Over the past few months, plenty of pharmaceutical and biotech stocks have come into focus as potential ‘coronavirus plays’. One such stock is that of Inovio Pharmaceuticals Inc (NASDAQ:INO), which rallied strongly up until July on the back of its work on a COVID 19 vaccine. However, due to slow progress, the stock slumped back in subsequent days. Hence, it could be worthwhile to figure out if the stock is worth buying.
Red Flags
From the period between January and July, the Inovio stock rallied by as much as 456% but since then it has nosedived considerably. The biggest reason behind the stock’s poor performance is due to the United States Food and Drug Administration’s decision to put the Phase 2/3 clinical trial of its COVID 19 vaccine on partial hold.
It was announced that the FDA has further questions with regards to the clinical trial of the COVID 19 vaccine INO 4800. The company provided an update with regard to the partial hold on September 28. However, it has not provided any further updates.
Due to the uncertainty around the clinical trial, the stock has plummeted. On the other hand, competing companies like Moderna, Pfizer, and BioNTech have zoomed ahead with their late-stage trials. Hence, it is not a surprise that the optimism around Inovio has evaporated among investors.
Further Troubles
The partial hold on the Phase 2/3 trial for INO 4800 is not the only hit that the company took recently. In addition to that clinical trial, Inovio was also going to get funding for the same by the last days of September according to Joseph Kim, the Chief Executive Officer. However, due to the partial hold, it is believed that those funds have not been disbursed to the company.
That proved to be another significant blow to the company’s prospects over the short term. Many experts believe that the stock could be avoided until Inovio gets the go-ahead from the FDA for its trial.
Conclusion
It is quite clear that buying the Inovio stock at this point is going to be nothing more than a gamble for investors. Moreover, the company is going to release its earnings on November 9 and that could provide a clearer picture of the situation.
However, at the same time, it is also necessary to keep in mind that the company remains positive about its product and are confident that the FDA’s questions will be answered in a satisfactory manner. It could be a good idea for investors to perhaps keep an eye on the stock over the coming weeks.
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