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Wednesday, February 8, 2023

Could the FDA Be Ready to Crash Inovio’s Hopes and Dreams?

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It’s been a month since the Food and Drug Administration put a partial clinical hold on INO-4800, Inovio Pharmaceuticals’ (NASDAQ:INO) Covid-19 vaccine. I wrote about this issue shortly after the FDA’s announcement. At the time, I suggested that only speculative investors should invest in INO stock, reminding readers there were better options.

the inovio (INO) logo covered up by pills and a syringe

Source: Ascannio / Shutterstock.com

Well, one month later, the old adage “No news is good news” definitely doesn’t apply in Inovio’s situation. If anything, the delay should be a red flag to even the most speculative investors that all is not right at Inovio.

Here’s why.

The Easy Money on INO Stock Has Been Gotten

Inovio stock hit a 52-week of $33.79 at the end of June. For those who bought at the end of May, it was an easy double. The smart investors likely took profits — a 1,200% return on an annualized basis — while the poor souls who bought in the $30s are praying to the investing gods that Inovio will rise up once the FDA clears its vaccine for takeoff.

Only INO-4800 might not even make it to the runway.

According to my InvestorPlace colleague, Josh Enomoto, Inovio’s got a little DNA issue standing in its way. Apparently, DNA vaccines can cause cancer. Really?

“The God’s honest truth is that I don’t know. However, it’s important to note that I never stated that DNA vaccines absolutely cause cancer. That would be grossly irresponsible on my end because I don’t have the evidence,” Josh wrote on Oct. 19.

“Intellectually honest medical researchers cite the possibility of negative health outcomes via DNA vaccines. This platform, by its nature, involves our cell’s nucleus, where our DNA resides. Hence, the term, DNA-based vaccine. That’s backed up by another report published by the NIH. It states, ‘In case of DNA vaccines, after their internalization the DNA needs to translocate to the nucleus for transcription, followed by translation in the cytoplasm.’”

Josh compares Inovio’s DNA-based vaccine to Moderna’s (NASDAQ:MRNA) messenger RNA vaccine.

I’m not a scientist. I’m not even very technologically savvy, so much of what Josh states might as well be written in Latin because it’s hovering well over my head. However, what I do know is that where there is smoke, there is usually fire.

Inovio Isn’t the Only Game in Town

I recommend you read his entire article if you’re thinking about betting on Inovio before the FDA has rendered a response.

That’s especially true when you consider that Josh goes on to say that even though the possibility exists that the FDA will still greenlight INO-4800, the reality is that it doesn’t possess the right stuff to make it through to the approval stage.

“…Inovio does not feature enough advantages to convincingly lead the pack. Yes, its vaccine offers logistical advantages but it most likely will be a two-dose regimen. That would hamper distribution efforts while Johnson & Johnson’s vaccine candidate is designed to be a one-and-done affair,” Josh writes.

That, to me, is a critical piece of my colleague’s article. And something that I talk about all the time. Investors have options.

Given it’s been a month since the FDA paused Inovio’s efforts, even if its trial process fully resumes, what are the odds that it will be able to catch those already in Phase 3?

Unless you’re a very risk-tolerant investor, the odds are very low.

The Bottom Line

In my latest article about Inovio, not only did I bring up the FDA issue, but the possibility that this could effectively kill the company’s efforts to get the funding necessary to get INO-4800 to commercialization.

“If Inovio’s trial is taken off hold because the FDA is satisfied with its answers, the worst-case scenario would be an announcement that it’s further delayed because it can’t gain the funding necessary to move ahead. That would put the company even further behind than it already is,” I wrote on Oct. 1.

“The stock might jump on the news the trial’s back on, but it would most certainly fall if it’s unable to proceed because of a lack of funding.”

So, the risks involved don’t just revolve around the vaccine itself but also its actual delivery.

I’m not saying it’s going to happen, but investing is all about accounting for all possible eventualities.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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