Inovio Pharmaceuticals (NASDAQ: $INO) will not close this year at the same value that its stock enjoyed this summer. Still, the share has an increase of 170% compared to the beginning of the year. Now the stock seems to be getting a boost again due to the recently released third quarter results. On Monday evening, (November 9, 2020) after the market closed, the report was published and a wave of reactions arose.
Things are looking rosy today for Inovio shareholders as the stock is already up 25% today, heading towards $11 per share. The figures have now been confirmed and the company can therefore say that it has had a good quarter. Sales of $236,178 were reported, which was much lower than the $866,863 in the same period last year. The result is well below the average analyst estimate of $3.05 million.
Is that cause for panic or do the figures cover this turn? Inovio posted net profit of $19.2 million in the third quarter, equivalent to $0.11 per share. Last year, that was a net loss of $23.1 million or $0.25 per share in the same period. The company is doing much better this calendar year than last year. Finally, the quarter ended with cash, cash equivalents, and short-term investments totaling $337.2 million. This is also a key difference from the $89.5 million reported on the last day of 2019. Other key figures are the consensus estimated earnings per share which stands at -$0.19 (+24.0% year over year) and the consensus estimated earnings at $3.05 million (+250.6% year over year).
Inovio has not beaten EPS estimates and turnover estimates with this, but that does not seem to be of concern to many shareholders and analysts. The essence now lies mainly in the developments surrounding research and development partnerships. The large difference in net profit can be explained by looking at the $35.3 million change in the fair value of a derivative liability with its convertible bonds from August 2019. The sale of its GeneOne investment also generated a gain of $27 million. If these developments had not taken place, the company would have suffered another net loss. It would actually be worse than last year, with a net loss of $43.1 million, which equates to $0.26 per share. For this calculation and conclusion, the abacus are not even necessary.
The question that remains is: why the share has increased so much? This is mainly due to the fact that shareholders and analysts look at the developments of the studies that Inovio conducts. The FDA had previously asked the company about a vaccine candidate. A partial clinical halt of a planned late-stage study of the COVID-19 vaccine candidate INO-4800 was then the result. The questions were likely answered by Inovio at the end of October, which would mean that the FDA will come back with a response this month. This is a planned phase 2/3 study of which we will probably know before December whether the process can be continued.
Thanks to these recent developments, Inovio has a better outlook now than after announcing the first investigative report, when a lack of details caused shareholders to partially lose confidence in Inovio. Furthermore, the test results in June were also not surprising. The figures were very positive, but they were not innovative compared to previous publications by competitors such as Moderna. When Operation Warp Speed was founded, it soon became clear that Inovio missed the boat and could not count on governmental support. They had to bite through the sour apple.
We have passed that period of time and Inovio is now focusing on the next possibilities, such as predicting a production capacity of 100 million doses in 2021. This is not a number close to competitors like Pfizer and Moderna (who prediction to produce over 1 billion doses), but it shouldn’t be a huge disappointment. Various experts have already indicated that several pharmaceutical companies are needed to provide a large part of the world population with a vaccine. Funding levels and production capacity remain a serious concern for Inovio, but that does not alter the fact that the company could also increase significantly, once an FDA approval at the end of this month has been given.
Finally, the 25th Society for Neuro-Oncology Annual Meeting will be held in Austin, Texas between November 19-22. There, the biotech will present its data for the INO-5401, a highly potential treatment for glioblastoma. Something that – given the Covid-19 mania – can also be an important factor for the movement of the stock.
Neither PSN nor its owners, members, officers, directors, partners, consultants, nor anyone involved in the publication of this website, is a registered investment adviser or broker-dealer or associated person with a registered investment adviser or broker-dealer and none of the foregoing make any recommendation that the purchase or sale of securities of any company profiled in the PSN website is suitable or advisable for any person or that an investment or transaction in such securities will be profitable. The information contained in the PSN website is not intended to be, and shall not constitute, an offer to sell nor the solicitation of any offer to buy any security. The information presented in the PSN website is provided for informational purposes only and is not to be treated as advice or a recommendation to make any specific investment. Please consult with an independent investment adviser and qualified investment professional before making an investment decision.