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Here's Why Inovio Pharmaceuticals Popped Today

What happened

Shares of Inovio Pharmaceuticals (NASDAQ: INO) rose nearly 10% today after the company received an abundance of favorable media coverage over the weekend. In an interview with Yahoo Finance's On the Move, CEO Joseph Kim said the company had developed its experimental vaccine against the novel coronavirus strain hours after receiving the genetic sequence of the virus.

That news was amplified by various local and national media outlets. For instance, the Los Angeles Times ran a story with a headline, "Is a vaccine for the coronavirus coming? Inovio says it has designed one in San Diego".

The gains quickly dissipated, however. As of 1:08 p.m. EST, the pharma stock had settled to a 1% gain.

Image source: Getty Images.

So what

The revelation that Inovio Pharmaceuticals needed only hours to design its vaccine candidate against the coronavirus strain known as SARS-CoV-2, which causes a respiratory illness named COVID-19, is impressive. It helps that SARS-CoV-2 shares roughly 80% of its genetic sequence with other known coronavirus strains, which the company had worked on vaccines for in the past.

The news is also a reminder of the fast pace of innovation in biology-based technologies. Advances in genetic sequencing, machine learning, and DNA synthesis should combine to rapidly reduce the time to design new vaccine and drug candidates.

Of course, design is only one part of drug development. Animal- and human-testing will still be a bottleneck, as there's not much that can be done to expedite the time to generate safety and efficacy results of a novel vaccine candidate. That said, it's possible for the global pharmaceutical industry to make a vaccine available by the end of 2020 -- just in time to respond to a potential second wave of circulation.

Now what

Despite the opportunistic efforts of the company, investors should be wary of Inovio Pharmaceuticals. The company hasn't lived up to lofty promises made in the past and was on pace to generate operating losses in excess of $100 million in 2019. It also faces stiff competition from much larger and more experienced vaccine developers such as Gilead Sciences and Sanofi.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has a disclosure policy.


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