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Perception is reality. And that’s a harsh reality for Inovio Pharmaceuticals (NASDAQ:INO) and investors in INO stock. The stock is down 62% since the end of June. However, if you listen to at least one analyst, the stock has further to drop.
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If you’ve been keeping up with the vaccine race, you’ll recall that Inovio’s Covid-19 vaccine candidate uses unproven DNA vaccine technology. With the population still anxious about a vaccine in general, the idea of a vaccine that uses DNA may be a bridge too far for the Food and Drug Administration (FDA).
But getting its vaccine approved is only the first of two problems that may keep INO stock down. The second I believe is actually the larger threat that may be just coming to light. But both represent the fundamental risk of biotech stocks in the face of a global pandemic, nothing is decided until it’s decided.
Let’s look at each individually.
The FDA Has a Few Questions
To a biotech firm, those words must be like hearing you’re going to get audited by the Internal Revenue Service. The FDA is not letting Inovio move into late-stage trials for its Covid-19 vaccine candidate, INO-4800, until it answers some questions.
The problem is nobody, not even the bearish analysts, knows exactly what the FDA’s questions are. According to Inovio, the company has not seen any side effects in its Phase 1 trial. So what could it be?
Based on what I know of Inovio’s progress to date, there could be several issues. The first may be the size of Inovio’s trial. Johnson & Johnson (NYSE:JNJ) is going forward with a very robust 60,000 candidate trial. With the scrutiny being put