To say that Inovio Pharmaceuticals (INO -2.26%) is a volatile stock would be an understatement. In the past year, its share price has risen to highs of more than $30, and it has also hit lows of just over $3. Depending on when you bought and sold the stock, it could have easily made you rich or destroyed your portfolio.
Today, it's still in the COVID-19 vaccine race even though it's trailing the big leaders, Moderna and Pfizer. But is hope for its vaccine candidate, INO-4800, worth investing in Inovio? Or is there simply too much risk given the lack of other products to fall back on if it fails? Let's take a closer look at the company's business, its latest developments, and whether this stock, which has fallen 60% in the past six months (while the S&P 500 has risen 17%) is a good buy today.
Where INO-4800 is today
Last month, Inovio released data from its phase 1 trials relating to INO-4800. It reported that 78% of the people in the study who took 1.0 mg doses and 84% of those who took 2.0 mg doses of the drug demonstrated neutralizing antibodies. And through eight weeks, there weren't any serious adverse events among the participants. However, analysts were mixed on just how good the results were, as the potency could have been stronger.
Although INO-4800 is far behind Moderna and Pfizer's vaccines, it has an advantage in that the drug does not need to be frozen -- even during transportation. It can be stored at room temperature for at least a year, and even at 37 degrees Celsius, it can last over a month. By comparison, Moderna's vaccine needs to be stored at minus 20 degrees Celsius while Pfizer's has to be at an ultra-cold minus 70 degrees Celsius. From a logistical standpoint, Inovio's vaccine would be much easier to distribute and transport, which could make it the more popular option for countries around the world.
But it still could be weeks or months before investors get meaningful results on the drug's late-stage results as on Dec. 7, 2020, the company announced it dosed its first participant in its phase 2/3 trials.
Earlier this month, on Jan. 4, Inovio also announced it entered into a collaborative agreement with Chinese company Advaccine Biopharmaceuticals Suzhou. Advaccine will own the exclusive rights to manufacture and bring INO-4800 to market within Greater China. The deal involves a $3 million upfront payment to Inovio that could rise to $108 million if certain milestones are hit.
There's definitely some promise for Inovio's COVID-19 vaccine, even if it is far behind the leaders. But investors may not feel comfortable putting all their eggs in one basket, especially given how volatile Inovio's stock has been in the past year. Next, let's look at what else the company is working on and how strong its numbers are today.
What does the business look like beyond just COVID-19?
Inovio has many products in its pipeline, including ones that treat infectious diseases such as Ebola and HIV. It also has multiple cancer-fighting drugs that are currently in phase 2. The area where the company has made the most progress right now is in its portfolio of human papillomavirus (HPV) drugs, with three different products in phase 2 or later.
The drug that's furthest along is VGX-3100, which it's working on with Chinese biotech company ApolloBio. According to analysts, the drug could generate over $600 million annually in worldwide sales by 2024 if it comes to market. That would be a significant increase from what the company is generating in sales today. In the nine-month period ending Sept. 30, 2020, Inovio reported revenue of just $1.8 million.
Right now, things are looking good for VGX-3100. In December, Inovio reported results from phase 2 trials that showed solid efficacy, with the drug resolving 11 of 22 cases of HPV 16 and HPV 18 related to pre-cancerous anal lesions in participants just six months after their treatments began. Inovio is going to pursue securing rare and orphan disease designation for the indication, and it is also planning for phase 3 trials.
There's plenty of hope that even outside of INO-4800, Inovio could still have a great product with VGX-3100. And with many other drugs in its pipeline, this is much more than just a COVID-19 investment.
Is Inovio stock a buy today?
Inovio's stock could become a great buy if INO-4800 is successful and the Food and Drug Administration (FDA) approves the vaccine. But the problem is that's not a guarantee. Even VGX-3100 isn't a sure thing as early-stage trials don't involve many participants. It's still too early to tell how successful the drug will be.
The severe volatility in the healthcare stock means that it's not suitable for risk-averse investors, as news relating to these drugs will undoubtedly have a massive impact on where Inovio's shares will go this year. In September, when the company said it was putting its vaccine trials on hold because the FDA had questions about the drug, its shares cratered as much as 33% on the day the news broke.
If you're OK with the risk, the stock may be worth picking up given that it hasn't been this cheap for a while; the last time Inovio's shares were regularly trading below $9 was back in April. And so, unless the outlook for the company gets worse, the stock could prove to be stable around this price point. Inovio looks to be a promising investment, but this is certainly not a stock that investors can just buy and forget about.