Please ensure Javascript is enabled for purposes of website accessibility

Why Inovio Pharmaceuticals Inc. Stock Bolted Higher in August

By George Budwell - Updated Sep 6, 2018 at 9:34AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The vaccine maker has been achieving steady progress with its lead candidate.

What happened

Shares of the clinical-stage vaccine-maker Inovio Pharmaceuticals (INO -5.03%) gained 33% last month, according to data from S&P Global Market Intelligence. What triggered this sizable move northward? 

Inovio's surge last month was largely sparked by the company's second-quarter earnings report. The headline was that the company's experimental cervical dysplasia vaccine, VGX-3100, continued to make steady progress in its ongoing late-stage trial during the second quarter. Inovio reported that 70 clinical trial sites across 16 countries were open, and that figure was expected to rise to 90 sites globally by the end of August. 

A vial containing a fluid sitting in front of a syringe.

Image source: Getty Images.

So what

Apart from the fact that this lead vaccine candidate is Inovio's best chance to become a commercial-stage operation in the near future, VGX-3100 is expected to be a noteworthy revenue generator for the company going forward. For instance, a recent industry report by research firm EvaluatePharma noted that VGX-3100 could rake in $622 million in sales in 2024. That sales estimate is appreciably greater than Inovio's current market cap of $506 million. As such, VGX-3100 stands to be a key value driver for the biotech in the years ahead.  

Now what

While this clinical update is certainly a positive, Inovio still has a long way to go before reaching the regulatory filing stage for its lead vaccine candidate. VGX-3100's pivotal trial, after all, isn't scheduled to produce top-line results until 2020, according to clinicaltrials.gov.

Compounding matters, Inovio doesn't have the financial runway to see it all the way through to this key clinical catalyst. As proof, Inovio exited the second quarter with cash and cash equivalents of $95.6 million. That won't be sufficient to fund the company's ever-growing clinical pipeline for the next two-plus years.

The point is that the biotech may have to keep diluting shareholders in order to reach its next major clinical milestone with VGX-3100. This promising biotech therefore might be best viewed as a compelling watch-list candidate, rather than an outright buy, for the time being. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Inovio Pharmaceuticals, Inc. Stock Quote
Inovio Pharmaceuticals, Inc.
INO
$1.89 (-5.03%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.