What happened Shares of Inovio Pharmaceuticals (INO 8.11%) were crashing 27.4% as of 10:17 a.m. EDT on Friday. The big decline came after the company announced that the U.S. Department of Defense is discontinuing funding of the phase 3 study evaluating its COVID-19 vaccine candidate INO-4800.
Full Answer
Lingering disappointment over results announced on Tuesday and an FDA update are weighing on the stock
Keith began writing for the Fool in 2012 and focuses primarily on healthcare investing topics. His background includes serving in management and consulting for the healthcare technology, health insurance, medical device, and pharmacy benefits management industries. Follow @keithspeights
What happened
Shares of Inovio Pharmaceuticals ( NASDAQ:INO) were crashing 14.6% lower as of 10:55 a.m. EDT on Wednesday after falling as much as 20.7% earlier in the day. The drop stemmed from two factors.
So what
Inovio's valuation is based entirely on investors' expectations for the company's pipeline. Any hint of bad news is going to cause the biotech stock to sink. And both factors behind Inovio's decline today are hints of bad news to some.
Now what
The primary thing for investors to watch now with Inovio is the biotech's pipeline progress. Inovio hopes to advance INO-4800 to a phase 2/3 clinical study after reviewing its phase 1 results with the FDA. The U.S. government's Operation Warp Speed is also funding a preclinical trial that includes INO-4800.
Why is Inovio making noise?
The obvious reason why Inovio is making a lot of noise recently is that the company is in the race to bring a vaccine for COVID-19 to market. The company famously claimed that on Jan. 10, it created a vaccine for the rapidly spreading disease in a mere three hours after the genetic sequence of the SARS-CoV-2 virus that causes the disease was made public by Chinese researchers on the same day.
Does Inovio have any products?
Inovio currently doesn't have any products on the market, but the company's pipeline includes INO-5151, a potential treatment for prostate cancer that is presently in phase 2 testing. Other products in the company's pipeline include VGX-3100, which is being investigated as a potential treatment for cancers and precancers caused by human papillomavirus (HPV), and MEDI0457, a possible treatment for head and neck cancer.
Long History, Not Much to Show
When it comes to Inovio, you have a company with a long, rich history of making impressive progress on DNA vaccines for various high-risk infections and diseases. Yet, after four decades, the company doesn’t have much to show for it.
Coronavirus Crisis Will Fade
In the long run, coronavirus fears will fade. As they do, Inovio stock will likely give back its huge year-to-date gains.
Bottom Line on INO Stock
Inovio is one of the market’s favorite coronavirus stocks to buy. I understand why. But, I also understand that coronavirus hysteria on both Wall Street and Main Street is temporary. It will pass.