Inovio Neglected The Sign: Don't Feed The Bears!

| About: Inovio Pharmaceuticals, (INO)

Oh my goodness, Dr. Kim, did you really need to go and file a Form S-3 on a cold and lazy Friday afternoon? Say it ain't so, doc, or at least tell us why it is, okay? You have plenty of time to let me know, because I ain't going nowhere...Inovio (NYSEMKT:INO) and I will be dating for quite a while.

As for me, I heal from bear attacks pretty quickly, so even though they may try to hurt me on Monday, I will be sure to not step into their trap.

My investment checklist for a growth company is that they have money in the bank, maintain access to money and continue to execute on the business plan. So far, Inovio, Dr. Kim and his team are batting 1000% in my three key points of investment criteria. Consider it a pet peeve of mine...I simply like a company that can maintain a hefty wallet.

But, here they come, I can smell the unwashed fur from miles away. The bears are coming and they are going to try to convince me that an S-3 filing means more dilution, more money for insiders, broken promises and a broken company.

Seriously? These "Debbie downers" will try to convince me that Inovio is somehow taking advantage of the retail class because they want access to additional capital. And, I am sure that they are going to tell me that all of the S-3 raise, IF they even utilize it, will be at the $2.50 level or less, right? Give me a break, you four pawed critters, because I have a better menu that does not include fear as my tactic. My menu is served up with a dose of science, a dash of secure balance sheets, a smidgen of partnerships and a dollop of extremely encouraging trials.

In fact, my bet is that any money raised during the shelf registration will be at levels in the $5.00 -$10.00 range. Call it instinct, but, I am comforted with the knowledge that company management is well aware of the strength of the pipeline and will take full advantage of the price spikes when positive Phase ll data is announced. Oh yes, far too much momentum for Dr. Kim to suddenly slam on the breaks after telling us that the company was well funded into the year 2016.

So, as I sit around the campfire and discuss Inovio in Blazing Saddles fashion, the consensus is that Inovio is utilizing available resources to be prepared to fully fund a Phase lll study without the need of a partner, if they so choose to go it alone.

But, we all want partners, right? Well, yes and no. I want partners if I need a hedge and if I need cash quickly. I DON"T want partners if I know that my studies work and therefore do not want to piece off significant value simply for a small upfront payment. Inovio can always sell bits and pieces of successful technology, and, at the same time maintain relationships with several deep money pharmaceutical companies. I get the feeling that this is the motive of Friday's S-3 filing.

I have maintained a consistent position regarding small cap companies and dilution. It happens, live with it. Is it reality to think that Inovio can fund its way through a Phase lll trial without significant money? C'mon , friends, I know you can see the longer term picture. Dr. Kim made it clear in his presentations that Inovio is well funded through 2016, but, he never said through a complete Phase lll trial.

Inovio can seek $125 million, less fees and filing costs. That is a whole lot of qwan. In fact, it's enough qwan to fund this company for a decade, I believe. Do I actually think Inovio will ever access that much? No, I seriously don't. I can envision some quick 20-30 million dollar tranches to bolster the balance sheet, but, I also think that these receipts will come at a far less level of dilution than many of the bear community will lead you to believe.

If, for instance, Inovio reports strong results in the middle of the year for its Phase ll trail, I expect the price per share to reach the $5.00 level, at a minimum. At that point, if Dr. Kim feels the need to sell three million shares for a quick fifteen million dollars, then I support the move. In fact, when I invest in any company I make sure that I have trust in the CEO, that is essentially rule number one for me. So, in the case of Inovio, I feel extremely comfortable with management's decision to have an offering waiting in the wings, if needed.

And, while there is going to be great focus on the S-3 filing on Monday morning, I rest comfortably in the knowledge that Inovio has reported best in class results in several studies.

It's been eight months, but, I have not forgotten that Inovio was voted "Best Early Stage Biotech Company" at the World Vaccine Congress in 2013. Nor do I forget that Inovio has shown great success in pre-clinical studies with its DNA vaccine against Ebola and Marburg Filoviruses.

And I simply can't let six months of time erase my knowledge that Inovio's H7N9 DNA vaccine has shown effectiveness in producing an antibody in 100% of vaccinated animals. Oh, well it's in animals, the bears will yell, but, I would ask them to cite ONE large pharmaceutical company that did not test on animals prior to human studies AND whether or not those results were significant in their decision to move forward in the clinic.

Then, only five months ago, Inovio announced that their Cellectra electroporation delivery system powered durable and best in class T-Cell responses from its HIV vaccine in HUMAN studies. Also about five months ago Inovio announced that its potent hTERT DNA vaccine shows clinical evidence to reduce tumor size and recurrence.

And, in case your short term memory has deteriorated, I will remind you that approximately four months ago, Inovio partnered with Roche to explore its prostate cancer and hepatitis B immunotherapy products.

Oh, and let's not forget the that the preliminary data for its SynCon vaccine to treat cervical dysplasia/cancer has been quite encouraging, although top line data will not be released until mid year.

I know I have left out a tremendous amount of progress that Inovio has made in the past two years, and, I know I left out the several prestigious awards and recognition that Dr. Kim has received, personally. It is important and much of it can be found on the company's website.

But, back to that annoying S-3 filing. When I analyze it, I get the feeling that the company is gearing up for a Phase lll study of the SynCon vaccine for cervical cancer and dysplasia. Lining up all the pretty ducks in a row is important, and the timing is right.

As of September 2013, Inovio reported that they held approximately 46.3 million dollars in cash and zero debt. I like both lines on that ledger. And, subsequent to that quarterly filing, Inovio added cash proceeds from Roche and through the exercise of warrants.

So, when added all together, does an S-3 filing sound all that bad to you? If so, ask yourself whether or not you like to be invested in a small cap biotech stock with access to capital. If not, there are plenty of small biotech companies who still rely on those floorless convertible debentures, if that is what you seek.

For me though, an occasional curve ball is good. It forces me to go back and re-evaluate my position. In this case, the overwhelming evidence supports my decision to stay attracted to Inovio and to support management in their decisions. I remain quite confident that company management is far more aware of company developments than am I.

On Monday, I might get a small bite taken out of me by the bears, but, in the mid to long term, I am extremely confident that the trap is actually set for them.

Stay long, in my opinion...and relish the fact that Inovio can raise capital, when needed. My instinct tells me that Inovio is setting up for a bright future.

As for you, Dr. Kim, I must remind you...please don't feed the bears.

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.