I recently read a headline that caught my attention. Ocugen vs. Inovio: Where Is the Smart Money Going? I seriously can’t believe that any smart investor in their right mind is wasting more than a second of their time contemplating investing in Inovio Pharmaceuticals (NASDAQ:INO) and INO stock or Ocugen (NASDAQ:OCGN) and OCGN stock.
I really can’t.
But, she didn’t have a lot positive to say about either company to the author’s credit. Both remind me of punchdrunk fighters flailing away with little to show for their efforts other than remaining upright.
I wrote about Inovio seven times in 2020. The last time was in November when I said it would take a miracle to revisit $20. In the six months since it hasn’t seriously tested that price level. It got as high as $16.08 in mid-February before gradually falling to where it trades now around $7.50 as I write this.
I remain puzzled why anyone would seriously consider INO stock. Here’s why.
If You Bought INO Stock in January 2020 or Earlier
The first press release issued by Inovio that mentions Covid-19 was on Jan. 23, 2020. The share price was around $4.25. Related to coronavirus, the company issued a press release on July 25, 2019, that discussed INO-4700 and its potential use against the Middle East Respiratory Syndrome Coronavirus (MERS). Its share price was $2.80 at that point.
In both instances, I sure hope you sold when it was trading over $30 in June 2020. However, knowing that most investors are not very good at market timing, I’m going to assume you never sold and are still holding.
In the former example, you’re still up 76% over a 16-month hold. That’s a 57% annualized total return. If you bought the earlier date, you’re up 168% or 92% on an annualized basis.
I would take either in a heartbeat.
Why Haven’t You Sold?
It’s not a trick question.
In the 16 months since Inovio management first broached the subject of Covid-19, several companies have developed and gained approval for the use of their vaccines by the U.S. Food and Drug Administration (FDA).
Pfizer (NYSE:PFE) and its partner, BioNTech (NASDAQ:BNTX), were the first across the finish line. Their emergency use authorization (EUA) came on Dec. 11, 2020. Pfizer’s stock has actually lost a few dollars in the five-and-a-half months since. BNTX stock has made out far better. It’s up 56%, an annualized total return of 122%.
Moderna (NASDAQ:MRNA) got the second EUA a week later, on Dec. 18, 2020. Its shares are up 29%. That’s almost 63% annualized. On Feb. 27, 2021, Johnson & Johnson’s (NYSE:JNJ) Janssen division got the third EUA. It’s up 6.5% over a little more than three months. Annualized, that’s approximately 26%.
These three groups are all over the finish line. They’ve provided vaccines to Americans for many weeks now. Yet, their stocks haven’t delivered performances that would be considered lights out except for BioNTech.
So, what in god’s name makes you think the fifth or sixth vaccine in line is going to deliver more returns than INO has already delivered? I don’t see it.
The Bottom Line
My November article pointed to what I felt was an excessively exuberant evaluation of Inovio’s potential by InvestorPlace’s Louis Navellier.
He felt the company wasn’t a one-trick, Covid pony. I hope so for all its employees who depend on the company actually developing a vaccine used on humans.
“Nothing suggests CELLECTRA is a revenue powerhouse. In fact, the FDA still has issues with Inovio’s delivery device, which means the decade-long development of this product still might not produce meaningful sales,” I wrote on Nov. 20, 2020.
“If it were a blockbuster, I would assume someone like Becton Dickenson (NYSE:BDX) would be knocking on its door.”
In the past three years, Inovio’s revenues have fallen from $30.5 million in 2018 to $7.4 million in 2020. And I won’t even mention the losses. In Q1 2021, revenues were $371,000, well below the $1.3 million generated in Q1 2020. Again, I don’t need to mention the losses.
If you read through its Q1 2021 Program Updates, it all sounds so promising. Of course, that’s why investor relations people have jobs. To make investors think the future is oh so bright.
And sure, it’s got a few irons in the fire other than INO-4800, but who knows where all of that will land. If you ask me, it’s got to be pretty exhausting being a full-time biopharma investor.
But even they’ve got to see the writing on the wall. As Don Meredith used to say on Monday Night Football, turn out the lights, the party’s over.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.