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Partnerships Have Been a Boost for Inovio

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Inovio Pharmaceuticals  (NASDAQ: INO  ) and Roche (NASDAQOTH: RHHBY  ) announced last month that they have reached an agreement to develop and commercialize multi-antigen DNA immunotherapies. Invovio is a development stage biotechnology company working toward developing synthetic DNA-based vaccines, with some pipeline products in phase 2 and nearing phase 3. The partnership will focus on developing INO-5150 for prostate cancer and INO-1800 for hepatitis B.

The business
Inovio specializes in developing synthetic DNA-based vaccines and therapeutics that help prevent and treat cancers and other infectious diseases. The company has a rich early-stage pipeline with multiple drugs in ongoing phase 1 and 2 clinical trials.

Conducting several trials can be a daunting task for any development stage biotechnology due to the large capital requirements. The best solution to this predicament is to find good development partners. These partnerships serve a number of different purposes. They not only divide financial burden of clinical trials but also increase investor confidence in the viability of candidates. A development partnership with a large pharma company also assures a ready-made buyer for candidates and even the company itself. Therefore, it's a big plus point for Inovio that 10 of its 13 studies are being funded by collaborators.  

Roche partnership
Last month, Inovio announced that it has partnered with Roche for the developmental vaccines for hepatitis B and prostate cancer. Under the partnership agreement, Roche has acquired exclusive license for DNA-based vaccine INO-5150 and INO-1800. The license also extends to the CELLECTRA electroporation technology used for the delivery of these vaccines. The health care giant will also have the option to license more vaccine opportunities from Inovio with a collaborative research program in oncology.

Future partnerships
At a recent investor forum, Inovio's CEO Joseph Kim hinted toward a future partnership or licensing out of their products for further development and commercialization. The company is trying to spread the costs and risks with R&D grants, non-dilutive partner funding, and sponsored clinical trials. This is an excellent strategy for any development stage biotechnology company and should have a positive impact on Inovio's valuations.

During the presentation at the Bio Investor Forum, Kim seemed optimistic about Inovio's pipeline. He pointed out that the INO-1400 for breast/lung cancer could prove to be the universal cancer therapy and will have a huge revenue potential if approved. Quoting the closing words of the CEO himself, "We have the cash, we have the technology we have the validating partnership. We are the future of immune therapy." Certainly an optimistic statement that the company will have to back-up with positive clinical trial results.

Bottom line
Some of the largest pharma companies are paying huge sums to replenish their development pipelines. The increased popularity of development stage biotechnology companies is reflected in the stellar performance of NASDAQ Biotechnology Index, which is up 46% in the last twelve months.

However, investing in development stage biotechnology companies can be risky because only a small portion of promising candidates actually make it to store shelves. An effective method of screening out winners is to look for companies which have captured the interest of other major health care players. Inovio fits this bill with 10 partnered trials out of a total 13 ongoing clinical trials. The Roche partnership is a good long-term prospect because it will strengthen the financial position of Inovio and also provide it with a strong commercialization partner for INO-5150 and INO-1800.

Investors must do their own due diligence before making any long term investment in Invovio and should consider the downside risk of its candidates failing to succeed in clinical trials.

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Read/Post Comments (2) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 24, 2013, at 4:39 PM, aghast wrote:

    Balanced article... In addition to the significant risk management & non dilutive benefits of Inovio's partnered programs... the company also has an "Ace in the hole" non-partnered program.... i.e. its Cervical dysplasia ph II. therapeutic trial for women with CIN 2/3 or CIN 3 associated with HPV type 16 or HPV type 18.... expect trial results by mid 2014. I believe this is the only Ph II. therapeutic program currently underway for HPV,.. .and positive results in this study alone would like drive a partnership & resultingly a significant revaluation. What's amazing about Inovio is that the company is demonstrating (albeit early) best-in-class results in an increasing number of a block-buster areas of prevention and therapy. Inovio stands as a significant threat to the establishment as their vaccines trials progress... essentially they've figured out how to effectively engineer immunotherapies for the next generation of vaccines.... Day-traders and short sellers doing their best to hold the stock back... but the trial results & ensuing partnerships will eventually silence them... The talking heads (e.g. A. Feurenstein) will have to move onto their next big story, but will never admit they were wrong on Inovio... People often scoff about these small companies... always saying their valuations aren't justified,... Later they complain that they just missed the next Microsoft, Google... People... for once... stop listening to the Talking Heads and do your ***own*** due dilligence!!

  • Report this Comment On October 24, 2013, at 4:39 PM, caracass18 wrote:

    You are pumping old news on a 34 year old failed company that was born on the Vancouver exchange. The price tanked after the Roche partnership announcement. Inovio only received Roche's pocket change, $10 million, or .04 per share. Besides, Inovio has had partnerships in the past. They were all terminated. Inovio had partnerships with J & J, Chiron, Chrontech, Vical .... What happened to them. Once the partner gets a closer look under the hood or Inivio's "technology" fails, the partners run for the door. How soon before Roche terminates the partnership?

    In it's 34 year existence, Inovio hasn't completed even one Phase 3 trial. The stock price has spiraled down from $50.00 to 50 cents after a 1 for 4 reverse split.

    Why on earth would you choose to pump the dog stock of the century?

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9/30/2016 2:25 PM
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