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Inovio: Despite COVID-19 Vaccine Headwinds, Core Value Drivers Remain Intact, Says 5-Star Analyst

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In the COVID-19 vaccine race, Inovio (INO) just hit a road block. On Monday, September 28, the vaccine maker announced that the FDA put a partial clinical hold on its planned Phase 2/3 study of its COVID-19 vaccine candidate, INO-4800, with shares tumbling in response to the news.

What was the reason for the hold? The FDA has additional questions it would like answered about the trial and the electroporation delivery device, CELLECTRA 2000. Inovio will submit answers to the questions, and after this, the FDA will have 30 days to respond.

Weighing in on the development for Maxim, 5-star analyst Jason McCarthy points out that the Phase 2/3 trial has yet to kick off, and Phase 1 is still going on, suggesting it's most likely not a safety issue as it was with AstraZeneca.

It should be noted that the FDA also recently updated its guidelines around COVID-19 vaccine Emergency Use Authorizations (EUAs), as well as the process and data it would use to grant EUAs. According to McCarthy, these new guidelines could have played a role in the FDA’s decision regarding INO. To this end, the analyst believes the issues will be resolved in October or November.

As the COVID-19 opportunity remains intact, the analyst thinks that shares were “oversold” on the news. “Taken together, the pullback from mid-summer stock price highs, which were driven by enthusiasm around COVID-19 vaccines, including [the last] sell-off, we see an opportunity to build a position in INO,” he commented.

That being said, “the INO story is still more about its core oncology programs, one of which is heading to Phase 3 data this year and represents an inflection point for Inovio,” in McCarthy’s opinion. He is referring to VGX-3100, its lead program designed to target the E6 and E7 proteins of the HPV virus. It is being evaluated as a treatment for several HPV-associated precancerous conditions, including pivotal Phase 3 REVEAL-1 and 2 cervical dysplasia, Phase 2 AIN anal dysplasia and Phase 2 VIN vulvar dysplasia.

Data from the Phase 3 REVEAL-1 study is set to be released before the end of 2020. “In our view, a positive outcome for REVEAL 1 would de-risk the REVEAL 2 readout next year, and thus represents a potential inflection point for INO shares,” McCarthy explained.

If that wasn’t enough, the analyst is also watching for an update on its glioblastoma therapy, INO-5401. While the positive data for this program was overshadowed by INO-4800, McCarthy sees it as another point of strength.

Summing it all up, McCarthy stated, “...don't miss the forest for the trees with Inovio; oncology is still the core driver and it's going, in our view, relatively unnoticed with all the activity and attention on COVID.”

All of this prompted McCarthy to bump up his rating from Hold to Buy. Along with the upgrade, he attached a $20 price target, putting the upside potential at 72%. (To watch McCarthy’s track record, click here)

Looking at the consensus breakdown, other analysts take a more cautious approach. 2 Buys, 5 Holds and 1 Sell add up to a Hold consensus rating. However, at $13.71, the average price target implies 18% upside potential. (See INO stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.