This month, Inovio Pharmaceuticals (INO) expanded its partnership with Advaccine Biopharmaceuticals to run a Phase 3 test of its Covid vaccine — and INO stock soared.
The U.S. Department of Defense pulled its funding for late-stage testing of Inovio’s vaccine earlier this year. Now, the company is focusing on developing its Covid vaccine for areas underserved by current vaccines. The Advaccine-partnered study will take place primarily in Latin America and Asia.
Many countries are reporting vaccination rates under 10%, Inovio Chief Executive Joseph Kim said in a written statement. Experts have said it will take many vaccines to span the globe. Inovio is developing a two-injection vaccine and device combination.
But in the first quarter, Inovio’s losses deepened and revenue was lighter than expected.
Inovio stock now trades below 10 per share. The company has a large pipeline of drugs in development for cancer and infectious diseases. As of March 31, it had $518.6 million in cash, non-cash equivalents and short-term investments, up 26% sequentially.
All in all, is INO stock a buy?
A Look At INO Stock Fundamentals
First, it’s important to note Inovio isn’t profitable and expects continued losses in the foreseeable future. In the first quarter, Inovio reported a 27-cent loss per share and $371,000 in revenue. Both measures missed forecasts. Losses deepened and revenue declined.
Also of note, Inovio doesn’t have a commercially approved product on the market. It was founded in 1983, while its DNA work dates to 2000. Its revenue is comprised of collaboration and development money. The biotech company has big biopharma partners like AstraZeneca (AZN) and Regeneron Pharmaceuticals (REGN).
The revenue picture could change quickly if Inovio succeeds in making an effective coronavirus vaccine. The biotech also has a drug in Phase 3 testing to treat a precancerous condition of the cervix. It’s partnered with privately held ApolloBio on that drug.
But INO stock isn’t lining up with CAN SLIM rules for investing in growth stocks. Savvy investors should seek companies with at least 20%-25% recent earnings growth. Inovio stock isn’t expected to get there anytime soon. (Learn more about IBD Digital to get CAN SLIM stock investing tips.)
Analysts surveyed by FactSet expect Inovio to report a 25-cent loss per share on $1.1 million in revenue in the current quarter. Revenue would surged by a triple-digit percentage and losses would shrink vs. the year-earlier period.
Currently, INO stock has a Composite Rating of 11 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock’s key fundamental and technical growth measures. This means Inovio stock outranks just 11% of all stocks in terms of that metric.
In 2020, the biotech lost $1.07 per-share on $7.4 million in sales. Losses shrank year over year, while sales grew. For 2021, analysts surveyed by FactSet call for Inovio to lose 94 cents per share on $35.5 million in sales.
Inovio Stock Background
Here’s its background: Inovio was founded in 1983 under another name, Genetronics. At the time, it focused on a technological platform called electroporation. Electroporation is using controlled electrical pulses to create openings in cells. In theory, that should make them more permeable to drugs and other agents.
Then, Genetronics focused on developing drugs for cancer and dermatology. It also developed machines for electroporation to sell to research companies, according to the company’s first U.S. Securities and Exchange Commission filing.
In the 1990s, Genetronics traded on the Vancouver Stock Exchange, American Stock Exchange and the Toronto Stock Exchange. It voluntarily delisted from the Vancouver exchange in 1998. It remained on the Toronto exchange until 2003.
Two years later, Genetronics acquired gene therapy company Inovio AS and changed its name to Inovio Biomedical. In 2006 and 2007, Inovio had to restate some of its financials. In 2009, Inovio merged with VGX Pharmaceuticals. That added a cancer vaccine to its pipeline.
A year later, Inovio Biomedical became Inovio Pharmaceuticals.
Gates Foundation, CEPI Award Inovio Grants
After merging with VGX, Inovio began focusing on DNA vaccines and electroporation delivery. Electroporation uses a medical device to deliver a low electric shock at the injection site. This is meant to coax the drug into cells.
But in 2016, the fervor wavered after the Food and Drug Administration placed a cancer vaccine on hold. At the time, Inovio stock was also running hot on its Zika virus and influenza vaccines.
The next few years saw a downfall for INO stock, which plummeted to dollar-stock status.
But shares began a turn in January 2020 when the biotech company announced that the Coalition for Epidemic Preparedness Innovations, or CEPI, awarded it $9 million to develop a coronavirus vaccine. CEPI is a group of public, private and nonprofit organizations that fund vaccine development worldwide.
In March 2020, the Bill and Melinda Gates Foundation awarded Inovio $5 million to scale up its coronavirus vaccine delivery system. That followed a $1.6 million grant in 2016 to back its Zika virus vaccine.
Just nine analysts cover INO stock, according to MarketBeat.com. Three had buy ratings, five had hold ratings and one had a sell rating on June 29. Jefferies recently initiated coverage with a hold rating. On May 10, Piper Sandler downgraded INO stock after the company’s Covid vaccine test results disappointed. Analysts from outfits like HC Wainwright, Oppenheimer and Bank of America also cover Inovio stock.
As of March 31, 262 mutual funds owned 55.7 million shares of Inovio stock.
Technical Analysis Of INO Stock
Inovio stock hit a high mark of 33.79 in June 2020 after the biotech company received a $71 million contract from the U.S. Department of Defense to scale up manufacturing for its coronavirus vaccine. But in April, shares plummeted after the department withdrew funding for Phase 3 testing.
In 2020, INO stock rocketed 168% higher, albeit shares started the year at just 3.30. Today, the biotech company has a Relative Strength Rating of 5, putting it in the bottom 5% of stocks. The RS Rating pits all stocks against one another in terms of 12-month performance, on a scale of 1-99. Shares have also returned to dollar-stock status, trading around 9.30 on June 29.
The shares have a poor EPS Rating of 28. This reflects INO stock’s continuing losses per share.
On June 29, Inovio stock was below its 200-day moving average but above its 50-day line. Shares aren’t forming a definite chart pattern. And, if a base forms, investors should take it with a grain of salt. It will be key to watch whether Inovio can launch a commercial product.
(Related: Keep tabs on bullish stock charts by visiting MarketSmith.com.)
INO Stock: Coronavirus Vaccine News
The Department of Defense’s decision wasn’t based on Inovio or its product, the company said. Analysts say it’s possible Inovio could still launch its vaccine and device internationally. And, now, Advaccine is partnering on the Phase 3 test. That news, on June 9, sent INO stock flying higher.
Phase 2 testing — which U.S. officials are still funding — resumed in late 2020. In that test, the vaccine generated lower antibodies from plasma cells than what researchers have found in the blood of people who’ve recovered from Covid, analysts said.
The firm is also working on a vaccine to target all Covid variants. In May, the company said preclinical tests showed the vaccine induced immune responses against the variants first found in the U.K., South Africa and Brazil, as well as the original strain.
In February, INO stock soared after a Reddit user called for a short squeeze of the stock. Also helping the biotech company: BlackRock, an investment management firm, upped its stake to more than 14.2 million shares. It now owns 8.4% of Inovio.
Is Inovio Stock A Buy Now?
INO stock wasn’t a buy as of June 29. Shares aren’t forming a specific chart pattern and, based on technical analysis, aren’t showing the marks of winning stocks — strong growth in sales and earnings.
Investors are encouraged to buy a stock when it tops a buy point and is less than 5% extended from that entry. (Check out Stocks Near A Buy Zone.) Further, Inovio stock has weak Composite and RS Ratings. Its EPS Rating is somewhat better, but remains below the upper echelon of stocks.
What is important, for now, is watching INO stock as the biotech company works to get back on track in developing coronavirus vaccine. Its DNA approach differs from traditional vaccines and from the newer messenger RNA approach.
Staff Writer Michael Krey contributed to this article.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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