What happened

Shares of Inovio Pharmaceuticals, Inc. (INO -7.86%) were up 12.4% as of 11:32 a.m. EDT on Wednesday. The stock's jump stemmed from the biotech's announcement of its second-quarter results after the market closed on Tuesday.

So what

Inovio is a clinical-stage biotech with no products on the market. The reality is that its financial results in a given quarter don't mean a lot. So why did the stock enjoy such a nice bounce?

Gloved hands hold test tubes. Hand of person in blazer holds white cell phone displaying a question mark.

Image source: Getty Images.

Investors were likely excited to hear about progress for Inovio's phase 3 Reveal 1 clinical study evaluating VGX-3100 in treating cervical dysplasia caused by the human papillomavirus (HPV). The company stated that enrollment is on track in this study, with 70 sites in 16 countries actively recruiting patients.

VGX-3100 presents Inovio's best chance for advancing a product to commercialization. It's the only pipeline candidate that Inovio currently has in phase 3 testing. Once the Reveal 1 study reaches full enrollment, Inovio plans to immediately begin its Reveal 2 confirmatory study. 

If all goes well with these studies and Inovio ultimately wins regulatory approval for VGX-3100, it could have a big winner on its hands. Market research firm EvaluatePharma projects that the DNA immunotherapy could be one of the most valuable experimental vaccines in the biopharmaceutical industry.  

Now what

It's great that Inovio is moving along nicely with its late-stage study of VGX-3100. The problem is that the biotech's studies of the immunotherapy won't fully wrap up until 2020. In the meantime, Inovio doesn't have steady revenue coming in the door and continues to burn through cash.

Inovio does have a remarkably deep pipeline for a clinical-stage biotech. However, these programs are either in phase 1 or phase 2 testing. The only revenue they might generate for Inovio is through collaborations. Unfortunately, this revenue won't be nearly enough to fund the company's operations.

This means that sooner or later Inovio will probably have to raise additional cash through a stock offering. When that happens, the biotech's share price is likely to drop -- just as it has in the past.

Inovio could be a big winner over the long run if VGX-3100 or its other pipeline candidates are successful. But there's no certainty that success will come. Inovio stock will probably be very volatile for a long time to come.