Inovio: A Strong Sell

Summary

• Inovio has run a lot on speculation about its coronavirus vaccine.
• This article shows just how likely successful such an Inovio vaccine is.
• It shows this through two perspectives.
• This idea was discussed in more depth with members of my private investing community, Idea Generator. Get started today »

This won’t be an overcomplex article for sure. I'm just going to show two reasons, which reinforce each other, that make Inovio (NASDAQ:INO) an obvious strong sell.

First, we need to discuss why Inovio stock is up around 300% in 2020. The reason, of course, is speculation around INO-4800, Inovio’s vaccine candidate for COVID-19.

Hence, to know if Inovio should “stay up,” we should try to establish how likely to succeed this COVID-19 vaccine is. The two reasons I’m going to put forth will clearly show what’s likely to happen.

Reason 1 – Inovio Promises A Vaccine For Every Epidemic That Gets On The News

This reason is, to a great extent, the same as the short thesis put forth by Citron Research.

This also is not the first time I write on Inovio for this reason. As far back as 2017 I was aware of Inovio’s nature in this regard. Back then I wrote an article titled “Inovio Speculators Might Experience Fever-Like Symptoms On Account Of The Zika Virus.” In that article, I showed that Inovio already was at least in its third epidemic for which it was promising a vaccine (Ebola, MERS, Zika). For a while Inovio was feverish, then its stock was destroyed as Inovio never delivered on anything.

As it turns out, Inovio was actually on its sixth promised vaccine (H1N5, H5N1, Zika, HIV, Ebola, Mers). Inovio never delivered a vaccine for any of those epidemics. It only ever promised a vaccine for every epidemic that got on the news.

With this being the factual truth, what are the odds that things will be any different with COVID-19, its seventh attempt at the same thing? Very low, I’d say.

Reason 2 – Inovio’s Promised Vaccine Is One Of 76 Vaccines In Development For COVID-19

Now, we’ve already seen how reliable Inovio is “in a vacuum” (without considering competition). It promised six different vaccines in the past 10 years. It delivered zero.

However, for COVID-19, things are even more interesting. You see, there currently are 76 vaccine candidates in development for COVID-19. And don’t be impressed that Inovio’s vaccine is one of five supposedly already in trials, because Inovio is often fast at putting its candidates into trials. And besides, Inovio trial's estimated conclusion is in April 2021.

Now, consider the following:

• There are 75 competitors to Inovio’s vaccine.
• These competitors are often not serial “vaccine promisers” with no delivered vaccines. Instead, they’re often well-known names like Johnson & Johnson (JNJ) or well-regarded companies like Moderna (MRNA)*.
• Indeed, some competitors like AstraZeneca/Oxford (AZN) already are racing to test vaccines in 6,000 people within one month (vs. 40 within one year for Inovio), and to industrialize the vaccine during 2020 (millions of units). More such efforts to immediate industrialize vaccines also are in motion in India, China, etc.

Against this backdrop, and this competition, what do you think the odds are for Inovio, a serial vaccine promiser with nothing to show for its efforts except serial issuance of stock?

They are low. Very low.

Conclusion

The thesis here is rather simple. Inovio, a quick and serial promiser of vaccines that has never delivered a vaccine, is up against 75 other candidates set to develop a vaccine for COVID-19. Several of those candidates are so confident in their clinical success that they already are advancing production plans in order to have immediate capacity to deliver tens of millions of vaccine units during 2020.

The odds of Inovio winning this race are close to zero. The odds of Inovio even finishing such a race with no competition already were near zero, considering its past.

What's more likely is for Inovio to go back to where it started from. Around $3.00. This will happen much faster this time, if any of the competitors show success (which already seems to be very likely for AstraZeneca (AZN)/Oxford, and maybe also for others).

* I actually think AstraZeneca/Oxford's potential success might also be a negative for MRNA

Analyst’s Disclosure: I am/we are short 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.

Comments

[bengalesq]

Great call here. Not at the time it was written but after the run-up. I was going to buy PUTS but the premium was insane. Needed to be down 50% for me to break even. Turns out that did happen and they are probably worth a bunch now but it was too rich for my blood.

[joel menkes]

"Great call here. Not at the time it was written but after the run-up."

Yeah, but now you're cherry-picking timeframes. May 1, so like nearing 4 months after the article and we still haven't reached as low as we were on may 1. In fact we're almost 20% higher than where the yahoo chart says we closed on may 1. $10.28 So a 20% loser call isn't a great call in my book. Come back in another 3 1/2 months and let's see if it's still a "great call" or things have reversed again. In the meantime, fact is you likely would have lost money had you bought PUTS that day. The time deterioration alone and the 20% appreciation of the stock since then would have seen to that.

Better go fix your backward looking telescope 'cause it seems to me there may be some problems with its optics. You evidently got a distorted image. That's pretty weird since its a backward look and all the data's known. Usually it's the forward looking telescope that's giving out distortions and causing losses in the future.

[sb70]

Such a lame article. Its good not to overcomplicate matter. But this analysis is just silly.

[bengalesq]

Update: No good answer. Do not have the sack to short-sell it and the cost on the puts is prohibitive. Most puts require the stock to get to 15 ish for me to break even. F that.

[bengalesq]

NY Times article updated 6/20/20.
www.nytimes.com/...
If you shorted the stock at author's penning of story you got hammered. Question is what to do now at $32.49 up 216% since the article was written. Not rhetorical. Would love some feedback.

[joel menkes]

"Not rhetorical. Would love some feedback."

Take some profit off the table, if the stock falls a decent amount put some of that money back into it. That's me, you have to decide for yourself what's good for you.

[JeffreyScott]

INO-4800 moving into Phase 2/3. Join the fight! Stay Long INO.

[Elicc]

INO should be in pool position for the next federal aid

[joel menkes]

"...for the next federal aid"

Kim was interviewed on cnn this morning so they are getting recognition. Unfortunately the audio was lousy and the interview got cut short. Discussed some on the progress and timeline, were just getting into the financing end when they had to cut.

I see the market may finally be taking the general economic situation with some reality. Took a nap when things weren't so bad a bit over 1 1/2 hours ago.

[Lejun James Shao]

Should have bought it at 10.00.

[Lejun James Shao]

Finally bought it at 11.15 on 06/08. up 200% so far within 3 weeks.

[joel menkes]

"...up 200% so far within 3 weeks."

Staying greedy or taking at least a bit off the table? Maybe get your cake and eat it, too, by selling some out of the money covered calls on it. With the warning i did that and now they're in the money - 8-). But unless things really get carried away i should be able to eventually roll up and out economically. Ciao, good luck, stay safe

[Lejun James Shao]

@joel menkes Thanks for your advice. INO is the 12th of my picks this year which more than doubled after holding for 1-2 months. I always sell half of my holdings after it doubled and let the remaining share run.

[User 5894621]

obviously have No Idea what you are doing .. Trillions of Economy wiped out .. Billions being pumped into Vaccines .. Moderna, Novavax, Inovio were not invited to the White House for McDonalds and Fries = another LOSER short

[joel menkes]

"obviously have No Idea..."

That probably applies to you rather than us longs. Your short position scaring you now? Should be.

[pgonzalezseda]

Do your home work Joel. INOVIO has promise many vacines in the past, how they have work. ZERO, NADA, ninguna.

[joel menkes]

"ZERO, NADA, ninguna."

Obviously you'd better do your own homework.

I see 3 whole comments for you. I hope the other two at least have some substance. Otherwise you're jut wasting your time here at sa, just as you're wasting all of ours

[lshiang]

I tend to agree that Inovio promised a vaccine for every epidemic and delivered nothing. It is a penny stock to trap speculators.

[Softpropr]

I can’t wait for the movie to come out about the hostile takeover attempt of Inovio Corporation from Microsoft...

[mateo007]

INOVIO Biopharma is very close of the vaccine CODVID-19 this is the true,

[mateo007]

Inovio in this moment is the only Biopharma in the world market that are in the 2 Phase in South Corea in Philadelphia in April 2020 this is real, not only words, and in Inovio Bio pharma vaccine ,The Department of Defense of US invest 11,9 millions and CEPI 9 millios and Bill Gate 5 Millions and INOVIO Pharma have the solution of SARS and Codvid-19 is SARS plus another viruses think and get your own conclusion, some people only repeat, no think about the real things.

[Patent Plays]

Enough "short selling" the collective hope of finding a cure or vaccine to COVID-19- BIOTECHS producing a vaccine. Just like 2008 Banks received protection against short sellers to shore up confidence in our economy. Now we need to shore up humanities right to exist. I've proposed a bi-partisan request to the Senate Finance Committee to immediately freeze the short selling activities of Biotechs working on a vaccine. Its no mystery that the only 2 in Human Trials are Pre-Clinical Stage Biotechs. They expend all they have to find a cure. They need our protection. Money is not more important than lives. twitter.com/...

[Watching n Learning]

This author was a die hard short TSLA several years ago.
ZERO credibility, imo.

[Watching n Learning]

The author seems to have a knack for picking stocks that are not to short, imo.

I don't think he is aware of 12 Month Overall Survival Data from Phase 2 for GLIOBLASTOMA Study is coming up any time now ( most likely in May ), imo.

[Softpropr]

Crazy thing to short INO

[SaintPaul]

I haven't read such a panicked wrong side of the trade since Stone Fox Capital got caught long AAL and the sector over the weekend. Today was Judgement Day. Good to have been short the airlines. Not too hard...they're not flying. But INO....please...this article screams caught on the wrong side of the trade. First off ....of the 70 company's vying for legacy rights for saving Humanity...only 3 are in human trails already....one is a collaborative effort in China...and two are in the US...Moderna & Inovia (INO). INO has shot up because it's backed by the Gates Foundation, CEPI, & the DoD. I'd say people are thinking....hmmmm, those are 3 pretty heavy-hitters and have since bought far far FAR moreol option CALL contracts....than puts. Pull up the options chain on INO .... see for yourself. /cheers.

[tyriqprince]

We all just have to be realistic with what type of market this is. But I agree with you. I'm sticking with this stock. No emotional attachment but you got to risk it to get that biscuit.

[Terry Chrisomalis]

What I think is that Covid-19 is a bounce piece of news for INO and every other biotech out there. Are all 100 biotechs working on Covid-19 now going to be successful or find a cure? Probably not. Maybe 1 or 2 out of the 100 companies that put out a PR. The point is that Inovio is so much more than just Covid-19. It can be evidenced by the brain cancer data they got, you can't fake data. It boils down to data.

"Key interim data from the 52-patient clinical trial showed that 80% (16 of 20) of MGMT gene promoter methylated patients and 75% (24 of 32) of unmethylated patients were progression-free at six months (PFS6)"

pipelinereview.com/...

As much as many will say that this company is fake, a scam etc. Data submitted to the FDA can't be made up unless a biotech is willing to commit fraud to the SEC and FDA. It has good technology and that's all that matters. But I agree with you SaintPaul

[mateo007]

And you forgot to say that the Department of defense of USA put 11,9 millions in INOVIO BIOPHARMA

[SaintPaul]

INO, imo. .....I couldn't resist.

[Elicc]

Paulo, you come short at minus 40% when the party started already from 5 days.

[Paulo Santos]

Elice, this article and others were sumbmitted well before being published

[Elicc]

I have to understand that you already covered and took long position.

[Paulo Santos]

Elicc, even if I covered, I'd never take a long position. What would compel me to do such a thing?

It's very rare that any company can be a short or long, and within a short time and with no developments, it can turn into the opposite.

[orangejay]

This is from the motley fool published today,

A brighter future?
Although early investors in Inovio haven't fared well, it's possible that someone buying the stock today could have better chances of success. Inovio's pipeline includes several promising candidates.

The company's experimental COVID-19 vaccine has attracted the most attention recently. Last week, Inovio completed enrollment in its phase 1 clinical study of INO-4800. It expects to report results from this study in June.

Inovio's lead candidate, though, is immunotherapy VGX-3100. The biotech reported positive interim results in March from two phase 2 studies evaluating VGX-3100 in treating anal dysplasia and vulvar dysplasia, precancerous conditions caused by human papillomavirus (HPV) types 16 and 18. Inovio has a couple of late-stage studies of the drug under way and anticipates reporting results from one of them later in 2020.

The company also has other immunotherapies and vaccines in its pipeline. They're all in either early or mid-stage clinical testing, though. It will be several years before any of them could potentially win regulatory approval.

Could Inovio turn a $10,000 investment today into a fortune over the next decade? Maybe. But with clinical-stage biotech stocks, it's important not to put money at risk that you're not willing to lose. As Inovio's history shows, the potential for loss is real.

[Chihawk Research]

Inovio is going up to $450 million in shares issued since February. All for a biotech worth less than a $2 billion market cap.

[joel menkes]

"Inovio is going up to..."

A bit repetitive, aren't you. And perhaps incorrect per my answer to you on this just posted i guess it was a different ino article you made the same move on.

[MikeFromNZ]

Wow, 284 comments, most of them tedious repetitions, but congratulations @Paulo Santos!

I'll attempt to add a fresh perspective:

1. INO might win, but the odds are against them, and there is no prize for 66th place
2. MRNA also might win, but the ODDS, while arguably more favorable, are also against MRNA, given that they have many large well-established competitors with proven technology
3. Investments by Bill Gates or funding from BARDA don't guarantee anything, success or failure will be determined by clinical outcomes
4. There is substantial downside in INO and MRNA if they don't win
5. If MRNA's vaccine does fail, it will not only vaporize the COVID premium, but also call into question MRNA's entire technology platform
6. Everyone is focused on efficacy, which vaccine will work best, but is ignoring safety. Any one of these speculative stocks, including INO and MRNA, will get destroyed if there are SAEs
7. Stock opinions should be evaluated based on merit, not on the author's position, be that long or short
8. An author's position in a stock, long or short, is driven by his/her opinion on a stock, which should be evaluated based on its own merits, not on the author's position. I personally respect authors who put their own money where their mouths are
9. Complaints that an author who writes a negative opinion is biased because (s)he's short are ridiculous, and complaints about stock manipulation and calls for SEC investigations are absurd. I rarely see hundreds of comments dismissing a long thesis or clamoring for a SEC investigation because the author owns the stock

[Chihawk Research]

@MikeFromNZ Very thoughtful. So in response I'll ask you, why is the consensus that the big boys will succeed? I guess most say because their technology is established. That's valuable, but none of the big pharma guys have ever made a coronavirus vaccine. They were around for SARS and MERS and they are not further than INO on MERS. I realize the world loves their size but how have they done with their Covid-19 therapeutics? I'd say without the slight benefit from Gilead's Remdesivir the answer would be almost zero. So the idea that we assume these guys with old technology are going to clean up is actually silly. They don't just culture up a vaccine and bang. They fail often. Even the flu vaccine is only 45% effective. That might be called a failing level with Covid-19 if several vaccines make it. Big Pharma sees most of their earnings from a handful of the top over the counter drugs and therapeutics in their portfolio and then a few drugs they develop. They are more established and capitalized. But assuming that means they will have great answers is as naive as being certain about a little biotech. At first I thought they would be an answer. Now, I see reasons to doubt them.

[stephen tips]

@chihawk

See, removed again, including your comment in response.

[Chihawk Research]

@Stephen Tips You are right Stephen. That is a total disgrace. There was nothing offensive or profane in the remarks. That is just a wrongful censorship. Find me anytime and I'll share the protest with you mate.

[passing_time]

I can’t wait for the movie to come out about the hostile takeover attempt of Inovio Corporation. It would be about massive shorting efforts from all parts of Wall Street, along with government figures acting on the behalf of a large pharmaceutical company to steal the greatest medical technology platform of all time.

[joel menkes]

"...along with government figures acting on the behalf of a large pharmaceutical company..."

And small. I caught again last night trump's likely influence on the moderna award. During the gathering of the leaders of these companies' vaccine projects the mrna ceo spoke out about how he projected the possibility of his company having a vaccine ready to go to the public by january. The article doesn't show it but i understand fauci said not to get too optimistic over the time to prove success, trump says he prefers hearing the shorter period. The next day mrna gets the up to 463 million award. Government and science by optics. Any of you guys want to get together with me, form our own company, tell trump we think we can have a vaccine to the public by september, and maybe we can get some of our tax money back into our own pockets?

edition.cnn.com/...

[passing_time]

It’s just my opinion, but I think the White House doesn’t want to see an oriental-looking man be the savior of the white race. I think everything possible is being done to get INO’s technology and vaccine in the hands of a large pharmaceutical company that is lead by white people.

[joel menkes]

"...the White House doesn’t want to see an oriental-looking man be the savior of the white race."

Oriental is a rug, asian is preferred. I got that from a filipino when someone in my dept brought up the term. She was really serious about that.

Anyway, if kim can bring it quick trump will laud it imo. Election coming up. And kim i think is korean. So no problem of trump going off script in picking on everything chinese or chinese associated if that is the case with kim's ethnicity. Gotta be chinese or china-associated these days to fit the narrative and be targeted.

abcnews.go.com/...