What happened

Shares of Inovio Pharmaceuticals (NASDAQ:INO) are up 27% at 1:13 p.m. EST after Roth Capital initiated coverage of the biotech with a buy rating and a $13 price target, nearly five times higher than where it closed yesterday.

So what

Inovio's lead compound, VGX-3100, is a vaccine designed to stimulate patients' immune systems to attack pre-cancerous lesions caused by the human papillomavirus (HPV). The drug is being tested in three different types of HPV-induced lesions called high-grade squamous intraepithelial lesions (HSIL) -- cervical, vulvar, and anal -- with cervical HSIL being furthest along and expected to read out phase 3 results in the fourth quarter of next year. Interim data from the phase 2 clinical trials in vulvar HSIL and anal HSIL will be presented earlier, in the first quarter of next year.

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Inovio also has a couple of other partnered assets. INO-5401 is being developed for glioblastoma, a form of brain cancer, in combination with Regeneron Pharmaceuticals' (NASDAQ:REGN) immunotherapy cemiplimab. Another oncology drug, INO-5151, is in a phase 2 study for prostate cancer that's being funded by the Parker Institute for Cancer Immunotherapy and the Cancer Research Institute. Finally, there's MEDI0457, which was licensed by AstraZeneca (NYSE:AZN) and could result in milestone payments and royalties; AstraZeneca, which is in charge of development, is currently testing the drug in a phase 2 study for head and neck cancer.

Now what

With a market cap around $330 million after today's move, Inovio certainly has plenty of room to increase in valuation if its pipeline of drugs can get through the clinical trial process and approved. It might take a while to get to Roth's $13 target, but it isn't completely far-fetched.

At this point, funding is likely to be the biggest issue for Inovio, with the company ending the third quarter with just under $94 million in the bank. Valuation changes like we're seeing today can sometimes spark management to sell additional shares in a secondary offering, diluting current shareholders' positions.