Inovio Pharmaceuticals' (INO 0.53%) stock rose by more than 18.5% as of 2:30 p.m. ET on Wednesday after the company's Q2 earnings results broke the news of its plans to restructure its operations to conserve cash. The biotech will lay off 18% of its full-time employees while additionally reducing its contractor head count by a massive 86%.
Management expects the cuts to lower its operating costs by around 30%. Therefore, it should have enough cash to keep the lights on through Q3 2024. Inovio also announced the appointment of a new chief medical officer, Dr. Michael Sumner, which might be another contributing factor to the gain of its stock today.
Inovio doesn't currently have any medicines approved for sale, and its revenue in Q2 was negligible at less than $1 million. The closest program to commercialization is its coronavirus vaccine, which is in phase 3 trials, though it also has a few other early and mid-stage infectious disease programs in the works, like its Middle East Respiratory Syndrome (MERS) vaccine in phase 2 trials.
Inovio's net loss of $108.5 million in the second quarter means if it doesn't conserve its $348.1 million in cash carefully, it'll go out of business. Management's new plan to cut costs is a plus, because it'll increase the length of the company's runway to get one of its medicines out the door and start bringing in revenue. Furthermore, don't be surprised if research and development (R&D) expenditures on noncore projects end up getting slashed in future quarters.
Inovio's coronavirus vaccine candidate is being evaluated as a booster shot used in combination with the jabs produced by competitors that are already on the market. Investors should get an update on the booster project sometime in Q3.
If the results are favorable, the stock will likely soar, but there's no telling exactly how the trial is going in advance. So this isn't a great opportunity to invest unless you like to gamble.