E Inovio Pharmaceuticals: 2020 Is The Make Or Break Year

Inovio Pharmaceuticals’ (INO) stock, which has been gasping for air from 2017 to Jan 2020, received mouth-to-mouth resuscitation when news broke that it was in the reckoning developing a coronavirus cure, along with Johnson& Johnson (JNJ), Moderna (MRNA) and Novavax (NVAX).

The stock spurted 100% from $2.98 on Jan 6, 2020, to $5.91 on Jan 27, 2020. However, it developed vertigo at higher levels and crashed to $3.19 as of 10 Feb 2020.

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Image Source: Investing.com

INO develops immunotherapies to fight cancer and infectious diseases. It has a unique platform is that utilizes DNA and next-generation antigen sequencing and delivery to activate the immune system

If it has got so much promise and is such a novel company, why is the stock not performing? Here’s my analysis:

Valuation Metrics

With a forward P/S ratio of 53.93 and a TTM P/B of 9.38, INO is obnoxiously overvalued even at its current price of $3.19.

The operational cash flows are negative since 2014 and have been worsening over time:

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Image Source: MarketWatch

The situation in 2019 is no better. The company has been leaking cash quarter after quarter and has issued stock or borrowed to stay in the game.

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Image Source: MarketWatch

To absorb a part of the losses, INO reduced a cost-cutting plan in July 2019 which included 28% staff reduction and closing down several R&D and clinical programs. This would help the company reduce 25% cash burn annually.

Management’s Expectations in 2020

Though INO’s main issue has been its overly long gestation period, the management has done some crystal ball gazing and has promised the following deliveries by late 2020:

1. GBM (Glioblastoma Multiforme) survival data at 12 and 18 months for its INO-5401, a T cell-activating immunotherapy encoding for three tumor-associated antigens. Glioblastoma is an extremely challenging disease, and most patients die of their brain cancer within 12-24 months of diagnosis. INO’s last trial in 2019 demonstrated that 75% of its patients became progression-free at six months.

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Disclosure: I have no position in the stocks discussed, and neither do I plan to buy/sell it in the next 72 hours. I researched and wrote this article. I am not being compensated for it (other ...

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Danielle Rogers 8 months ago Member's comment

Good analysis on $INO.

Sunil Tinani 8 months ago Author's comment

Thanks, Danielle