Investors ought to be even more careful where they put their money in times like these. It's more important than ever to make highly selective investment decisions with a struggling stock market, challenging economic issues, and dangerous geopolitical tensions.
Sure, many companies that have recently gotten hammered on the market will eventually rebound. But for others, the future still looks murky. Let's look at two biotech stocks that fall into the second category: Inovio Pharmaceuticals (INO -0.34%) and Vaxart (VXRT -7.23%). Here's why it could be best to stay away from these vaccine makers right now.
1. Inovio Pharmaceuticals
Inovio Pharmaceuticals encountered a series of headwinds in its quest to market its experimental coronavirus vaccine, INO-4800. Recently, the company discontinued a phase 3 clinical study for this candidate. Inovio argued that since there is now a lower incidence of severe cases of COVID-19 worldwide, its planned phase 3 study would require a larger trial size and more funds to complete than it had originally anticipated.
Inovio Pharmaceuticals is now looking at the coronavirus heterologous booster market. Heterologous boosting refers to administering a booster dose of a vaccine three to six months after administering a two-dose course of a different vaccine.
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Inovio Pharmaceuticals thinks this strategy could be highly profitable if COVID-19 becomes endemic. Interim data from a clinical trial conducted by Inovio's partner, China-based Advaccine Biopharmaceuticals Suzhou, showed that INO-4800 increased T cell immune response when administered as a booster three to six months after initial inoculation. T cells are white blood cells that are critical to a patient's immune system.
Inovio is currently in talks with various regulatory bodies worldwide regarding the path forward for INO-4800. But there remains plenty of uncertainty for the company in this market. No one knows what regulators will require of Inovio, nor do we know when it will eventually launch INO-4800. Further, there are already a host of other vaccines in circulation, and INO-4800 must prove to be at least as effective as those to even hope to make a dent in this space.
To make matters worse, Inovio's leading non-coronavirus pipeline program doesn't look like a slam dunk either. This candidate is called VGX-3100. It is a potential DNA vaccine for treating HPV-associated cervical dysplasia, which is a precancerous condition. Inovio has already completed a phase 3 trial for VGX-3100, but its results were not as positive as one would have hoped.
The company is running another late-stage study for VGX-3100, but per the recommendation of health industry regulators in the U.S., Inovio will have to run at least one other trial before filing for regulatory approval for this investigational vaccine. Inovio currently has no products on the market, it generates little revenue, and it is consistently unprofitable.
That, coupled with the uncertainty regarding its two leading candidates, does not inspire confidence. That's why investors might want to stay away from this biotech for now.
2. Vaxart
Vaxart is another company looking to jump into the coronavirus vaccine market. This biotech has several aces up its sleeve. First, its candidate is an oral vaccine. Vaxart could carve out a niche for itself in the COVID-19 vaccine space because many people would prefer an oral tablet over a needle. Second, there is evidence that Vaxart's candidate can produce antibodies where it matters most, namely in mucosal sites where the infection happens.
Third, according to the results of a poll conducted by the research analytics company Harris Poll, 73% of Americans would welcome COVID-19 vaccine options that are developed from more "traditional" methods. This poll was commissioned by Ocugen, whose candidate, just like Vaxart's, is "traditional" in this sense. Some of the current leaders on the market are mRNA vaccines, which are relatively new to the scene. Pfizer's Comirnaty was the first-ever mRNA vaccine to receive regulatory approval from the U.S. Food and Drug Administration (FDA).
For all those reasons, Vaxart's potential coronavirus vaccine looks promising.
However, it is currently in a phase 2 clinical trial. It still has to complete a late-stage study and obtain regulatory approval. How long will that take? Phase 3 studies generally last between one and four years. Assuming the company starts one today, it won't end until mid-2023 in the best-case scenario. Then it will take another six to 10 months before obtaining regulatory approval from the FDA. In other words, Vaxart's candidate won't hit the market until 2024 at the earliest, and that's a generous estimate.
Of course, what matters most is whether it is as effective (or more) than competing vaccines. But we don't know that yet, and it could still run into various clinical and regulatory headwinds, something biotech investors always have to factor into the equation. Lastly, Vaxart also does not have any products on the market and is not profitable. It is best to avoid this company, especially in the current environment.
