It's been a rough 12 months for Inovio Pharmaceuticals (INO -2.98%). In the past year, shares of the company have declined by 35% while the S&P 500 has risen 30%. The main reason for this abysmal showing was Inovio's inability to keep up with some of its peers, such as Moderna, in the race to develop a coronavirus vaccine.
However, the biotech recently announced some encouraging regulatory news on that front. Let's look into the latest developments regarding Inovio's attempt to market its investigational coronavirus vaccine, INO-4800, and whether it is worth purchasing shares of the vaccine maker today.
Gearing up for a late-stage clinical trial
In September 2020, Inovio announced that the U.S. Food and Drug Administration (FDA) had placed its planned phase 2/3 clinical trial for INO-4800 on partial clinical hold. Regulators had concerns regarding Inovio's proprietary Cellectra 2000 device, which it uses to administer the vaccine. These concerns were not related to the vaccine's safety or efficacy. The FDA lifted the clinical hold on the phase 2 portion of the trial late last year, which allowed Inovio to move forward with this part of the study.
However, the phase 3 portion remained under clinical hold, meaning Inovio was unable to conduct a late-stage study in the U.S. -- until now. On Nov. 9, the company announced that the agency had decided to remove the clinical hold on the phase 3 portion of this clinical trial after reviewing all the data and information the biotech provided. Inovio is now free to conduct a phase 3 clinical trial for INO-4800 in the U.S., but what does this mean for investors?
Is a comeback in the cards for Inovio?
Due to its regulatory troubles in the U.S., Inovio and its partner, Advaccine Biopharmaceuticals Suzhou, have sought to conduct a phase 3 clinical study for INO-4800 elsewhere. The two biotechs have received the green light in India, Brazil, Colombia, the Philippines, and Mexico. With the FDA lifting the clinical hold on its phase 3 study, they can now add the U.S. to that list.
The two companies plan on running this global clinical trial to test the safety and efficacy of two doses of INO-4800 administered one month apart. Although vaccines for COVID-19 are now widely available in the U.S., that's not the case everywhere. This market remains underpenetrated in many third-world nations. Inovio is hoping to tap into this market if INO-4800 earns regulatory approval.
However, there is still a long road ahead for the company. INO-4800 could flunk in this phase 3 study, and even if it is successful, it is unlikely to hit the market before 2023 at the earliest. And when it does, it will be entering a very competitive market. The roster of companies fighting for dominance in this space -- or that could join in before Inovio -- includes Pfizer, Moderna, AstraZeneca, Johnson & Johnson, Novavax, and Ocugen.
Other candidates are in the works
Inovio's strategy to go after underserved markets may sound like a good move, but no one knows what the landscape will look like by the time it has a chance to do so. In short, the company's prospects in this space look very uncertain. Naturally, INO-4800 isn't the only product in Inovio's pipeline. The company is currently working on other candidates.
Its most advanced program is VGX-3100, an investigational treatment for cervical dysplasia, a human papillomavirus (HPV)-associated precancerous condition. In my view, VGX-3100 looks somewhat promising. Cervical dysplasia is a condition that affects hundreds of thousands of people every year in the U.S. and Europe, and it can only be treated by an invasive surgical procedure, according to the company.
In March, Inovio announced positive data from a phase 3 study for VGX-3100 in cervical dysplasia patients at week 36 after treatment. The company plans to announce more data by the end of the year, after a total of 18 months of follow-up with this patient population since they last received the treatment.
The company is also enrolling candidates for another phase 3 study for VGX-3100. More positive results could send the company's shares soaring through the roof. But as per usual with clinical-stage biotechs, investors should exercise caution. Negative results or regulatory setbacks, particularly relating to INO-4800 or VGX-3100, could again sink Inovio's shares, especially considering it currently has no products on the market.
The vaccine maker remains a risky bet -- even after the FDA's decision to lift the clinical hold on the company's phase 3 study for INO-4800. That's why most investors should stay away from Inovio, as there are plenty of other excellent biotech stocks to consider.