What happened

Shares of the developmental vaccine and immunotherapy company Inovio Pharmaceuticals (INO 0.36%) fell by as much as 15.8% right out of the gate Thursday morning. This double-digit decline marks a sharp trend reversal for the small-cap biotech.  

Following an investor presentation last Monday, Inovio's shares jumped by a remarkable 83.7% over the first three trading days of the week. Investors seemingly piled into this biotech stock this week in the hopes of getting in before the company lands a large grant for its COVID-19 vaccine candidate, INO-4800.  

Inovio's shares have battled back from this rough start to Thursday's trading session, but they are still down by 5.4% as of 10 a.m. EDT.

A red arrowing illustrating a downward trend.

Image source: Getty Images.

So what

Not everyone was impressed by Inovio's investor presentation, however. Ahead of the opening bell today, Roth Capital analyst Jonathan Aschoff reaffirmed his sell rating and $11 price target on the biotech's stock. Aschoff, in effect, is calling for a hefty 40% correction relative to where Inovio's shares closed on Wednesday. This bearish call appears to be the catalyst that sent the biotech's stock spiraling downward in early morning action today.

In his note, Aschoff said INO-4800 "has virtually no chance" of winning out in a crowded field of competitors. He also said Inovio's late-stage HPV cancer vaccine candidate, VGX-3100, is "destined to be a commercial failure." That's a bearish take on the biotech's top two clinical candidates to be sure. As such, it's not surprising to see Inovio's shares taking a breather from their recent rally. 

Now what

Should Inovio shareholders take Aschoff's comments to heart? Clinical-stage biopharma stocks are always a risky investment -- and Inovio's shareholders would be wise to keep that in mind. Failure can occur at myriad steps during product development and commercialization, after all. But that doesn't mean that anyone has a surefire take on the future of Inovio's pipeline. In other words, investors probably shouldn't overreact to this bearish call.