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Why Inovio Pharmaceuticals Stock Is Jumping Today

By Prosper Junior Bakiny – Sep 14, 2020 at 11:25AM

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No news is good news for this biotech company.

What happened?

Shares of Inovio Pharmaceuticals (INO 2.68%) are up by 7.6% as of 11:59 a.m. EDT on Monday, after rising by as much as 9.1% earlier in the day. The biotech didn't report any news but is probably benefiting from an overall stock market rebound. 

So what

All three major U.S. market indexes experienced sharp drops over the past week-and-a-half, with the tech-heavy Nasdaq Composite declining by nearly 10% from Sept. 2 to Sept. 11. Inovio's stock had already been under pressure before these developments. But with the broader market getting a lift today thanks to positive news regarding a potential COVID-19 vaccine (among other things), it isn't surprising that Inovio is benefiting, as well.

With that said, the biotech will continue to be highly volatile moving forward. Inovio said it would kick off a phase 2/3 clinical trial for its experimental coronavirus vaccine, INO-4800, sometime this month.

Man on a ladder drawing an upward pointing graph on a board.

Image source: Getty Images.

Once the company formally announces the initiation of this study, its shares will likely jump. However, other companies have already started phase 3 clinical trials for their candidates. Inovio could somehow catch up to its peers, and even if it doesn't, the world will need more than just one vaccine.

In the long run, the biotech could still benefit from this opportunity, especially if its candidate is more effective than others. But investors have lost a bit of faith in Inovio's chances since it first released unimpressive interim results from its phase 1 clinical trial for INO-4800. The company has a long road ahead before it can overshadow some of its peers in the coronavirus vaccine race again. 

Now what

Inovio has no approved products on the market at the moment and a valuation that's largely tied to its COVID-19 programs. Given these factors, it's probably best for risk-averse investors to stay away from this biotech stock for now. 

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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