<p>The Chinese coronavirus outbreak is an unequivocally terrible tragedy. Efforts to deal with this outbreak must first and foremost be aware of the human element. But to acknowledge this, there is also an opportunity – and sorry for how difficult that word sounds in this context – for pharmaceutical and biotechnology companies. Recently, this bull drove the case for Inovio Pharmaceuticals (NASDAQ: INO) and INO stocks.
Inovio was hardly a well-known name outside the biotechnology community and was one of the high-flying names in the late 1990s / early 2000s. At one point, INO stock was approaching $ 200 per share. Today, stocks are trading at a few cents above $ 3. Even at its most recent peak, equity was just below the $ 6 mark.
However, the INO share has risen since the beginning of October last year. And it really made headlines when it announced a possible coronavirus vaccine last month.
Even better, according to NBC San Diego, “Coalition for Epidemic Preparedness Innovations granted up to $ 9 million to support Inovio’s vaccine. It is in preclinical testing and may transition to human trials in early summer. ”
It is an incredibly promising start for this biotechnology company. But can the INO stock complete its wealth-to-rags-to-wealth? Here are three advantages and three disadvantages to consider, starting with the bad news first.
Disadvantage: Regulatory approvals take time
Normally, drug approval requires extensive clinical trials, which takes time that Inovio does not necessarily have. The worst case scenario is that after obtaining these approvals, the demand for the company’s vaccine is gone because the outbreak has subsided.
This was the case with the SARS virus in 2003, where the majority of infections occurred well within a year. Even reducing the time to a few months would not have helped in the SARS case.
Around mid-March 2003, the World Health Organization reported 167 cases. At the end of May, the number of cases was 8,360. But then SARS had peaked. By the end of June, the case had “only” reached 8447.
The conclusion: time is not in favor of the INO share.
Disadvantage: China reluctant to seek help
As a communist government, China has never fully earned the trust of Western and pro-Western nations. One would think, however, that a humanitarian crisis would change hearts and minds, at least temporarily. And you would be wrong.
It is true that China recently opened its doors to the WHO to allow international experts to study the virus and seek solutions. But that is only after tens of thousands have been infected.
China’s reluctance to seek help while its own people are dying in the streets speaks volumes about their government integrity or lack thereof. In my opinion, it is almost impossible to have a real, trusting relationship with the Chinese Communist Party. As such, I see this as a headwind against Inovio and the United States and China in general.
Disadvantage: Big Pharma beat everyone
As I mentioned earlier, the INO stock was on the verge of touching $ 6, which represented a big step from where it was at the beginning of the year. So what happened? Gilead Sciences (NASDAQ: GILD) entered the picture.
Earlier this month, Gilead announced a research collaboration with Chinese authorities to conduct trials of its antiviral drugs. While we do not know if Gilead’s solution will be effective, the large pharmaceutical company is first on the market.
In addition, with GILD’s large financial resources, it makes it risky for smaller companies such as Inovio to invest their limited resources to fight an industry giant.
Pro: Coronavirus much worse than SARS
Many have compared coronavirus to SARS. But if I place the two outbreaks based on their timelines, I think they’s apples to oranges.
To me, this chart says it all. I exhibited the starting point from when both outbreaks infected 100 people or more. From there, I compiled a cumulative number of cases at certain time intervals. I think you agree that the differences are shocking.
My biggest takeaway is that the acceleration of coronavirus is on an exponential scale in relation to SARS. If we adopt a similar outbreak trend as SARS, we are only at the beginning of this terrible crisis. Cynical, but it’s good for INO stocks and their underlying possible vaccine.
Pro: INO stock is very relevant
I’m not a doctor and I do not play anyone on TV. But I analyze numbers daily and they paint me a very gloomy picture.
According to the latest update from The New York Times, coronavirus has infected 37,198 people. Furthermore, the death toll in China has jumped to 811, surpassing the SARS epidemic. However, SARS lasted about eight months. With coronavirus, we are only six weeks long.
Although Gilead may have the benefits of the market first, I’m not sure if that means much. After all, the Times has reported on new cases away from the epicenter of the virus, such as Britain and Spain. Thus, we may need Inovio’s vaccine.
Pro: Inovio’s profound medical breakthrough
Although Inovio does not supply its vaccine for any reason, the company received free publicity. In my opinion, the biggest catalyst for INO stocks was not about the vaccine. Instead, it was how quickly the underlying biotechnology company produced a possible solution.
On January 10, Chinese researchers online revealed the genetic sequence of coronavirus. Within 24 hours, Inovio responded with its vaccine. As Inovio CEO Joseph Kim put it, the company’s technology revolves around DNA. Therefore, they did not need a physical sample of the virus, only the genetic profile.
In my opinion, these are innovations at the next level, something out of science fiction. It’s just that before, probably most investors did not know about this technology.
“Thanks” to the coronavirus, they do it now.
Conclusion: A convincing purchase
Like other investors, I had never heard of Inovio, even though one of their headquarters is in my backyard. But I’m paying attention now because of this outbreak.
But what is very convincing about the INO share is its underlying innovations. Inovio may not win war on coronavirus vaccines. However, it may be able to respond and enter the market only with the next outbreak.
At the time of writing, Josh Enomoto had no position in any of the above securities.