Inovio Pharmaceuticals (INO), a developer of synthetic vaccines, holds a lot of promise with a number of very promising candidates in its pipeline. The company uses its proprietary technology to better deliver the vaccines, which is considered safe by the FDA and is already protected by patents. However, the company is still conducting a number of clinical trials to assess the safety and efficacy of its DNA vaccines. Once approved, these candidates can have blockbuster potential and have the ability to revolutionize the entire field of cancer vaccination. The update below covers some recent happenings at Inovio and the shifting investor perception of the company. For a detailed look at its candidates and upcoming catalysts please click here.
Recently the targeted cellular therapy was featured on the news, which highlighted the benefits and the potential of this therapy, and featured patients who participated in trials and experienced improvement. This increased interest and believe in the targeted cellular therapy, using the patient's own cells to fight against tumors or cancers, is indeed a positive factor. Inovio has the potential to become the pioneer in this therapy since its candidates are synthetic vaccines, and the company is expecting positive results from ongoing trials.
The company recently participated in the LD Micro Conference, and highlighted the benefits of the synthetic vaccines, and the company's ability to patent them. Furthermore, it also explored the technology that allows easy administration of the DNA plasmid, giving Inovio an edge over the competitors. Not only this, the VGX-3100, cervical cancer candidate, is expected to compete in a multibillion market, and the trial results in mid-2014 are a vital catalyst for the company. VGX-3100 is also expected to get orphan drug status in the United States, which will further help the case of the candidate. Financially, the company hasn't made any offering yet, and believes in raising funds through non-dilutive methods. The company was labeled as one of the more successful companies at the LD Micro Conference.
The company will be participating in a number of conferences next year, which include Biotech Show case 2014 from January 14-15; BIOCEO and Investor Conference from February 10-11; and Cowen and Company's Conference from March 3-4, 2014. These events hold importance for the company going forward and to garner increased investor interest.
While the short interest has increased in Inovio, with almost 12 million shares short (8.1% of float), the insiders and institutional investors have been busying buying. During the last 6 months insiders have increased their holdings by almost 350,000 shares i.e. an increase of1.4%. Institutional investors have also increased their Inovio holdings by a mammoth 22% as compared to last quarter i.e. adding 4.6 million shares.
Inovio has almost 400 patents, no long term debt to pay, innovative technology, solid partnerships funding operations, and an expert management team, insider and institutional interest, positioning it well above run of the mill biotechnology companies. These factors also make the company a lucrative acquisition target, for big companies like Roche, Merck, and GlaxoSmithKline (GSK), among others.
The company despite its better than expected stock performance has a consensus price target of $1.63 with a Buy rating, while the current price is $1.98 (9/12). The highest price target by analysts is $2.50 by Aegis Capital and the lowest target is $1.0 by Piper Jaffray. Out of the seven analysts covering the company, six rate it a buy and one rates it neutral. Additionally, the company has institutional holdings of 9.7%which has increased over the past few months, and insider holdings of 13%. This definitely is a good sign for the company, entailing that the investors and the management believe in the prospects of the company.
The company has recently seen an increased short interest because the share prices have remained volatile and have failed to breakout time after time. However, the increased short interest is also a positive factor for the share prices, as once the prices increase substantially; these shorts will have to cover their positions and thus will most likely push the share prices further.
Inovio is a good long term play, since its product candidates hold promise and starting next year it will advance number of its trials and also report data for the its cervical cancer candidate VGX-3100. This data will be a make or break for Inovio, since the success in these trials would open new avenues for therapy and DNA-based vaccines. This trial will solidify the company's position in the immunotherapy space.
Due to the high volatility and lack of optimism by sell-side analyst, I would recommend Inovio for only long term investors who understand the potential of DNA vaccines and can push through the volatility created by the heavy short interest.