Shares of Inovio (NASDAQ:INO) are trading near a six-month low. The company is being battered by delays in getting its Covid-19 vaccine candidate into Phase 2 trials. And without a successful vaccine, it seems there’s little reason for investors to be excited about INO stock.
Inovio is still the tortoise (at best) in a vaccine race that includes a lot of hares. And to be clear, Inovio’s DNA-based vaccine technology was not one of the four types of Covid-19 vaccines in clinical trials.
But there is significance to that. In fact, that may very well explain the hang-up with the FDA. And to be fair, it’s still not clear exactly what the FDA’s questions were. The only thing investors know is that the questions did not involve the safety of the vaccine.
I’m just spit balling here, but with multiple vaccines in late-stage trials, the urgency is to have at least one of those candidates approved. Inovio may be on the back burner. However, the longer it takes to develop a vaccine, the more time Inovio has to prove itself.
Something Stinks in Denmark
As if the news couldn’t get worse, there is evidence of a new mutation to the novel coronavirus. It’s emerged in Denmark and it is causing public health officials there to advocate for travel bans. A concern about virus mutation is that, if the mutation affects Covid-19’s spike protein, it can render any vaccine or antibody treatment ineffective, or less effective.
However, this may be an advantage for Inovio. In July, the company released preliminary results that showed its vaccine candidate, INO-4800 generated antibodies that neutralized the early strain of Covid-19 and its mutant variation. Now, past performance doesn’t mean future results, but it’s theoretically possible that Inovio’s vaccine may prove effective against the current mutation (a question I left with a company source was left unanswered at the time of this writing).
And, even if it wasn’t, there’s another potential scenario. If the current vaccine has to be modified, it would seem that Inovio would be able to quickly replicate the new sequence. Yes, it would still have to go back to square one. But with a successful Phase 1 currently in the books, it may have fewer obstacles from the scientific community.
Skepticism is Natural, But Is It Warranted?
INO stock has been volatile and there’s reason for that. Invoio has not brought a vaccine to market in its 40-year history. Many investors are convinced that Inovio’s DNA vaccine (which the company was able to produce in record time) is just a money grab.
Analysts of this opinion will point to the company’s unproven DNA technology. And now, they would add the FDA’s hold as further reason for skepticism.
But as I see it, every time things have looked darkest for Inovio, investors have been unwilling to throw in the towel. As I wrote in October, nobody knows exactly what the FDA is questioning.
INO Stock Is a Risky Buy
I’m not going to pound the table for INO stock. And to be fair, I wouldn’t invest an amount of money that meant something to me on the company’s vaccine. However, it doesn’t mean the stock isn’t worth a speculative bet.
There is growing hope that a Covid-19 vaccine is within our grasp. But the closer it gets, the more elusive it seems. And that is actually a good thing long term for public acceptance of a vaccine. Inovio is advancing technology that offers tantalizing potential, and not just against the novel coronavirus.
In order for that to happen, someone has to take a leap of faith. And with other vaccine candidates that are further along, there’s no urgency for that to happen. However that doesn’t mean it won’t happen. In this case, the longer we go without approval, the better the odds that Inovio may edge its way into the conversation.
INO stock is not likely to go to zero. Even if they are not a finalist for a Covid-19 vaccine, they have other candidates in the pipeline. But you’ll definitely want to limit your potential losses as the stock is likely to remain volatile particularly as the Biden administration’s plans come into focus.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.