Inovio (NYSE: INO) stock is trying to hang on to a small gain after the company reported earnings on August 9. Shares of the biotech company are essentially flat for the year, and yet INO stockholders have been taken on a wild ride for much longer than that. There are a couple of reasons for that.
In 2020, it was easy to explain the meteoric rise in INO stock. Inovio, along with a myriad of other biotech companies was in the race to develop a Covid-19 vaccine. In fairness, Inovio still is running its race. The company has a candidate, INO-4800 that it is in Phase 2/3 clinical trials.
A second consideration is that with short interest in INO stock currently running at over 20%, investors are simply looking at Inovio as a short squeeze opportunity. It certainly wouldn’t be the first stock to do that.
There is a third option. And that is to look at Inovio for what it really is. And that is a biotechnology company that is engaged in the development of DNA medicines to treat some infectious diseases and, perhaps, some forms of cancer. So as not to misrepresent what the company does, I’d urge you to read about it from the company itself.
However, if you’re an investor in INO stock, seeing any of these avenues through to fruition will test the patience of investors.
Is INO-4800 Still a Viable Covid-19 Play?
The short answer is yes. Clinical trials are still ongoing and it’s possible that the company could receive approval. And if iNO-4800 is approved it will have a couple of key advantages over current Covid-19 vaccines.
First, it will remain stable at room temperature. This may facilitate the vaccine’s use in foreign countries where it is logistically difficult to administer the current vaccines.
The other potential advantage is that the company has its own delivery system in its CELLECTRA device. However, this is a double-edged sword for Inovio because, as it turns out, the CELLECTRA device is essential to maximizing the efficacy of the company’s vaccine. And the FDA is still trying to resolve some questions it has about getting the device approved.
This has created other problems for the company, specifically, the U.S. government canceled the funding for INO-4800's development. The company has since acquired other funding, but it remains far behind in the development cycle.
Vaccine Acceptance Will Be Challenging
Once again, I don’t want to misrepresent the company’s DNA vaccine platform. I would encourage you to read about that for yourselves. However, being a realist, it’s impossible to ignore the skepticism that has been tacked onto the mRNA vaccines from Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA).
If consumers were skeptical about those vaccines, I can imagine the skepticism that will come with a vaccine that uses “DNA” in its descriptor. It would seem to me that a better course of action would be for one of its other DNA vaccines to be approved first. That would allow the technology to be introduced via a vaccine that patients will see as having gone through a rigorous clinical trial period.
The Bottom Line on INO Stock
Inovio stock does have potential. However, if you’re looking to invest in the company, I think you have to view it through a wider lens than that of a Covid-19 play. And when you do you should contemplate that this is a company that’s been in business for 38 years, yet its next approved vaccine will be it's first.
That could be chalked up to the simple fact that being a pioneer in this kind of research takes time. And I would say that’s fair. However, INO stock has been publicly traded since 1998. For the majority of that time, it has been operating in penny stock obscurity.
Of course, as the saying goes, they only have to be right once. And if they are, INO stockholders would likely be rewarded in exponential terms. But that’s a big if. You should invest accordingly.
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