While many coronavirus stocks soared to record highs over the past year, shares of Inovio Pharmaceuticals (NASDAQ:INO) are down nearly 50% over the past 12 months. The company has not advanced its DNA coronavirus vaccine INO-4800 to commercialization, and generally speaking, its research and development efforts have been a massive disappointment.

Keep in mind that this company announced the discovery of a coronavirus vaccine after a mere three hours of effort during the early days of the pandemic. So what went wrong? 

Man receiving a coronavirus shot at the clinic.

Image source: Getty Images.

What happened

Inovio was one of the frontrunners in the coronavirus vaccine race last June, having published phase 1 clinical data for INO-4800 at around the same time as large-cap biotechs such as Moderna and Pfizer. Shortly after its success, however, the U.S. Food and Drug Administration (FDA) placed a clinical trial halt on the phase 3 portion of the study, citing safety concerns with its vaccine injector. It took until December 2020 for independent researchers to peer review the phase 1 study. On top of that, the company sued its own vaccine contract manufacturer over a supply dispute. 

The delays, amid a global pandemic in which time was of the essence, proved to be devastating. At the time of writing, over 40% of the U.S. population has been fully vaccinated. It is unlikely that INO-4800 would play any role at all in combating COVID-19, at least in the U.S.

Is there any hope left?

On May 10, Inovio published phase 2 clinical data regarding INO-4800. In the study, patients who received the vaccine candidate had superior neutralizing antibody and T-cell response levels than those who took the placebo. The vaccine candidate was well tolerated.

There wasn't much progress to be reported. For starters, patients were not exposed to actual circulating strains of the coronavirus (especially variants of concern). It isn't easy to deduce how surrogate metrics in the study can translate to protection against severe COVID-19. Nearly all of the vaccines on the market offer 100% protection against the latter. 

What's more, Inovio's phase 3 portion of the study is still (inexplicably) halted by the FDA, and has been since last September. This means that Inovio may need to move its phase 3 study abroad and seek regulatory approval elsewhere. Making matters worse, officials from the Department of Defense pulled the plug on funding the study last month.

The company does have over $500 million in cash to cushion any losses. But again, it is uncertain at this point if it can see a return on investment with INO-4800. 

The verdict 

The golden age of investing in Inovio stock is essentially over. When investing in small-cap biotechs, management matters as much as the science. It is totally plausible (as the case with Inovio) for human factors to hamper the rollout of a promising vaccine candidate. Given its research delays, lack of resolution, and regulatory uncertainties, it's best to ignore Inovio stock until the company can get its act back together. 

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.