Inovio Stock Collapses After U.S. Officials Pull Funding For Covid Vaccine Test

Inovio Pharmaceuticals (INO) said Friday the Department of Defense pulled its funding for final-phase testing of the company’s Covid vaccine, prompting INO stock to collapse.




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The decision follows the authorization of three vaccines for emergency use in the U.S. The department told Inovio it isn’t basing its decision on “the awardee or product,” Inovio said in a news release. Now, the biotech company says it will focus on developing the vaccine-device combination for use outside the U.S.

But for INO stock analysts, the company’s window for success is closing. Pfizer (PFE) with development partner BioNTech (BNTX), Moderna (MRNA) and Johnson & Johnson (JNJ) have launched vaccines in the U.S. Novavax (NVAX) is soon expected to follow.

“We have long argued that in the context of the effectiveness and availability of the other vaccines, be they mRNA-based or adenovirus-based, the need for (Inovio’s vaccine) called INO-4800 is unclear, even when considering the different supply chain requirements,” Piper Sandler analyst Christopher Raymond said in a report to clients.

He kept his neutral rating and 7 price target on INO stock.

INO Stock Collapses On Funding Pull

In morning trading in today’s stock market, INO stock plummeted 27.9% near 6.60. In February, INO stock hit its 2021 high at 19. Shares nearly hit 34 in 2020 after U.S. officials decided to fund its Covid vaccine development, but have sloughed off since then.

Last September, the Food and Drug Administration placed Inovio’s coronavirus vaccine on a clinical hold. INO stock fell more than 28% that day. In November, the agency allowed Inovio to continue midstage testing. But today, the Phase 3 test is still on hold.

INO stock hasn’t fully recovered from that point.

Outside U.S. Development

The Department of Defense’s Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense in coordination with other health officials will continue to fund Phase 2 development for the vaccine-device regimen.

After that, Inovio says it will focus on developing the vaccine outside the U.S. The biotech company is also working on a vaccine that would target all Covid variants. That could help salvage some opportunities for Inovio, RBC Capital Markets analyst Gregory Renza said.

“Though we note the extreme low cases in China and South Korea, coupled with the existing license agreements with lead players in ex-U.S. countries could lead to delay in clinical development as well as market opportunities for the company,” he said in his note to clients.

Renza has a sector perform rating and 8 price target on INO stock.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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