A year ago, Inovio Pharmaceuticals (NASDAQ:INO) held a leading position in the coronavirus vaccine race. The clinical-stage biotech company launched a clinical trial only a month after Moderna. Today, Moderna's vaccine has vaccinated millions of individuals worldwide. And Inovio faces its biggest challenge yet.

Last week, the U.S. government told Inovio it would no longer fund the company's upcoming phase 3 trial. The decision is due to the broad availability of coronavirus vaccines. So far, the U.S. has granted Emergency Use Authorization (EUA) to Moderna, Pfizer, and Johnson & Johnson (J&J). Inovio's shares sank more than 20% in one trading session on the news. Now, we might wonder if there's any hope for this potential latecomer to the coronavirus vaccine market. Let's take a closer look.

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The first setback

This isn't Inovio's first setback. The U.S. Food and Drug Administration (FDA) in the fall placed the phase 2 and 3 portions of the trial on partial clinical hold pending questions. The FDA lifted the hold on phase 2 in December but maintained the hold on phase 3.

Inovio's phase 2 study is ongoing. Last week, the Department of Defense said the decision to end phase 3 funding "results from the changing environment of COVID-19 with the rapid deployment of vaccines" and "is not a reflection of the awardee or product."

The Department of Defense will continue to fund phase 2. But Inovio will have to find a solution if it hopes to bring its candidate to the next stage of testing. Inovio says this solution is conducting a phase 3 trial with partners outside of the U.S. The company plans to work with Advaccine of China and the International Vaccine Institute.

Before that can happen, though, Inovio must generate promising data from its phase 2 trial. The company completed the enrollment of 400 volunteers in that trial in the first quarter. In the most recent earnings report, Inovio said it expects to complete phase 2 in the second quarter.

At the same time, Inovio is working on a "pan-covid" vaccine. The company uses its SynCon gene optimization algorithm to analyze data from today's variants. Then, it creates a synthetic spike protein that would result in protection against variants of today and tomorrow. This program is early-stage. If it's successful, we might expect an eventual vaccine to be used in a post-pandemic setting.

Revenue potential

So, how does all of this translate into revenue potential? First, let's consider the phase 2 candidate. The U.S. has already ordered enough vaccine doses from Pfizer, Moderna, and J&J to cover all Americans. It's clear that any newcomer to the U.S. market this year will struggle. And Moderna expects to launch a booster to better handle strains this fall -- so even that market may not offer much room for others.

Internationally, latecomers may do well if they enter the market in the coming weeks. Some European countries, for instance, are struggling with vaccine shortages. But later in the year, today's vaccine leaders may fulfill more and more European demand. The European Commission recently increased its Pfizer order to a total of 600 million doses this year. It's a two-dose vaccine. That, plus orders of other currently marketed vaccines may cover the European Union's 447 million residents.

All of this means Inovio's potential coronavirus vaccine won't find it easy to carve out market share in the U.S. or international markets.

But there is a bright spot investors should watch. And that's Inovio's pan-covid candidate. A vaccine that could handle all coronavirus strains would be a game-changer. If Inovio makes this work -- and if it manages to do so ahead of competitors -- the product could represent billions of dollars in revenue. Inovio also has more than a dozen other candidates in the pipeline for indications including cancer and infectious diseases. And several are in phase 2 studies. Those are other programs to watch. So, there is hope for Inovio over the long term.

Time to invest?

Still, it's too early to consider investing in this biotech stock. Right now, Inovio's stock price is very dependent on news from its coronavirus vaccine program. Here's a look at performance over the past year. We can see gains in the early days of clinical development -- then declines as of July. That's when rivals Pfizer and Moderna moved closer to late-stage trials.  

INO Chart

INO data by YCharts

Inovio's biggest chance for market share is the pan-covid candidate. But it's not clear how long it will take Inovio to bring a pan-covid candidate through clinical trials. So, investors could be in for months of dramatic share movements with each bit of vaccine program news.

Inovio's one to watch. But until we have clinical trial data from the pan-covid candidate or compelling news from another pipeline program, it's best to watch from afar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.