Summary
- Today, we take our first look at an outfit called Inovio Pharmaceuticals.
- The company is currently well funded and advancing several drug candidates including those targeting COVID-19 and HPV.
- An investment analysis follows in the paragraphs below.
The hardest thing of all is to find a black cat in a dark room, especially if there is no cat ."? Confucius
Today, we put a small biotech concern based just outside of Philadelphia in the spotlight for the first time. The shares had a massive spike up in mid-2020, but have been going down since that short lived rally fizzled out. Is the nearly 80% decline in the equity over the past year a buying opportunity or should this falling knife continue to be avoided? An analysis follows below.
Inovio Pharmaceuticals Overview:
Inovio Pharmaceuticals ( INO ) is based in Plymouth Meeting, PA. The company is focused on developing DNA medicines to treat and protect people from diseases associated with human papillomavirus (HPV), cancer, and infectious diseases. DNA medicines have myriad potential benefits. They do not use chemical or other adjuvants; they are comprised only of plasmids, water and the low concentration of salts. Inovio's drug candidates are temperature stable, which means they do not require ultra-cold chain transport or storage. The downside to this developmental method is that DNA medicines are large molecules that require a delivery mechanism in order to be transported into the cell sufficiently.
March Company Presentation
Management has stated that its technology platform can target nearly any disease or condition by encoding to the appropriate antigen leading to the production of antibodies and T-cells. Inovio's approach has two parts. The first is around plasmid design optimization. The company summarizes this as follows:
We identify diverse strains or variants of a target pathogenal cancer. We then assess the gene sequence of the selected antigen from chosen strains or variants of the pathogenal cancer. We design an optimal consensus sequence for the selected antigen, using our proprietary algorithm. We insert the optimized sequence for each selected antigen into our plasmid backbone to construct a precisely designed plasmid ."
March Company Presentation
They then use their investigational proprietary smart device 'CELLECTRA' to generate brief electrical pulses that open up the cells. This allows the DNA medicine to enter and then be processed within the cells to generate the desired immune response.
March Company Presentation
The company has a large and diverse portfolio of pipeline candidates as you can see by clicking here for the most up-to-date pipeline graph. Inovio has a variety of developmental partners as one can see in the chart above.
Recent Developments:
March Company Presentation
Earlier this year, Inovio revised its focus for the company's COVID-19 vaccine candidate INO-4800 to pursue the development of the heterologous booster strategy. This change of approach was in response to changes in the global COVID marketplace, and a waning demand for primary serious vaccine regimens. Findings from several recent publications suggest that heterologous boosting generates more robust immune responses than the homologous boosting and might enhance protection. The company is awaiting final data analysis from a heterologous boost trial with INO-4800 being conducted by the company partner Advaccine in China. This data should be out by the end of this year.
March Company Presentation
INO-4800 was also selected to be evaluated as a primary vaccination regimen in the WHO Solidarity trial vaccines. This effort is designed to evaluate the efficacy and safety of new cancer vaccines for COVID-19.
March Company Presentation
The company is also targeting HPV. This is an infectious disease that can progress to cancers as well as other debilitating and life-threatening conditions. Inovio's most advanced candidate in this effort is called VGX-3100. This compound targets HPV 16 and 18 types and is designed to treat cervical HSIL. After amending the trial to revise the primary analysis population from all-comers to a biomarker positive population, this Phase 3 trial REVEAL 2 is currently ongoing. Efficacy and safety follow-up data from this trial should be out either late this year or early in 2023. If successful, Inovio will have to conduct one or two additional well-controlled trials in the biomarker positive population to support a marketing application since REVEAL 2 is only an exploratory trial.
March Company Presentation
The company has several Phase 1, Phase 1/2 trials and even a Phase 2 study for various indications underway. We focused on COVID-19 and HPV since they are the most advanced programs for the purpose of this analysis.
INO: Analyst Commentary & Balance Sheet
The analyst community is hardly sanguine about Inovio's prospects in 2022. Over the past six months, five analyst firms including RBC Capital and Oppenheimer have assigned or maintain Hold or Neutral ratings on the shares. Price target proffered range from $1 to $3 a share. On August 10th, Maxim Group did maintain its Buy rating on Inovio, but slashed its price target to $5 from $11 previously.
The company ended the second quarter with $348 million of cash and marketable securities on its balance against less than $17 million of long-term debt. Management has stated this funding is adequate to maintain all planned activities into the third quarter of 2024. There have been several small stock sales by insiders in 2022, but they total barely over $100,000 in aggregate. Of note, just under 20% of the outstanding float in the stock is currently held short.
Verdict:
The company has some potentially interesting technology and multiple 'shots on goal' as well as developmental partners and the company is well-funded at the moment. The company's focus on COVID-19 sparked a huge rally in the stock in the second quarter of 2020 during the height of the lockdowns. However, Inovio still hasn't got its COVID-19 efforts to the approval phase and the globe is now saturated with already viable and approved vaccines.
This encapsulates Inovio's journey as a public company. Long on promise, short on results. The company has been public for nearly a quarter century now, but still doesn't have any products on the market. This probably explains the lack of analyst firm enthusiasm and relatively high percent of outstanding float that is currently held short. Given that, INO would appear to be an Avoid for investors.
You can bail water 24/7, and no matter how good you are at not sinking, you still have a hole in your boat ."? Kelli Jae Baeli
For further details see:
Inovio Pharmaceuticals: Long On Promise, Short On Results