Inovio Pharmaceuticals (NASDAQ:INO). The company has been in the news recently as it is one of several firms trying to develop a vaccine to the Zika Virus. This, along with rapidly improving sentiment on the biotech sector which has emerged in recent trading days
However, Inovio is much more than a possible Zika vaccine and that is not even the main attraction of owning this small biotech concern that now sports a market capitalization of just under $700 million. First, the company has an extensive pipeline of emerging vaccines that are moving along in development. Second, over 20% of its market capitalization is represented by net cash on its balance sheet. Inovio is well funded for all of its development at least through 2018. This is important given demand for secondary offerings for small biotech concerns has almost completely dried up in the past couple of months, although this has improved some recently. This helped push down the stock prices of most companies that need to raise funding in the foreseeable future.
Inovio has numerous trial milestones in 2016. One of the more intriguing vaccines the company has in its pipeline is its INO-3112 immunotherapy compound. It reached a collaboration deal with larger MedImmune around this focus area in the summer of 2015 which granted Medimmune the exclusive rights to INO-3112 immunotherapy. Inovio received $27.5 million dollars as an upfront payment and will receive performance milestone payments up to $700 million upon reaching development and commercial milestones. In addition, Medimmune will also fund all development costs associated with the study and has agreed to pay Inovio double-digit tiered royalties upon commercialization of INO-3112. Inovio plans to initiate human trials sometime in 2016.
Although most of the company's pipeline consists of early stage or pre-clinical vaccines it does have other partnerships with DARPA, other government agencies and Roche (OTCQX:RHHBY). This speaks to the potential of Inovio's underlying technology which consists of two parts.
First, Inovio's DNA-based immunotherapies are designed to treat and/or prevent diseases. For this they have something called SynCon® DNA plasmid technology. This platform is based on this concept. The company takes the genetic code for a vital element of the immune system or immune response and facilitates significant production of it in the body. This novel approach to synthetically designing the genetic code hopefully will help the body more readily break the body's tolerance of cancerous cells or achieve more universal protection against both existing and newly emerging strains of pathogens. These products are designed to produce multiple disease-specific antigens, cytokines that help kick-start the immune system, and monoclonal antibodies that provide a differentiated immune response to rapidly protect against a target disease. In addition, Inovio's electroporation delivery technology then plays a vital role in activating best-in-class immune responses from these immunotherapy products.
Although years away from a recurring revenue stream, the company will continue to get milestone payments from its development partners as its pipeline moves through trials. In addition, it has strong support due to its potential from the analyst community. 4 Buy ratings have been issued over the last three months by analyst firms including Piper Jaffray and Stifel Nicolaus. Their price targets range from $13 to $31 on this speculative but very promising emerging vaccine play. A stake is worthy of consideration for aggressive investors
