according to Oppenheimer’s Hartaj Singh.
“The lifting of the US FDA partial clinical hold is important, for regulatory and future commercial purposes,” the 5-star analyst said. “With the pandemic potentially receding in the US (COVID-19 infections falling), the company still expects to recruit less than 10% of its INNOVATE patients from the US. However, the gravitas of an FDA imprimatur and the potential of future US approval are important.”
There have been other recent positive developments. India has also signed up for the trial, and INO and the Colombia Ministry of Health and Social Protection have signed a memorandum of understanding (MoU) to develop Covid-19 and possibly other vaccines. Additionally, realizing INO-4800’s inherent advantages - the vaccine can be kept at room temperature for more than a year – the WHO has jumped on board and initiated a global Phase 3 trial. Singh anticipates interim readouts from the global Phase 3 INNOVATE study “as early as 1H22.”
Oppenheimer analyst Hartaj Singh makes the argument that progress on Inovio's INO-4800 coronavirus vaccine, combined with its INO-5401 cancer vaccine and its Human papillomavirus (HPV) vaccine VGX-3100, could drive Inovio stock higher. How much higher?
Of the three biggest vaccine candidates, Singh sees INO-4800 as the one offering the most immediate value, and contributing $20 per share to his $35 overall target price.
Less well known than competing coronavirus vaccines from Pfizer or Moderna, Singh notes that INO-4800 has several advantages to recommend it. For one, it's DNA-based, and thus can theoretically be modified to combat mutated versions of the COVID-19 coronavirus. For another, it offers a better "safety/tolerability profile," that could recommend it as an alternative to other vaccines.
And for a third, INO-4800 is said to be both easier to store and has a longer shelf life than other vaccines on the market today, which might make it more suitable for stockpiling against future coronavirus outbreaks.
VGX-3100 is the next most valuable of Inovio's vaccine candidates, thinks Singh, being worth perhaps $7 a share. It's also, says the analyst, the vaccine with the "highest sustainability and potential upside on commercialization" for Inovio, as HPV will presumably remain a problem long after the coronavirus pandemic has gone away. Singh also sees "potential to expand into other (pre)cancerous indications" based on research done for VGX-3100.
Finally, Singh sees INO-5401 as worth perhaps $5 a share to Inovio stock. In the analyst's view, INO-5401 could be a "potential breakthrough" drug for treating patients with glioblastoma, a cancer that has not seen a real improvement in treatment options "for decades."
Other vaccine candidates in the pipeline, plus Inovio's cash on hand, make up the final $3 of the analyst's target valuation for Inovio.
Not all this value may be immediately apparent to investors, however. Notably, Singh admits that revenues at Inovio over the past three years have been measured in the low single digits of millions of dollars. It won't be until 2022, says the analyst before sales really grow appreciably. But once these vaccines begin coming to market, the analyst sees significant growth potential: $656 million in sales in 2022, twice that in 2023, $2.1 billion in 2024, and $3 billion in 2025.
Indeed, by 2025, the analyst forecasts that Inovio could be earning $6.48 per share, per year, making today's price target of $35 look cheap indeed.
In the meantime, though, investors will need to be patient. Profits will only emerge alongside sales in 2022 -- $1.46 per share.
