Is Inovio Stock Set to Rebound?

The Motley Fool
The Motley Fool

Inovio Pharmaceuticals (NASDAQ: INO) has been one of the disappointments of the coronavirus vaccine race. Last year, the company fell behind in the development of its vaccine candidate. And this year, the stock has dropped about 18%.

Now, however, it looks like things may be changing for Inovio. U.S. regulators recently gave the company the nod to start its late-stage trial, and this week Inovio laid out its plan to tackle the omicron variant. Does all of this mean Inovio stock is ready to rebound? Let's take a look.

Image source: Getty Images.

Delivering DNA

First, let's talk about Inovio's good news. Last year, the U.S. Food and Drug Administration put Inovio's phase 2 and 3 trials on a partial clinical hold. Regulators had questions about the trial and the handheld device used to administer the vaccine candidate. Inovio uses its proprietary Cellectra to deliver optimized DNA strands directly into cells. The FDA lifted the hold on phase 2 after about six weeks, but phase 3 remained on hold for more than a year.

Now, Inovio can move forward and hopefully reach the regulatory submission stage in the coming months. Inovio is also conducting its phase 3 trial at sites outside of the U.S.

In other positive news, Inovio has explained how it will address the latest coronavirus strain. Authorities first identified the omicron variant in South Africa early last month, and it's since spread to areas including Europe and North America.

Inovio says its vaccine candidate INO-4800 sparks T cell immune response. These responses are less vulnerable to viral mutations, and that's why this candidate may have a good shot at handling omicron and other variants. Inovio is now testing samples from its clinical trial participants against omicron.

The biotech company has a second potential tool to beat the latest variant in the form of its pan-COVID vaccine candidate. Its development involved using an algorithm to analyze the genetic sequences of all existing strains, and from there, Inovio designed a candidate that would ideally target a wide array of variants. This candidate is still in the preclinical stage. So far, it's worked against other variants and Inovio is testing it against omicron.

And finally, Inovio has one more opportunity to beat the variant. It has launched the development of a strain-specific candidate to target omicron.

Will Inovio gain?

So, will any of these efforts result in gains for Inovio's shares? INO-4800 is closest to market, so any positive data from tests of that candidate against omicron could lift the stock in the coming weeks. The pan-COVID candidate could be big in the future. But it's too early stage right now to make much of a difference in the fight against omicron. By the time the pan-COVID candidate makes it to late-stage trials, the world may be dealing with another coronavirus variant.

Inovio is likely to have the same problem with the strain-specific candidate. I don't think Inovio will bring it to market quickly enough to tackle omicron. Rivals Pfizer and Moderna may be able to rapidly update current vaccines and win FDA authorization. That's because their products are on the market, and they've built a pathway to update those products in a timely manner. Inovio hasn't yet brought a vaccine to market, so it can't operate in the same manner.

All of this means Inovio's best chance at share gains in the near term is positive news from the INO-4800 program. Pfizer and Moderna dominate today's vaccine market, but efficacy isn't 100%. If another player can offer a vaccine with advantages in efficacy, targeting variants, or logistics, that player may carve out market share.

Will this player be Inovio? It's possible. But many investors have lost faith in the biotech company. So how can Inovio bring back the confidence? Only through solid data and a solid plan to bring its vaccine candidate to market. At that point, Inovio stock may rebound. Right now, it's too early to say if and when that will happen. But considering the latest news, Inovio is a player to keep on your vaccine stock watch list.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool recommends Moderna Inc. The Motley Fool has a disclosure policy .

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