’s why.
The Easy Money on INO Stock Has Been Gotten
Inovio stock hit a 52-week of $33.79 at the end of June. For those who bought at the end of May, it was an easy double. The smart investors likely took profits — a 1,200% return on an annualized basis — while the poor souls who bought in the $30s are praying to the investing gods that Inovio will rise up once the FDA clears its vaccine for takeoff.
Only INO-4800 might not even make it to the runway.
The company still hasn’t gotten the go-ahead to resume trials. Meanwhile, some of its peers who also had trials paused have since begun work again. And not being first to the goal in the vaccine race isn’t a death knell, exactly. But 12 vaccines are in phase-3 trials now. So every day Inovio’s vaccine testing remains paused not only lets them (and all the other phase-2 and phase-1 vaccines) get further ahead, but may even allow more pre-clinical vaccines to pass it by.
In other words, like I said, no news isn’t good news. Inovio needs news of its trials restarting, so it can get back in the race.
And according to my InvestorPlace colleague, Josh Enomoto, Inovio may have some other questions to deal with.
“Intellectually honest medical researchers cite the possibility of negative health outcomes via DNA vaccines,” Josh Enomoto wrote about Inovio on Oct. 19. “This platform, by its nature, involves our cell’s nucleus, where our DNA resides. Hence, the term, DNA-based vaccine. That’s backed up by another report published by the NIH. It states, ‘In case of DNA vaccines, after their internalization the DNA needs to translocate to the nucleus for transcription, followed by translation in the cytoplasm.’”
Inovio Isn’t the Only Game in Town
I recommend you read his entire article if you’re thinking about betting on Inovio before the FDA has rendered a response.
That’s especially true when you consider that Josh goes on to say that even though the possibility exists that the FDA will still greenlight INO-4800, the reality is still might not be one of the popular vaccines.
“…Inovio does not feature enough advantages to convincingly lead the pack. Yes, its vaccine offers logistical advantages but it most likely will be a two-dose regimen. That would hamper distribution efforts while Johnson & Johnson’s vaccine candidate is designed to be a one-and-done affair,” Josh writes.
That, to me, is a critical piece of my colleague’s article. And something that I talk about all the time. Investors have options.
Given that it has been a month since the FDA paused Inovio’s efforts, even if its trial process fully resumes, what are the odds that it will be able to catch those already in Phase 3?
Unless you’re a very risk-tolerant investor, the odds are very low.
The Bottom Line
In my latest article about Inovio, not only did I bring up the FDA issue, but the possibility that this could effectively kill the company’s efforts to get the funding necessary to get INO-4800 to commercialization.
“If Inovio’s trial is taken off hold because the FDA is satisfied with its answers, the worst-case scenario would be an announcement that it’s further delayed because it can’t gain the funding necessary to move ahead. That would put the company even further behind than it already is,” I wrote on Oct. 1.
“The stock might jump on the news the trial’s back on, but it would most certainly fall if it’s unable to proceed because of a lack of funding.”
So, the risks involved don’t just revolve around the vaccine itself but also its actual delivery.
I’m not saying it’s going to happen, but investing is all about accounting for all possible eventualities.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
