Inovio shares continue volatile trading as analysts say they believe in its technlogy

Shares of biotech Inovio Pharmaceuticals Inc. fell more than 20% Friday, as analysts weighed in on the company’s latest earnings and RBC downgraded the stock on valuation grounds.
The Plymouth Meeting, Pa.–based company has seen its stock INO, -24.21% soar more than 180% this year, as the company announced that it’s developing a vaccine called INO-4800 to treat the coronavirus-borne disease COVID-19.
The vaccine is currently in preclinical studies, and the company is aiming to advance to clinical trials in April. It has secured up to $9 million in funding from Coalition for Epidemic Preparedness Innovations, or CEPI, a global organization based in Oslo, and another $5 million from the Bill and Melinda Gates Foundation to fund the development of a smart device to use to inject the vaccine.
Thursday’s earnings, however, may have reminded investors that the company is still a small biotech with many products in development but none that are actually approved. Inovio posted a net loss of $37.7 million, or 38 cents a share, for the fourth quarter, wider than the $33 million, or 34 cents a share, loss posted in the year-earlier period. Revenue was a mere $279,000, down from $2.5 million a year ago.
The company has taken advantage of its stock’s rally to raise money and said it issued 43 million shares during the period from Jan. 1 through March 11 under an at-the-market agreement, raising total proceeds of $208.2 million. The sales were made at a weighted average price of $4.92 per share. As of March 11, there was no more capacity in the ATM agreement.
Analysts remain impressed by the company’s technology but agree that it’s the non-COVID-19 pipeline that shows the most promise. Inovio has 15 DNA medicines in various stages of development that aim to treat, cure or protect people from diseases associated with HPV, cancer and infectious diseases.

RBC analyst Gregory Renza downgraded the stock to sector perform from outperform on Friday but maintained his $7 price target.
“ In our view COVID-19 vaccine attention has helped to reach levels that reflect fair value, and more than accounts for the potential that resides in their late HPV-driven programs which we see as the key value driving assets in INO’s portfolio,” Renza wrote in a note to clients.

The analyst said he is taking a cautious view on Inovio’s ability to fully capture any opportunity with INO-4800, noting the many challenges involved in monetizing a vaccine, as well as the work needed to be able to deploy it. But he praised the company’s versatile technology, clean safety history and quick-response capabilities.
Maxim Group analyst Jason McCarthy agreed that the pipeline is key.
“Remember, this is pivotal-stage company with VGX-3100 in two [Phase 3] trials for cervical dysplasia, with one reading out in 2020,” he wrote in a note to clients. “The oncology pipeline is also robust and a driver as data emerges in 2020 as well. We view infectious disease (ID), even COVID-19, as interesting and validating of the platform, but not the long-term driver.”
McCarthy said he’s sticking with a buy rating on the stock and raised his price target to $12 from $6.
“From a valuation perspective, while rising to [about $1.3 billion], we would point to the most advanced program in VGX-3100 and ask what’s the value? Given the size of the cervical dysplasia market, this could be a [$1 billion–plus] opportunity and suggests there is additional upside in [Inovio] shares just on this program alone. [The company’s infectious-disease and oncology] programs could be additional upside.”

Stifel analysts said the jump in market capitalization to about $1.3 billion in the last few weeks is making it harder to join the dots but conceded that the coronavirus-driven headlines will likely continue. And as one of the first companies expected to start trials of a vaccine candidate and more funding likely on the way, Inovio will continue to benefit, analysts led by Stephen Willey wrote in a note.
“We believe upcoming data catalysts for core pipeline programs — including preliminary P2 VGX-3100 data in HPV-caused anal/vulvar HSIL later this month, updated 12-month OS data from the P2 INO-5401 trial in GBM (expected 2Q20), and pivotal P3 data for VGX-3100 in HPV-caused cervical HSIL by YE20 —provide multiple levers for additional upside in FY20.
Stifel reiterated a buy rating on the stock and raised its price target to $8 from $7.

On Thursday, Inovio said its Cellectra 3PSP device is a small, handheld and portable device that runs on AA batteries and can be used to inject a vaccine. It was originally developed using $8.1 million in funding from the medical arm of the U.S. Defense Threat Reduction Agency’s Medical CBRN Defense Consortium.

Inovio reiterated that it expects to deliver one million doses of INO-4800 by year-end. It said it is working to “scale up both INO-4800 and CELLECTRA 3PSP devices to potentially make available millions of doses to combat this outbreak.”
Inovio shares are up 99% in the last 12 months, while the ProShares Ultra Nasdaq Biotech ETF BIB, +14.10% has fallen 30% and the S&P 500 SPX, +9.29% has fallen 8%.
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