Inovio Pharmaceuticals(INO 2.80%) was an early star in the coronavirus vaccine race. In the first half of 2020, its shares soared more than 700%. But the company fell behind in its development timeline. One major hurdle was a partial clinical hold on one of its trials. And the stock's performance has struggled since. It's down more than 80% from its 2020 peak.
The biotech company's troubles aren't over. Inovio during its earnings report last week said it was halting enrollment of its vaccine trial to update the endpoint. This will once again lengthen the development timeline -- and delay potential commercialization. But Inovio also reported one very positive detail. Could it be a silver lining in the company's dark cloud? Let's find out.
Image source: Getty Images.
A partial clinical hold
First, a little background on Inovio's work. The company is developing a DNA vaccine. It uses a proprietary handheld device called Cellectra to deliver optimized DNA plasmids directly into the body through electrical pulses. In the fall of 2020, the U.S. Food and Drug Administration (FDA) placed the company's phase 2 and phase 3 trials on partial clinical hold before they began. The FDA had questions about the trial and about the Cellectra. The agency has since lifted the hold.
At the same time, the U.S. government halted planned funding of one of Inovio's trials due to the number of vaccines already on the market. Inovio forged ahead, with plans to hold trials primarily outside of the U.S. Its phase 3 trial is taking place at sites around the world, including Colombia, Mexico, and India.
During Inovio's earnings report, it said its investigational vaccine showed declines in antibody levels against the omicron coronavirus variant. Vaccine leaders Pfizer and Moderna have also reported a decrease in antibody levels against omicron. So, this is a common problem for vaccines designed to fight the original coronavirus.
Now, Inovio aims to change the goal of its trial. It wants to show that its candidate -- like the vaccines of Pfizer and Moderna -- prevents severe disease. The original endpoint was to demonstrate prevention of illness. This, as I mentioned above, means another delay for Inovio. To start with, the company said data from the trial won't be available in the first half of this year as earlier planned.
A silver lining?
Where is the silver lining within this cloud? In this detail: Inovio says its vaccine candidate maintains "robust T cell responses" against omicron and all of the variants that have come up so far. T cells are another crucial part of the immune system's toolkit against viruses. Research has pointed to the importance of T cells in the coronavirus fight, for two reasons. They tend to stick around at high levels for a longer time than antibodies. And variants have been less likely to escape vaccines that spur T cell responses.
This is definitely a positive for Inovio. And, eventually, the company may produce a very efficacious vaccine. But the key word here is "eventually." Right now, Pfizer and Moderna already dominate the market. And they are advancing quickly on updated vaccines. Even Novavax -- a latecomer to the market -- already launched a phase 1/2 trial for a combined flu/coronavirus vaccine.
So Inovio faces significant competition now and in the years to come. Inovio could gain some market share if efficacy is strong. Still, it's difficult to imagine how the company might be able to carve out significant market share considering this situation.
And not surprisingly, due to the investment in clinical trials for the vaccine, Inovio's losses have deepened. The company reported a net loss for the fourth quarter of last year of $106 million. That's compared to a loss of $24.3 million in the year-earlier period. Research and development spending tripled to more than $92 million.
The company's capital resources haven't changed drastically from last year. Cash and equivalents total about $401 million, down from $411 million.
Still, this combination of a lengthier timeline to market, more advanced competition, and a deepening loss is enough to make me very cautious about this stock. So, yes, the T cell data is absolutely a bright spot, and makes Inovio worth watching. But I would avoid buying the stock -- at least until Inovio moves closer to the vaccine race finish line and we have some clues about potential market share.
