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Inovio Pharmaceuticals: COVID-19 Vaccine Not the Only Path to Success

After a market crushing performance during the first half of the year, one of 2020’s best performers has been struggling of late.    

The last month has seen shares of Inovio Pharmaceuticals (INO) decline by 27%. The publication of murky data for the biotech’s COVID-19 DNA vaccine candidate INO-4800 and a sense it is lagging behind competitors’ progress have raised concerns amongst investors. Add in an overheated valuation and maybe a sell off was inevitable.

As a reminder, despite the souring sentiment, the stock is still up by a majestic 510% on a year-to-date basis.

With the public and investors’ focus squarely on COVID-19 related developments, it is easy to forget these companies have other drugs in various states of development.

On Thursday, Inovio shares broke out of the downtrend and surged by 9%. For a change the uptick had nothing to do with COVID-19.

Which brings us to INO-3107, Inovio’s treatment for recurrent respiratory papillomatosis (RRP). Inovio announced INO-3107 had been designated Orphan Drug status by the FDA. The status is given to rare diseases with a small addressable market that otherwise not be profitable enough to develop, therefore the government steps in to provide support. The designation should provide Inovio with various incentives, including seven years of market exclusivity should the treatment gain FDA approval, a prescription drug user fee waiver, and tax credits for qualified clinical trials.

INO-3107 is currently being evaluated in a Phase 1/2 trial with 63 subjects participating in the study.

Defined by the growth of noncancerous tumors that can result in life-threatening airway obstructions, there are currently 15,000 RRP cases in the U.S.

H.C.Wainwright analyst Ram Selvaraju commented, “These incentives could help the company advance future clinical development of INO-3107 and maximize the DNA medicine’s commercial value, in our view… We believe INO-3107 has the potential to address the underlying recurring virus, delay or eliminate the need for frequent surgery, and provide a long term treatment option to improve the quality of life for both adult and pediatric RRP patients.”

However, it is still early days in the drug’s development and for now Selvaraju stays on the sidelines with a Neutral rating. (To watch Selvaraju’s track record, click here)

Selvaraju’s colleagues agree. Inovio currently has a Hold consensus rating, based on 2 Buys, 5 holds and 1 Sell. The average price target comes in at $22 and implies shares will remain range bound for now. (See Inovio stock-price forecast on TipRanks)

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