The frantic global search for a vaccine or therapy for the coronavirus has sent the valuations of previously small cap biotechs to unimagined heights over a short period of time.
There can’t be many better examples for the phenomenon than Inovio Pharmaceuticals (INO). Investors have cheered the progress of its COVID-19 DNA vaccine candidate INO-4800 by sending shares on a mightily impressive run – the stock is up by 505% since the turn of the year (even after today’s 25% sell off).
The massive gains, the richly valued $3.2 billion market cap and a track record that – while promising – has yet to yield any significant results have prompted a rethink at investment firm H.C. Wainwright.
“We believe the risk/reward ratio for Inovio has increased significantly as many open questions remain,” said firm analyst Ram Selvaraju, “Including the strength and duration of neutralizing antibodies and T cell responses that may be generated in human trials and the effective protection the vaccine may demonstrate in animal challenge studies.” “As a reminder,” concluded the 5-star analyst, “There is no approved human vaccine for any type of coronavirus, while no DNA vaccines have been approved for human use yet.”
INO-4800 is currently in a Phase 1 trial with interim data expected any day now. A Phase 2/3 trial of INO-4800 is also planned to go ahead this summer. The company will need to demonstrate why its DNA based approach is “superior.” Proof Inovio can run the gamut from market authorization, to maintaining enough supply to pricing the vaccine reasonably while also driving profit, will also be required. Lastly, Selveraju says, Inovio’s offering will need to show “evidence that the immunity afforded by vaccination lasts sufficiently to have a significant impact on the spread of the coronavirus pandemic.”
As these questions remain to be answered, Selvaraju slashed his rating on INO from Buy to Neutral, while removing his price target. (To watch Selvaraju’s track record, click here)
Selveraju’s view is partially echoed by his colleagues across the Street, with 5 analysts saying Hold, and 3 suggesting Buy. Yet, the average price target of $26.50 implies 31% upside from current levels. (See Inovio stock-price forecast on TipRanks)
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