Every vaccine candidate to stop the novel coronavirus — and at last count, there are more than 150 of ’em — comes with a potentially hazardous side effect: turning an investor into a numbskull. Want proof? Witness the head-to-head performance of Pfizer (NYSE:PFE) and Inovio Pharmaceuticals (NASDAQ:INO).
On Nov. 27, the former began to deliver its vaccine via chartered flights for imminent worldwide distribution. Meanwhile, the latter has never, ever, ever brought a single product to market since its founding in 1979. So who would guess that in the weeks since Nov. 1, INO stock has outperformed PFE stock percentage-wise by nearly three times?
Not me, InvestorPlace readers. But it has. So let us now summon that madcap medical and market genius, Dr., Demento: Fetch the numbskull antidote, quickly!
Though scathingly dubbed “the COVID-19 version of Theranos” by Citron Research, INO stock has nonetheless jumped in November by more than 22%. And Pfizer? Well, the rewards for being the frontrunner and likely winner in getting its vaccine market first have been nothing short of depressing. And if you ask me, investors are unduly shunning it for no other reason than it’s a big company less likely to spike in price. Since Nov. 1, PFE stock is up just a tad above 8%.
Given how INO stock has defied reason, science and your favorite Vegas bookie thus far, it’s worth at least a fleeting glance to see whether this Philadelphia-area biotech can keep injecting investors with happy-happy juice. On maybe a portfolio placebo is more like it.
INO Stock and Its Illogical Ascent
Before you seance the late, great, polio-busting Dr. Jonas Salk to complain, perhaps make a call to former Federal Reserve Chairman Alan Greenspan. If you reach him, do me a favor: Ask why the stock market term he coined — “irrational exuberance” — has shown itself off in turbocharged ways with INO stock. Sure, he’s 94, but I’ll bet he’ll pick up the phone: Alan the Unflappable may be as agitated as any logical investor over this.
National Geographic has done yeoman’s work tracking Covid-19 vaccine progress and in an article updated on Nov. 23, Amy McKeever reports back on a dozen companies large and small that have reached Phase 3 trials and beyond.
Aside from Pfizer, you’ll find those that have stumbled badly such as AstraZeneca (NASDAQ:AZN) and underdogs you can’t help but root for, including Novovax (NASDAQ:NVAX). Is Inovio on this list? Nope. Why? Because National Geographic knows better than to fall for a false correlation between scientific progress and the science of PR spin. And INO stock has repeatedly benefited from savvy media relations over time.
Why Inovio Is a Vaccine Charlatan
To amplify my point above, I contend that adrenalized investors find it much easier to manipulate and thus inflate the share prices of tiny companies rather than titanic ones. As for those minuscule players, INO stock is up 386% year over year, while NVAX has rocketed 2,492%. Compare that to Pfizer, up 2%, or fellow vaccine pack leader Johnson & Johnson (NYSE:JNJ), up roughly 5%.
So while you might think a straight-line connection links medical triumph and investor profit, it doesn’t. I’ve become such a cynic on this point that I wouldn’t be surprised if Pfizer creeps up in the single digits if and when its treated, jubilant patients make headlines worldwide.
Meanwhile, Inovio stock benefits from a proprietary mind-bending vaccine that suspends disbelief. You need not believe me; turn instead to Cirtron’s damning 12-page report that contends: “Inovio is guilty of issuing highly misleading information to pump the company’s stock price. … In the case of COVID-19, they are taking advantage of retail investors while they’re stuck in quarantine.”
So what have we got? “Simply put, the management team at Inovio is a group of charlatans,” Citron concludes.
Remember, It’s Your Shot
Look, if we cynically twist the formula of Nobel Prize winning economist Milton Friedman as he laid it out in 1970, a company’s only job is to maximize shareholder value. Taken to its end, that means INO stock need only rise in price for investors to stand up and cheer. Whether they actually produce anything of value is irrelevant. Friedman would say that the only caveat for any company is to not break the rules, so trumpeting near-progress allows Inovio to sit in a gray area it can exploit.
Investors who’ve made a killing on INO stock have every right to argue that they haven’t been fooled. That they just want to make money. But it helps to know that Inovio has played this game before. This 2016 CNBC clip begins with an astonishing broadside that reporter Melissa Lee directs at Inovio chairman and CEO Joseph Kim during the Zika virus crisis: “You seem to be Johnny-on-the-spot when it comes to infectious diseases. Whenever something pops up it seems Inovio comes back into the news.”
Again, over four decades, Inovio has not once brought a product to market. That it would accomplish this now with a Covid-19 vaccine amounts to a bottom-of-the-barrel minor league player, now 41 years old, hitting a grand slam in Game 7 of the World Series.
INO stock? Sure, it’s a good investment for people who only care about leveraging price fluctuations at a tiny company. There is no law against this, just as nothing prevents one from investing in adult-content stocks, for example. But those of us with a conscience who’d rather boost a true vaccine contender know there are better ways to profit, and in turn profit a pandemic-imperiled planet.
On the date of publication, Lou Carlozo held a long position in PFE.