Since reaching an all-time high of $33 per share on June 29, Inovio Pharmaceuticals (INO -3.13%) is down nearly 61%, turning an investment of $10,000 at its peak to just $3,933 as of Oct. 8. Many market participants have joined in the discussion about the plunge, from disgruntled investors upset with the share performance to new investors wondering how to buy the dip. 

As it turns out, Inovio's headwinds show no sign of subsiding and have arguably gotten worse in the coming weeks. Today, let's look at what's going on behind Inovio and why investors should look for safer coronavirus stocks

Red image of a vaccine vial and syringe.

Image source: Getty Images.

Lack of orders

Back in August, Inovio published interim phase 1/2 clinical results (pending peer review) regarding INO-4800, its DNA-based COVID-19 vaccine candidate. In the study, 38 out of 38 participants who received INO-4800 developed overall immune responses against SARS-CoV-2, the virus that causes COVID-19.

On the surface, the data looks fine. The problem arises, however, when one digs deeper and finds that the company has yet to receive a single order for its experimental vaccine from any government anywhere in the world. Moreover, INO-4800 did not appear as a candidate on the list of coronavirus vaccine developers for the U.S. government's Operation Warp Speed back in June. The company did gain entry to the list in late July, but that was for a vaccine study on non-primates.

Oversaturated market

Inovio's progress is in stark contrast to that of its competitors, such as Pfizer (PFE 1.63%) (which is collaborating with BioNTech (BNTX -2.76%)), Moderna (MRNA -2.52%)AstraZeneca (AZN 0.68%)Novavax (NVAX -6.04%)Johnson & Johnson (JNJ 2.58%), and CureVac (CVAC -2.17%), all of which are either negotiating or have already secured more than 1 billion doses' worth of orders for their COVID-19 vaccine candidates from the governments of developed countries worldwide. 

That's not all; these companies will also boast a total production capacity of 7.7 billion doses of their coronavirus vaccines by the end of 2021, subject to approval. Keep in mind, the world only needs between 7.8 billion and 15.6 billion doses of COVID-19 vaccines for complete global immunization (some vaccine candidates require one dose, some two). In reality, the total addressable market for such vaccines would likely be even smaller, as affordability may be a significant issue in immunizing developing countries.

It is also important to note that those 7.7 billion doses are on an annual basis. By the end of 2023, the top eight coronavirus vaccine players would likely be able to address the vast majority of global demand for immunization. Once vaccinated, a patient would not need a subsequent dose for an extended period, effectively cutting out the possibility for manufacturers to generate recurring cash flows. 

The problem gets worse

If that wasn't bad enough, Inovio is also engaged in a legal battle with its contract manufacturer, putting delivery logistics at risk even if INO-4800 succeeds in clinical testing. Moreover, the U.S. Food and Administration (FDA) recently placed a clinical halt to INO-4800's phase 2/3 clinical trial before operations commenced, further delaying progress. 

Takeaway for investors

In its 40-year history, Inovio has never brought an FDA-approved product to the commercialization phase, and the company has accumulated a deficit of over $900 million. 

When a company continuously loses cash, it must raise more money from investors to stay afloat. In just one year, Inovio's total shares outstanding has ballooned from about 100 million to 167.5 million. Notable short-sellers such as Citron Research and Muddy Waters have taken positions against Inovio, further indicating that something may be amiss with the company. Investors looking for coronavirus vaccine stocks may wish to consider Inovio's track record in developing vaccines for global pandemics, and perhaps look for other alternatives in the sector.