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Shares of Inovio Pharmaceuticals dropped about 7% in Thursday’s pre-market trading after the biotech company priced its $150.5 million share offering.
Inovio (INO) is offering to sell 17,700,000 shares of its common stock at a price of $8.50 per piece, reflecting a 14% discount to the closing price on Jan. 20. Furthermore, Inovio has granted the underwriters of the offering a 30-day option to buy up to an additional 2,655,000 shares of common stock. The share sale is expected to close by January 25, pending customary closing conditions. BofA Securities, Jefferies and Cantor are acting as joint book-running managers for the offering.
Inovio describes itself as the only company to have clinically demonstrated that a DNA medicine can be delivered directly into cells in the body via a proprietary smart device to produce a robust and tolerable immune response. The biotech company has a number of programs in development targeting HPV-related cancers, recurrent respiratory papillomatosis, and prostate cancer, among others. Additionally, Inovio is currently conducting clinical trials for INO-4800, its COVID-19 vaccine candidate, which targets the major antigen spike protein of the SARS-CoV-2 virus.
“Inovio intends to use the net proceeds from this offering for the development of its clinical pipeline, including clinical development expenses relating to INO-4800 and research and development expenses, and for general corporate purposes, including working capital and general and administrative expenses,” the company stated.
As Inovio shares have already surged a stellar 196% over the past year, analysts are sidelined on the stock with a Hold consensus. Looking ahead, the average analyst price target of $13 indicates additional upside potential of 34% over the coming 12 months.
Earlier this month, Benchmark analyst Aydin Huseynov slashed the stock's price target to $15 from $25 in view of the operational challenges of INO-4800 trials and manufacturing amid a "shrinking and competitive market" for COVID-19 vaccines.
However, Huseynov stuck to his Buy rating, citing "potentially significant upside" for the stock if Inovio inks pre-sales deals of INO-4800 with multiple foreign governments. (See Inovio stock analysis on TipRanks).
Furthermore, the analyst believes that the company would need to enter into a partnership with a “strong and reputable” biopharma partner to help with the operational capacity and speed to manufacture several hundred million vaccine doses in 2021 and beyond.