Inovio Pharmaceuticals (INO) has thrown its hat into the coronavirus vaccine ring with biopharma names like Moderna (MRNA), Johnson & Johnson (JNJ) and Pfizer (PFE). But INO stock is frequently volatile on Covid-19 vaccine news, and regulators forced the company to delay its Phase 2/3 study.
X
Biotech company Inovio is taking a different tactic compared with other coronavirus vaccine makers. It’s making a vaccine using pieces of DNA. That method could be promising. In late June, Inovio said 94% of Phase 1 study participants showed an immune response after receiving two doses of its vaccine.
But on Sept. 28, the company said the U.S. Food and Drug Administration wanted additional questions addressed before Inovio could begin a Phase 2 and Phase 3 Covid-19 vaccine trial. On Nov. 16, the FDA gave Inovio the go-ahead to begin the Phase 2 portion of the study.
Shares of INO stock have yo-yoed on the various FDA news. After all, Inovio is going up against giants in vaccine development. It trails Pfizer, Moderna, Johnson & Johnson and others in the race for a coronavirus vaccine. Biotech Inovio, however, has a large pipeline of drugs in development for cancer and infectious diseases.
So, amid the backdrop of the coronavirus pandemic, is INO stock a buy now?
A Look At INO Stock Fundamentals
First, it’s important to note Inovio isn’t profitable and expects significant losses in the foreseeable future. In the fourth quarter, Inovio reported a 14-cent net loss per share compared with a loss of 38 cents per share in the year-ago period. Revenue was $5.6 million, up 2,000%.
Also of note, Inovio doesn’t have a commercially approved product on the market. It was founded in 1983, while its DNA work dates to 2000. Its revenue is comprised of collaboration and development money. The biotech company has big biopharma partners like AstraZeneca (AZN) and Regeneron Pharmaceuticals (REGN).
The revenue picture could change quickly if Inovio succeeds in making an effective coronavirus vaccine. The biotech also has a drug in Phase 3 testing to treat a precancerous condition of the cervix. It’s partnered with privately held ApolloBio on that drug.
Simply put, INO stock isn’t lining up with CAN SLIM rules for investing in growth stocks. Savvy investors are encouraged to seek companies with at least 20%-25% recent earnings growth. Inovio stock isn’t expected to get there anytime soon. (Learn more about IBD Digital to get CAN SLIM stock investing tips.)
Analysts surveyed by FactSet expect Inovio to report a 19-cent loss per share on $1.2 million in revenue in the current quarter. Revenue would fall, but losses would narrow.
Currently, INO stock has a Composite Rating of 25 out of a best-possible 99. The Composite Rating is a 1-99 measure of a stock’s key fundamental and technical growth measures. This means Inovio stock outranks just one-quarter of all stocks in terms of that metric.
In 2020, the biotech lost $1.07 per-share on $7.4 million in sales. Losses shrank year over year, while sales grew. For 2021, analysts surveyed by FactSet call for Inovio to lose 65 cents per share on $130 million in sales.
Inovio Stock Background
And its technicals demand a critical look. Inovio was essentially a dollar-stock in 2019, hitting as low as 1.91 in October 2019.
Last month, INO stock catapulted to a five-month high, at 19, after investment firm BlackRock upped its stake in the biotech company and amid a Reddit call to action against short investors. But shares quickly tapered off.
Here’s its background: Inovio was founded in 1983 under another name, Genetronics. At the time, it focused on a technological platform called electroporation. Electroporation is using controlled electrical pulses to create openings in cells. In theory, that should make them more permeable to drugs and other agents.
Then, Genetronics focused on developing drugs for cancer and dermatology. It also developed machines for electroporation to sell to research companies, according to the company’s first U.S. Securities and Exchange Commission filing.
In the 1990s, Genetronics traded on the Vancouver Stock Exchange, American Stock Exchange and the Toronto Stock Exchange. It voluntarily delisted from the Vancouver exchange in 1998. It remained on the Toronto exchange until 2003.
Two years later, Genetronics acquired gene therapy company Inovio AS and changed its name to Inovio Biomedical. In 2006 and 2007, Inovio had to restate some of its financials. In 2009, Inovio merged with VGX Pharmaceuticals. That added a cancer vaccine to its pipeline.
A year later, Inovio Biomedical became Inovio Pharmaceuticals.
Gates Foundation, CEPI Award Inovio Grants
After merging with VGX, Inovio began focusing on DNA vaccines and electroporation delivery. But, in 2016, the fervor wavered after the Food and Drug Administration placed a key cancer vaccine on clinical hold. At the time, Inovio stock was also running hot on its Zika virus and influenza vaccines.
The next few years saw a downfall for INO stock, which plummeted to dollar-stock status.
But shares began a turn in January 2020 when the biotech company announced that the Coalition for Epidemic Preparedness Innovations, or CEPI, awarded it $9 million to develop a coronavirus vaccine. CEPI is a group of public, private and nonprofit organizations that fund vaccine development worldwide.
In March 2020, the Bill and Melinda Gates Foundation awarded Inovio $5 million to scale up its coronavirus vaccine delivery system. That followed a $1.6 million grant in 2016 to back its Zika virus vaccine.
Just nine analysts cover INO stock, according to MarketBeat.com. Three had buy ratings, five had hold ratings and one had a sell rating on March 10. But after the FDA put a hold on the Covid-19 vaccine Phase 3 trials, Cantor Fitzgerald lowered its price target on INO stock to 12 from 31. Maxim Group, though, upgraded the stock to buy from hold. Roth Capital also upgraded shares to neutral from a sell rating.
Analysts from outfits like HC Wainwright, RBC Capital Markets, Citigroup and Piper Sandler also cover Inovio stock.
As of Dec. 31, 259 mutual funds owned 41.2 million shares of Inovio stock.
Technical Analysis Of INO Stock
Inovio stock hit a high mark of 33.79 on June 26 after the biotech company received a $71 million contract from the U.S. Department of Defense to scale up manufacturing for its coronavirus vaccine.
In 2020, INO stock rocketed 168.2% higher, albeit shares started the year at just 3.30. Today, the biotech company has a Relative Strength Rating of 22, putting it in the bottom one-quarter of stocks. The RS Rating pits all stocks against one another in terms of 12-month performance, on a scale of 1-99.
The shares have a middling EPS Rating of 60. This reflects INO stock’s continuing losses per share.
As of March 10, Inovio stock was below its 200-day moving average and 50-day line. Shares aren’t forming a definite chart pattern. And, if a base forms, investors should take it with a grain of salt. It will be key to watch whether Inovio can launch a commercial product.
(Related: Keep tabs on bullish stock charts by visiting MarketSmith.com.)
As of Dec. 31, mutual fund ownership in INO stock was slightly above 24%. But more funds were adding or retaining shares than those reducing their positions. That included several actively managed funds.
INO Stock: Coronavirus Vaccine News
On Feb. 1, INO stock soared after a Reddit user called for a short squeeze of the stock. Also helping the biotech company: BlackRock, an investment management firm, upped its stake to more than 14.2 million shares. It now owns 8.4% of Inovio.
In early November, Inovio said it had answered the FDA’s questions regarding its planned Phase 2 and Phase 3 studies. On Nov. 16, the company announced the FDA had cleared it to begin the Phase 2 test, though the Phase 3 study is still on a partial hold.
In its fourth-quarter earnings release, Inovio noted its drug, VX-3100, met all its goals in a Phase 3 study of patients with a precancerous form of cervical cancer. The company also said it expects to complete a Phase 2 study of its Covid vaccine in the second quarter.
Before the end of 2020, Pfizer with partner BioNTech and Moderna gained emergency use authorization for their coronavirus vaccines. Johnson & Johnson’s gained authorization in late February. In December, Inovio said its coronavirus vaccine generated neutralizing antibodies and/or T cell responses in every participant in a clinical test. INO stock rose 1.9% on the news.
In September, Inovio announced a vaccine manufacturing agreement with Thermo Fisher Scientific (TMO). Inovio says it lined up enough third-party manufacturers to manufacture 100 million doses of its Covid-19 vaccine in 2021, if the vaccine is approved.
In its late June announcement, Inovio said its coronavirus vaccine generated an immune response at six weeks in 94% of participants who received two injections. Inovio also tested the vaccine in animals. After that, researchers exposed the animals to SARS-CoV-2, the virus that causes Covid-19. The animals were immune.
But some analysts criticize Inovio for providing vague antibody data in its second-quarter earnings report. That, combined with the misses on both the top and bottom lines, sent INO stock tumbling 23% on Aug. 11.
Is Inovio Stock A Buy Now?
To make a long story short, no, INO stock isn’t a buy right now based on technical analysis, along with its revenue and profitability.
Inovio stock isn’t forming a definitive chart pattern. Investors are encouraged to buy a stock when it tops a buy point and is less than 5% extended from that entry. (Check out Stocks Near A Buy Zone.)
Further, Inovio stock has weak Composite and RS Ratings. Its EPS Rating is much stronger, but remains below the upper echelon of stocks.
What is important, for now, is watching INO stock as the biotech company works to get back on track in developing coronavirus vaccine. Its DNA approach differs from traditional vaccines and from the newer messenger RNA approach.
Staff Writer Michael Krey contributed to this article.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
YOU MAY ALSO LIKE:
Biogen Asks FDA To Approve Alzheimer’s Drug — Why It’s Far From A Slam Dunk
Here’s How Gilead Is Expanding Its Blockbuster-Potential Coronavirus Drug
See Stocks On The List Of Leaders Near A Buy Point
IBD Stock Of The Day: See How To Find, Track And Buy The Best Stocks
Watch IBD’s Investing Strategies Show For Actionable Market Insights
[ad_2]
Source