<p>Inovio Pharmaceuticals (NASDAQ: INO) shares have been on fire. In fact, while the rest of the market is struggling as volatility rises, the INO stock and a whole group of others continue to thrive. Why is it like that?
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Many of these smaller biotechnological stocks continue to struggle with hopes that they can get the cure or play a role in finding a vaccine against coronavirus. As the virus continues to sweep across the world, it is causing chaos.
Some are in a state of panic, as consumers (even in mostly unaffected areas) clean out goods. Take a look at this image of a local Costco Wholesale (NASDAQ: COST) in Chicago to get an idea of it. And this is in a country where the virus has had very little impact (except on the news).
I would not say that it is an overreaction, but the level of panic is quite high. There have been more than 3,000 deaths and 94,000 infections worldwide. As it spreads to other countries, it creates more concern among global leaders. Companies cancel conferences and events, the Federal Reserve lowers interest rates and Italy considers closing schools.
The INO share rose 69% on Tuesday and is moving higher again on Wednesday, as investors hope it can get an answer.
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Inovio has undergone some major outbreaks so far in 2020 – and no, it has not been all due to coronavirus.
Many investors probably think that the INO share has only moved higher because of it. It has admittedly been the catalyst lately, but it has not been the catalyst all year. In January, Inovio rose to the 200-week moving average but was quickly rejected by this brand. Although it seems to defeat, it was not.
To get there, stocks had to break out during long-term downward resistance (blue line). It was a bit dicey, but this mark was mostly held as support when the INO share retreated in the following weeks. With its latest rise, however, Inovio officially breaks above the 200-week moving average and clears $ 6 during the process.
Along the way, the INO share has kept its moving average of 10 weeks (green line) when bulls are looking for more upwards. Now look for this name to now hold above the $ 6 mark and the 200-week moving average. In order for bulls to have control, we must see that these earlier marks of resistance turn to support. If they can, it will make $ 10 a possible upward target, equivalent to 33% upwards from the end of Tuesday.
Human studies will begin next month here in the United States, with tests in China and South Korea set for “soon thereafter.” From Dr. Joseph Kim, President and CEO:
We immediately started preclinical testing and small-scale manufacturing and have already shared robust preclinical data with our public and private partners … We plan to deliver one million doses by the end of the year with existing resources and capacity. However, we need additional resources to scale up to make enough doses to protect Americans from COVID-19 and to lead global efforts to curb this virus.
If Inovio finally becomes the best solution for coronavirus, it could be a serious catalyst for its business. Of course, this presupposes that Inovio is the one leading the charge and not a company like Gilead Sciences (NASDAQ: GILD).
“Existing resources and capacity” is enough for one million doses. That is about ten times the total number of infections registered so far. While Inovio has the balance sheet to survive on its own, it is currently not profitable or free cash flow positive.
Keep an eye on this one in the future. Over $ 6 and the bulls are still in control. Below and the situation becomes a little more uneven.
Bret Kenwell is the director and author of Future Blue Chips and can be found on Twitter @BretKenwell. At the time of writing, Bret Kenwell had no position in any of the above securities.