<p>There are some companies that remain on the stock exchange for several years. They often publish press releases, they often get a little speculative talk, their share prices rise regularly. Yet for a long time, those press releases never seemed to mean anything more concrete. Unfortunately, Inovio (NASDAQ: INO) is one such company. Inovio has been trading on Nasdaq for more than 20 years. And the INO stock peaked at almost $ 200 a share.
Now, however, Inovio is struggling to stay away from penny stock, and the company is surviving primarily by diluting its shareholder base. Since 2010, Inovio’s outstanding shares have almost quadrupled and increased from 26 million shares since then to over 100 million shares.
Meanwhile, Inovio has not made a profit in even one of these ten years. In fact, it has never even had positive gross margins once during that time. Revenue has now dropped to less than $ 10 million and annual losses have exceeded $ 100 million per year.
Yet hope never seems to die. The Inovio stock spiked again a few weeks ago when traders linked the vaccine development company to hopes of a potential treatment for coronavirus from China. Still, the commercial pop quickly faded. And people had the right to dump the stock – Inovio has a long way to go and there are good chances that it will never reach profitability.
Speculation about coronavirus
In late January, Inovio announced a partnership with Beijing Advaccine to develop the INO-4800 coronavirus vaccine from China. InvestorPlace’s Chris Lau explained the details of how things happened later. To make a long story short, even though they received only $ 9 million in funding related to this development, Inovio’s market capitalization rose by $ 300 million.
I would also note that Phase I clinical trials are a dozen a dozen. The purpose of a phase 1 trial is only to show that a compound is safe in humans and to determine what is the correct dose to generate immune responses. Researchers often perform phase 1 studies on healthy volunteers. And the purpose is not to determine if the drug is effective to a statistically significant degree. The majority of the phase 1 studies are successful and the drug in question can proceed to a more rigorous phase 2 study.
All this to say that putting a vaccine in phase 1 studies against coronavirus means very little. Over the years, Inovio has put potential vaccines to the test for lots of different indications and generated little success for its efforts.
My verdict on INO stock
It is important to separate the effects of coronavirus on Inovio’s share price from the rest of the business. See what has happened to Alpha Pro Tech (NYSEMKT: APT), Lakeland Industries (NASDAQ: LAKE) and other companies that can generate more revenue from coronavirus. Although the virus has gained momentum in recent days, these stocks remain well below their recent trading highs.
Ian Bezek has written more than 1000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $ 300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek. At the time of writing, he had no positions in any of the above securities.