|Any More Gas Left In INO's Tank After Recent Rally?|
|By Brian Wilson, Lead Contributor|
|Wednesday, 06 February 2013 04:52|
I also think that a recent initiation of coverage on Inovio by Maxim Group with a “buy” rating makes it a bit more attractive in the short run, although I think that their $1/share price target isn’t nearly as optimistic as the standard analyst rating. This makes me think that Maxim is actually more towards the neutral side on INO in the short to medium term.
Like mentioned earlier, INO has quite a number of compounds in its pipeline (all of which are vaccines from their development platform). Arguably the most interesting one going forward is VGX-3100, which is their vaccine for the human papillomavirus (HPV). HPV infection is directly linked to cervical dysplasia, although VGX-3100 is actually designed to trigger an immune response against the cancer itself. This is quite a revolutionary mechanism of action which is based on the notion that DNA-based vaccines can produce a strong immune response against targeted cells.
This was proven last year after the company released data from a Phase I trial for VGX-3100, showing that the vaccine achieved best-in-class immune responses to VGX-3100 while verifying decent tolerability amongst patients. We should take the results with a grain of salt - or at least caution, as phase I trials are small and not as controlled (this one had only 18 people in it).
Still, it seems that the company is more than confident in its vaccine as it moves into phase II trials for its HPV targeting. If these new trials can replicate the results of the phase I trials, I think the market will be far more confident in the vaccine’s overall profile which should lift the stock significantly.
Another program that INO investors should be watching is the leukemia program for the WT1 Vaccine. This program will specifically look for efficacy in the treatment of acute myeloid leukemia (AML) and chronic myeloid leukemia (CML) – similar forms of cancer that have been notoriously difficult to treat in the past. The company released interim phase II results on December 6th of 2012 which were very positive.
We will see finalized results in 2013 for this trial, which could also help INO depending on the final results. The primary endpoints in this trial are the molecular responses to a particular disease marker in CML patients, and time to progression for AML patients. These are expected to be met.
The only issue with the leukemia vaccine is that it is being funded by an outside source, which means that Inovio will be surviving off of milestone payments for the WT1 vaccine. This limits its potential to add value for INO shareholders, although it does provide the company with financing. This is particularly good, because this makes it unlikely that Inovio will have to perform an equity financing anytime this year.
Inovio’s intrinsic value is hard to gauge at this point, because the majority of its pipeline is involved in a partnership and because all of the programs are in early stages of development. The market capitalization is about $100 million at this point, which isn’t cheap or expensive for the company’s current position. This is why I think INO might simply trade on sentimental shifts in the market as was the case throughout 2012.
From a technical standpoint, the chart presents us with a confirmed entry on a cup and handle formation. If it breaks past some resistance at $.80, the stock could see a run to $.90 and then $1.10-- especially since volume is spiking and the MACD indicators are just starting to move to the upside.