What happened

Shares of Inovio Pharmaceuticals (NASDAQ:INO) were trading 8.7% higher as of 12:04 p.m. EST on Monday. Those gains came after the biotech announced the initiation of the phase 2 portion of a phase 2/3 clinical study for its coronavirus vaccine candidate, INO-4800. The study will be funded by the U.S. Department of Defense.

So what

A dark cloud had been hanging over Inovio's COVID-19 program ever since September, when the Food and Drug Administration placed a partial clinical hold on its planned phase 2/3 study. Did Monday's news blow the dark cloud away? Not entirely -- but it was definitely a step in the right direction.

Syringe with needle in vaccine bottle

Image source: Getty Images.

The company stated that the phase 3 portion of the clinical trial will remain on partial hold until it satisfactorily answers the FDA's remaining questions regarding its Cellectra 2000; that device uses a technique called electroporation to deliver DNA vaccines like INO-4800 directly into the skin cells of recipients, where they can begin generating an immune response.

Investors were also understandably excited about the news that the Department of Defense had agreed to fund the phase 2 study of INO-4800. Inovio had previously hinted at the potential for securing third-party funding for its coronavirus vaccine program, but the FDA's partial clinical hold had muddied the waters.

Now what

The next potential catalyst for the biotech stock will come when and if the FDA lifts its partial clinical hold on the phase 3 study of INO-4800. Inovio stated that it "plans to resolve the remaining device questions during the conduct of Phase 2 segment and prior to the start of the Phase 3 segment of the trial."