Inovio Pharmaceuticals (NASDAQ:INO) is on a lot of investors' radar screens these days. That's not surprising since the small biotech ranks as one of the leaders in the race to develop a vaccine for novel coronavirus disease COVID-19. Anyone who bought the stock at the beginning of this year and held on has now nearly quadrupled their initial investment. 

You might be thinking, "Wow, if I only could have bought this stock a lot sooner when it first went public. Just imagine the amount of money I could have made." The good news is that you don't have to use your imagination. I have the answer for you. The bad news is that the amount probably isn't what you might expect. If you had invested $10,000 in Inovio's initial public offering (IPO), here's how much money you'd have now.

Syringe on top of $100 bills

Image source: Getty Images.

It's complicated

Before we answer the big question, it's important to understand what is meant when we refer to Inovio's IPO. Unfortunately, it's complicated. Inovio hasn't always been Inovio. It began operations in 1983 and was then known as Biotechnologies & Experimental Research. 

In 1994, the company changed its name to Genetronics and went public through a share exchange with Consolidated United Safety Technologies, which was already listed on the Vancouver Stock Exchange. To muddy the waters even more, Consolidated United Safety Technologies was originally known as Concord Energy, with the business starting in 1979.

Three years after combining with Consolidated, Genetronics moved its stock listing from the Vancouver Stock Exchange to the Toronto Stock Exchange. In December 1998, the company listed its shares on the American Stock Exchange, now known as the NYSE American exchange. Genetronics change its name to Inovio in 2005 with its acquisition of Norwegian gene delivery technology company Inovio AS.

To simplify all of this, let's just use Inovio's first day of trading on a U.S. stock exchange for our calculations. And we won't delve into the complications caused by the biotech's stock splits through the years. 

You could have purchased shares of what would later be known as Inovio on Dec. 8, 1998, for a split-adjusted price of $60 per share. With an initial investment of $10,000, you would have been able to buy 166 shares (and had $40 left over since you couldn't buy a partial share). 

Fast-forward to today. Those 166 shares would now be worth... a little over $1,700. If you had taken the $40 remaining that you couldn't use to buy Inovio and stuck the cash in a sock drawer, it would have been a better investment than buying Inovio stock.

Behind the disappointment

Why has Inovio been such a disappointment for early investors? Mainly because the company has been in business for decades and doesn't have an approved product on the market. Inovio has been unprofitable since it was founded. As of the end of 2019, the company had amassed an accumulated deficit of nearly $740 million. 

When a company goes for such a long period of time without achieving profitability, it has to raise cash to keep the lights on. That usually requires either taking on debt or issuing new shares. Inovio has done both.  

Issuing new shares to bolster its cash position has especially taken a huge toll on the biotech stock through the years. Just look at the following chart, which illustrates how Inovio's market cap has risen tremendously while its share price has plummeted.

INO Chart

INO data by YCharts

This chart shows just how much dilution hurts shareholders. Of course, had Inovio not issued more shares and diluted the value of existing shares, it probably wouldn't be in business today.

A brighter future?

Although early investors in Inovio haven't fared well, it's possible that someone buying the stock today could have better chances of success. Inovio's pipeline includes several promising candidates.

The company's experimental COVID-19 vaccine has attracted the most attention recently. Last week, Inovio completed enrollment in its phase 1 clinical study of INO-4800. It expects to report results from this study in June.

Inovio's lead candidate, though, is immunotherapy VGX-3100. The biotech reported positive interim results in March from two phase 2 studies evaluating VGX-3100 in treating anal dysplasia and vulvar dysplasia, precancerous conditions caused by human papillomavirus (HPV) types 16 and 18. Inovio has a couple of late-stage studies of the drug under way and anticipates reporting results from one of them later in 2020.

The company also has other immunotherapies and vaccines in its pipeline. They're all in either early or mid-stage clinical testing, though. It will be several years before any of them could potentially win regulatory approval.

Could Inovio turn a $10,000 investment today into a fortune over the next decade? Maybe. But with clinical-stage biotech stocks, it's important not to put money at risk that you're not willing to lose. As Inovio's history shows, the potential for loss is real. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.