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Inovio Pharmaceuticals (NASDAQ:INO) is a small cap biotech that has a rich pipeline and an extremely cheap valuation. Over the last month, the stock has shed 30% of its valuation, despite a flurry of positive press releases. With EIGHT drugs in Phase I or higher drug trials, the pipeline here is very impressive. As the companies home page says, Inovio is creating the vaccines of tomorrow in cancer, flu and HIV, all extremely lucrative if brought to market.

So why is Inovio down 30% in the last three weeks on heavy volume with good news? Like many stocks, Inovio got caught up in an overall market downdraft that accelerated year end tax selling. This is not uncommon this time of the year. Such drops, however, bring opportunity for those ready to seize them. Trading under 50c, down 30% from where traders where willing to chase only a month ago, there appears to be excellent near term upside for a gem of a long term play.

A look at the chart shows the steep sell-off with the market recently and a nice consolidation in the 45c-50c area. A break above resistance at 50c should quickly send the stock back to the 50 day moving average, currently at 61c.

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Lets take at look at their leading drugs now as reported in their most recent earnings report. First off there is flu and with flu season here stocks in this sector tend to get interest now. Inovio has just treated the first patients in its third influenza clinical trial, this one evaluating immune responses in elderly adults immunized with Inovio's H1N1 SynCon universal influenza vaccine.

With respect to the treatment potential of its novel synthetic vaccines, Inovio reported that its SynCon vaccine against cervical dysplasias and cancers (VGX-3100) achieved an industry first when T-cell immune responses induced by this vaccine, which have been previously reported as being best-in-class, were also shown to generate a strong killing effect against cells targeted by this vaccine. Enrollment is ongoing in Inovio's Phase II clinical study of VGX-3100 for cervical dysplasia. Data is expected in late 2013.

Two Inovio collaborators, the University of Southampton and ChronTech Pharma AB, are expected to report interim data from their phase II studies of DNA vaccines for leukemia and hepatitis C virus, respectively, before the end of 2012. Positive data from either or both trials could send the stock significantly higher. Of late, biotech stocks have been moving higher into expected data releases so this is another positive for the stock price right now. Also with recent news of price gouging in AIDS drugs by Gildead (NASDAQ:GILD) all eyes are back on the sector.

Most biotech stocks would be happy with one or two successful pipeline drugs with positive news. Inovio has multiple drugs in multiple indications that are showing positive results. All this and a stock price of 48c and a market cap of $66m. The upside potential here is very attractive. At a stock price of $2 per share from just one successful indication Inovio would be considered cheap. With drugs in cancer, HIV and Flu a much higher market cap can be justified. A look at Acadia (NASDAQ:ACAD) which has gained 400% in the last few months shows the huge rewards that can be gleamed from small cap biotech stocks.

Disclosure: I am long INO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.