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Inovio Pharmaceuticals (NASDAQ: INO) made headlines in the spring by becoming one of the leaders in the coronavirus vaccine race. Clinical-stage biotechnology designed its potential three-hour vaccine based on the genetic sequence of the coronavirus. And he became one of the first to launch a human trial of his potential vaccine – just a month behind one of today’s leaders, Modern (NASDAQ: ARNM). As a result, Inovio shares climbed 860% in the first half.
But unrest has since rocked the coronavirus vaccine candidate program – and the course of action. Investors were disappointed with the lack of details in Inovio’s initial trial data report, and more recently the U.S. Food and Drug Administration halted the start of the company’s final-stage study. . Stocks are now down 69% from their June high.
But the turmoil may soon be over. This month is a time when everything will get better – or everything will get a whole lot worse. Let’s take a closer look.
Image source: Getty Images.
The FDA has questions
The FDA put a partial clinical suspension of the phase 2/3 trial planned by Inovio at the end of September. The FDA had further questions about the trial and the device Inovio used to deliver its coronavirus vaccine candidate. In a statement to Philadelphia Business Journal On Nov. 2, Inovio said it responded to questions from the FDA. Inovio did not say when he responded, but the company had originally planned to do so sometime in October. From that point on, the FDA has 30 days to contact Inovio and decide if the trial can go ahead. This means that we can probably expect a response from the FDA this month.
And that’s not the only problem that plagued Inovio. When the company released interim Phase 1 data on June 30, it said 94% of trial participants exhibited an immune response based on the activity of binding and neutralizing antibodies and the T-cell response. It’s positive. But unlike Moderna, Inovio did not provide specific levels of neutralizing antibodies, which are considered essential because they block infection. Investors sanctioned the stock and it fell 27% in one trading session.
Trial update
In the August results report, Inovio offered an update on the trial. The company said 100% of the volunteers showed an overall immune response – but still didn’t give more details on the antibody levels. Inovio said the full report is under peer review for publication in a medical journal.
As investors hungry for more detailed data, they also began to worry about Inovio’s funding levels and production capacity. Operation Warp Speed (OWS), the government effort to bring a vaccine to market, has provided billions of dollars to biotech and pharmaceutical companies, including Moderna. (Moderna, in fact, earned $ 2.5 billion in support from the U.S. government.) But OWS did not fund Inovio. The awards from the company, the Department of Defense, and private organizations total only $ 110 million.
Inovio anticipates a production capacity of 100 million doses from next year. Moderna is scaling up to deliver 500 million to 1 billion doses by then. And Pfizer (NYSE: PFE) and partner BioNTech (NASDAQ: BNTX), also a leader in the vaccine race, plan to deliver 1.3 billion doses from then on.
It is clear that funding levels and manufacturing capacity present challenges for Inovio. And the lack of detail in the Phase 1 data report makes it difficult for investors to assess the strength of the vaccine candidate. But the biggest headwind that Inovio is currently facing is the latest action from the FDA. As mentioned above, this story is expected to be resolved by the end of November.
Room for more than one player
If the response from the FDA is favorable, this could be the positive catalyst that Inovio stocks need. They may not return to their June highs, but they are likely to recover some ground. When it comes to the vaccination schedule, it’s clear that Inovio won’t make it to the finish line first. Inovio had planned to start the study in September, so it will be at least six weeks late. And the company, at this point, has neither the capacity nor the funding to become the main player. But the need for a coronavirus vaccine paves the way for more than one player – even those who are late at the finish line. If Inovio’s data is solid, the company could potentially carve out market share.
And finally, one more bright spot: the success of this program can boost investor confidence in Inovio’s other pipeline programs. This is because all of Inovio’s programs are based on the same technology. The company injects DNA plasmids – made from the DNA sequence of a virus or tumor – intradermally or intramuscularly. This stimulates the production of an antigen which will then trigger the body’s immune response.
It is impossible to predict whether the FDA will allow Inovio’s late-stage trial. But there are two positives about the hold. First, it was not related to an adverse event in the phase 1 trial of the vaccine candidate. And second, the FDA has cleared the Phase 1 trial to continue. Yet if the FDA’s response is negative, the hopes of Inovio’s coronavirus vaccine may be dashed. And don’t expect anything positive from stock performance.
So what should an investor do? Right now, during this critical month, it’s best to watch Inovio’s story from afar.
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