Inovio Pharmaceuticals (NASDAQ:INO) discovers and develops synthetic vaccines and immune therapies focusing on infectious diseases and cancers. Here's what you need to know about this stock.

VGX-3100 a big binary event for Inovio
Large pharma interest within the space sets the backdrop for Inovio's pivotal mid-stage data readout for VGX-3100, expected between late June to late July. Delivered through Inovio's electroporation technology, VGX-3100 is indicated as a potential treatment for adult women with biopsy-proven HPV types 16 or 18 associated cervical intraepithelial neoplasia.

We also have to consider Inovio's partnership with Roche (NASDAQOTH:RHHBY), for the development of INO-1800 and INO-5150 for hepatitis B and prostate cancer, respectively. This represents a $412.5 million opportunity in milestone payments for Inovio, and potentially much more should Roche decide to explore additional indications. It is not inconceivable that Roche could decide to expand its partnership with Inovio by licensing VGX-3100 upon a positive top-line readout from the ongoing phase 2 trial.

Provided this understanding of the overall climate surrounding Inovio, the upcoming data readout is pivotal to the future of the company, as its other clinical candidates may not have shown enough of an immune response to warrant late-stage study.

Simply put, I suspect that this binary event will be crucial -- this is one of Inovio's most advanced pipeline candidates, and it's crucial, not just for the drug itself, but also to help validate the pipeline.

Are DNA vaccines still viable?
It seems that as clinical trials progress into phase 2/3, DNA vaccines tend to produce suboptimal immune responses in humans, potentially lending credence to the bear case with respect to Inovio that VGX-3100 could be destined for a similar fate. Of course, since Inovio has yet to develop a commercial product since its inception, the bear case may be all the more relevant.

Despite the fact that Inovio is planning on using its own immune activator called IL-12 as part of the vaccine regimen in further clinical testing of VGX-3100, there remains the looming concern that the enhancement may not significantly improve the prospects of success.

Thus, while many are optimistic about VGX-3100, clinical failure would likely be catastrophic to shareholders as it is the lead clinical candidate at this time.

Strong financial position
For Q1 2014, Inovio lost $11 million, or $0.05 a share, missing analyst expectations. However, earnings were bolstered by Inovio's research agreement with Roche, which accounted for three developmental fees totaling $1.4 million. As a result, total revenue was $2.4 million for the quarter, beating the consensus of $1.41 million. Inovio has plenty of cash -- about $116.8, with $63.3 million garnered from an underwritten offering during the quarter -- so cash burn isn't an immediate issue, although Inovio will eventually need additional cash unless a partnership is signed.

My Foolish takeaway
Post reverse-split, short interest stands at roughly 13.6% of the float. This indicates that there are many who are betting on a decline, following the top-line readout anticipated to be between late June-late July.

Given the negative sentiment surrounding the top-line readout of VGX-3100, as well as the poor track record of DNA vaccines, I think investors should sit on the sidelines until after the binary event occurs.