I am a long time follower and investor of Inovio Pharmaceuticals (NYSEMKT:INO) and I can say unconditionally that the future has never looked brighter for Inovio to not only produce a breakout year, but has also placed itself into a position whereby it can generate and publish clinical results within months that will set the stage for huge growth for the remainder of the decade.
I understand that investors get excited about the stocks they own, and many have the same enthusiasm for their stocks that I share with Inovio. But, unlike many emerging biotechs, Inovio has systematically set the table and is very near to actually serving up the dish.
To be fair, if Inovio had not recently published initial results of the Ebola trials as well as to provide some key updates to current and future projects, my enthusiasm might be a bit tempered. But they have, and it's what is in these reports that should not only excite investors, but will most certainly begin to grab the ears and checkbooks of major pharma companies in the industry.
Regardless of the fact that Inovio has enjoyed a price run in excess of 35% during the prior two weeks, the data presented, which has also been sent for peer review, actually justifies for the price per share to much higher than the current $8.72 cents closing price on March 31, 2016.
It does get disheartening when I compare the accomplishments of Inovio to those that have produced absolutely nothing of merit, yet still get the sterling press coverage from certain financial blogs. [see Sarepta (NASDAQ:SRPT)]
For instance, when Inovio published data from its INO-3100 it was met with tremendous skepticism. Results can be interpreted in many ways and can be penned to lure a reader to embrace an opinion that might not be truly unwarranted. I may rehash some of the results of the INO-3100 trial at greater length in the future as they get closer to starting the planned Phase III trial. However, a key takeaway when reading others opinion about a particular trial is to keep in mind one extremely important factor. Regardless of how authors will try to twist and turn facts to generate a reaction to their cause, one obvious variable that they cannot exclude is the strength of a "P Value".
The "P Value", which is an indicator to suggest the strength of an outcome, is a reliable predictor and is closely watched in clinical studies. If a "p value" is not lower than .05, companies will invariably look to other avenues to generate better future results.
In Inovio's results published in regard to the INO-3100 study, the "p values" associated to the patient groups were .006 and .0017, respectively. But, even with these results published, peer reviewed as well, many blogs dismissed the results as being non-statistical to the relevant future of INO-3100. And because many investors, potential and current, might not have a full grasp of what is transpiring in the clinic and base investments on various financial reports, I wanted to take a step forward and highlight a few of the most recent accomplishments achieved at Inovio.
First and foremost, the Phase II VGX-3100 data revealed that Inovio's core technology works. This was the part where investors were holding their breath, as the company was definitely in a proof of concept phase that the market was quite skeptical about. In combination with the SynCon platform, coupled with electroporation, Inovio confirmed validity to the science. This allowed the company to confidently move forward.
Next, Inovio introduced their proprietary DNA based immune activator, DNA IL-12. Immune activators are beginning to show tremendous promise in combination therapies. The DNA IL-12 has the potential, on its own, to be an important tipping point to treating cancer and infectious disease. What DNA IL-12 does is to act as an molecular vaccine adjuvant to increase cytotoxic t-cell responses and breadth of humoral responses. As investors in biotech, many of us are aware that t-cells are the most important and primary fighting army necessary to battle cancer and infectious disease. Simply put, t-cells are the disease killing mechanism to destroy a host of disease and infection in humans.
Inovio is demonstrating not only the ability to generate robust responses in a number of trials, they have an important proprietary method of creating the adjuvant through the use of DNA coding. The DNA within the Inovio science is a main differentiator from almost every other company that is working to develop treatments for cancer and infectious disease. It's for that reason, in my opinion, that Inovio has already inked lucrative partnership deals, one with Roche (OTCQX:RHHBY) and the other with MedImmune.
The DNA coding ability at Inovio can literally be used to dominate the infectious disease space and even extend into the chronic illness space. In fact, when Inovio comes out with their own DNA based checkpoint inhibitor, I would consider it to be a "game over" moment for the competition and Inovio will hold the opportunity to harness the most comprehensive immuno-oncology treatment platforms in the industry. I would expect a multitude of opportunity from large pharma to grab just a small piece of the opportunity that Inovio can offer with DNA based combination therapy. And with the strong IP portfolio that Inovio holds, the path of least resistance will be for companies to partner, rather than try to circumvent the IP and work through costly clinical trials at the risk of being a willful infringer.
The DNA aspect at Inovio is a key differentiator, but, it's not all that the company has to offer.
The flu vaccine market is estimated to be a five billion dollar a year market and estimates are running as high as one hundred billion in market potential by the year 2025. As for therapeutic potential, on March 30, 2016, Inovio was voted as "Best Therapeutic Vaccine" by the World Vaccine Congress for its HPV vaccine.
Inovio was recognized by industry peers for "Best Therapeutic Vaccine" for its DNA-based immunotherapy, VGX-3100, a first-in-class product for treating high grade cervical neoplasia associated with human papillomavirus (HPV). Medical researchers have previously tried to stimulate therapeutic immune responses against HPV and cervical lesions with little success. Inovio's phase II data from this immunotherapy demonstrated that robust CD8+ killer T cells activated in the body by VGX-3100 were correlated to the clearance of neoplastic cervical lesions as well as the virus which caused the disease. These results were statistically significant and clinically relevant, and were published last year in a peer-reviewed article in The Lancet, one of the world's leading medical journals. Inovio will take VGX-3100 into a phase III trial later this year.
Then, later on that same day, Inovio also announced results from its Ebola vaccine, the first trial tested on human subjects. Inovio reported that its Ebola vaccine, INO-4212, was safe and tolerable amongst 75 healthy subjects. Inovio went on to report that:
This initial trial evaluated INO-4212 in five groups of healthy subjects. INO-4212 consists of two optimized SynCon DNA plasmids coding for the Ebola glycoprotein antigen from circulating Ebola strains from 1975 - 2014. These plasmids were tested separately and together in muscle and skin in five study arms, one including Inovio's DNA-based IL-12 immune activator. Of 69 evaluated subjects, 64 (92.7%) seroconverted and mounted a strong antibody response to the Ebola glycoprotein antigen following the three dose immunization regimen; 48 subjects (69.6%) seroconverted after only two doses.
Significantly, in the study arm using intradermal (SKIN) administration, 13 of 13 evaluable subjects (100%) generated antigen-specific antibody responses after only two doses and all remained seropositive after three immunizations. Similarly, in the study arm receiving the vaccine with intramuscular administration in combination with plasmid IL-12, 12 of 13 evaluable subjects (92.3%) demonstrated strong antibody responses after only two immunizations and 13 of 13 (100%) produced strong antibody responses after three immunizations.
The future of Inovio is at hand and for those that are "short" the stock, it might be a very dangerous investment. Unless used as a hedge for a long position, the risk that on any given day Inovio might further demonstrate the capability to ink extraordinary partnerships, be awarded massive grants from government and private agencies simply outweigh the risks of betting against the future of Inovio.
Resting comfortably on uncompromising results in treating both HPV and Ebola, the company is more at risk of being bought out "too cheap" than it would be to take a step back due to issues in the clinic. Inovio has demonstrated near 100% safety and tolerability results, accompanied by the generation of robust t-cell activity. The early proving ground has laid the strong framework for Inovio to quickly progress in many avenues of growth. Because Inovio can do in weeks what other companies cannot do in months, or even years, should propel investors to take a close look at the future for Inovio.
With a strong balance sheet and a well recognized and peer awarded medical team, the pieces are in place to transform the way cancer and infectious diseases will be treated in the very near future. Not only are the clinical trials and results in favor of Inovio, even the congressional weight of trying to regulate drug company pricing models also plays into positive favor for an investment in Inovio.
Because Inovio has the unique ability to treat in-vivo instead of in-vitro, not only is the time and expense significantly mitigated, the costs associated with progressing though trials can be significantly shorter and less costly, ultimately allowing for lower priced treatment of patients.
Risks are always lurking the investment arena. But, the biggest risk I see right now as it relates to how the stock might perform short term is that it couples closely with the IBB, which is a biotech ETF that has gotten clobbered in the prior twelve months. Because Inovio trades in relative tandem to the IBB, short term pullbacks can be expected. However, the stock can quickly rebound with momentum, as seen in the prior week of trading.
My belief is that Inovio needs to do all that it can do to get the price of the stock up as soon as possible to avoid a low ball offer for the company. Institutional investors settle too cheaply, eager to net 20%-30% on investments instead of looking long term on a company's potential. Unless Inovio was offered more than $50.00 a share, I personally would balk at the offer, based entirely on the market position and current potential that Inovio holds over competitors. While perhaps giving up a substantial gain, I believe that Inovio is a generational stock and I want to participate in its long term rewards.
Inovio has a lot to show us, much of it slated for release in the coming months. In my opinion, the second quarter of 2016 will be the start of the transformative year that Dr. Joseph Kim alluded to in 2015.
We shall soon see, and I am eager to be proven right on my bullish case for Inovio.
Disclosure: I am/we are 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.