Things can change quickly in the stock market, especially in the volatile biotech industry. In early 2020, Inovio Pharmaceuticals (INO 2.83%) was considered a leader in the hunt for a coronavirus vaccine. Had things gone according to plan, the stock could have ended up much like Moderna, a company that had no products on the market but whose COVID-19 vaccine became highly successful.

Alas, Inovio was not so fortunate and although the biotech hasn't given up on its coronavirus project, things don't look too promising. Is there any hope left for investors?

Inovio's hopes in the COVID-19 market

Inovio Pharmaceuticals encountered regulatory headwinds that substantially delayed its efforts to develop an effective coronavirus vaccine. Now, the biotech has refocused its strategy on the heterologous booster market. This plan makes sense. Although vaccination rates vary across countries, a substantial percentage of the world's population has already received at least one dose of a vaccine.

Even if Inovio's candidate, INO-4800, is approved for primary vaccination, its prospects would be limited. But if COVID-19 indeed becomes endemic, millions of people will seek to get vaccinated seasonally -- just like the annual flu vaccine. But how good are Inovo's chances in the booster market? At this point, it is hard to say.

The company recently reported results from a clinical trial conducted by its Chinese partner. The data showed that INO-4800 administered to patients three or six months after a primary vaccination series resulted in an increase in T-cell immune response.

Inovio is discussing the best way to move forward -- and eventually, obtain regulatory authorization or approval for INO-4800 in the booster market -- with global regulatory bodies. These talks could take a long time. Even if Inovio comes to some regulatory agreements, it will likely have to produce more positive results from clinical trials. Accounting for the potential of clinical or regulatory roadblocks, it is hard to be enthusiastic about Inovio's chances.

That's especially the case when considering that plenty of other companies are already battling for supremacy in this market. 

Reducing expenses could help, but by how much?

Funding is always an issue for clinical-stage biotechs. Developing innovative therapies isn't cheap, and with no products on the market, these companies have to raise money.

Sometimes, they resort to dilutive financing, a necessary evil for many biotech companies. Inovio Pharmaceuticals did this in January 2021 by issuing millions of new shares of its common stock in return for gross proceeds of about $173 million.

More recently, Inovio Pharmaceuticals announced expense-reducing measures to extend its cash runway through the third quarter of 2024. These measures will include reducing its workforce. This may be a step in the right direction for a company that generates little revenue and is consistently unprofitable. But it will mean little unless the company manages to launch products on the market or, at the very least, successfully blow investors out of the water with solid results from clinical trials.

We have already seen that Inovio's hopes in the COVID-19 market are uncertain. The company's most important candidate other than INO-4800 is its DNA vaccine VGX-3100, which it is developing to treat HPV-associated cervical dysplasia (a precancerous condition). Inovio Pharmaceuticals plans on releasing data from various clinical trials later this year, and perhaps it will do so for its ongoing phase 3 clinical trial for VGX-3100. But this product has already produced results from a late-stage study -- and the data was mixed.

Of course, that does not mean VGX-3100 will suffer the same fate this time around, but the results will have to be impressive to positively impact its stock price. The most important thing isn't short-term drivers, but whether Inovio can earn approval for VGX-3100.

The U.S. Food and Drug Administration informed the company that its ongoing study for this product likely wouldn't be enough to support an eventual approval, which means this candidate is still very far from launching.

This stock is not worth the risk

Inovio's decision to switch to the COVID-19 booster market was wise, and the company's cost-cutting efforts will help. However, there are too many uncertainties surrounding its coronavirus efforts and VGX-3100, one of its leading non-coronavirus candidates. The biotech will need more than its recent appointment of a new Chief Medical Officer, Michael Sumner, to turn things around.

In short, Inovio Pharmaceuticals' stock looks too risky, so investors should only observe from a safe distance.