- 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.
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
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This article was written by
Portuguese independent trader and analyst. I have worked for both sell side (brokerage) and buy side (fund management) institutions. I've been investing professionally for around 30 years.
I have a Marketplace service here on Seeking Alpha called Idea Generator that's focused on deep value, real-time actionable ideas based on valuation and catalysts. The Idea Generator portfolio has beaten the S&P 500 by more than 74% since inception (2015).
I can be reached at paulo.santosATthinkfn.com.
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.
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