by Josh Perkins
Instead of relying on dated technology and scientific practices, particularly in the creation of vaccines, researchers at Inovio (INO) dedicate their time to developing synthetic vaccines aimed at helping the body produce specific antigens to fight off or diminish the effects of potentially life threatening diseases including cancers, and infectious diseases such as AIDS, Hepatitis C, and influenza. According to the company, the prevention and treatment of these and other diseases remains its main goal â€“ a lofty goal for a company without any products on the market.
Traditional vaccines are strictly preventative. This model does not apply to infections like cancer and AIDS. Modern knowledge of DNA and the genome allows scientists to look at proteins, made up by amino acids, within the cells created by these infections. By using the DNA that provides the code for these proteins, scientists now have the capability to fight infections head on. Unlike traditional vaccines, created mostly from bacterial cultures that usually contain components of a virus (thus allowing the body to build immunity to a specific virus before it enters the body), synthetic vaccines are derived mostly from amino acids strung together. Once injected into a patientâ€™s body, the vaccine enters infected cells and helps â€˜rewriteâ€™ the genetic code to increase T-cells, which are normally used to help the body fight off diseases before or after they enter the body. Synthetic vaccines also greatly reduce a patientâ€™s dependence on medication as current medications are mainly used to help patients â€˜live withâ€™ a disease rather than eradicate it completely.
In addition to creating synthetic vaccines for immediate use, scientists and researchers can also replicate synthetic vaccines during sudden outbreaks in less time than traditional vaccines. In the event of a pandemic or yearly bout of the flu, medical personnel around the world will have enough vaccines to stop the spreading of a disease very quickly.
Not only do synthetic vaccines have the potential to save a countless number of lives and increase life expectancy, these vaccines also have the potential to bring in billions over the next few years in medical sales. This is due mostly to the versatility of synthetic vaccines as the creation process could potentially prevent or treat most diseases on record.
Since 2008, Inovio received $35 million in non-dilutive grant funding to develop and design synthetic vaccines from organizations including the National Institute of Allergy and Infectious Diseases, PATH Malaria Vaccine Initiative, and the National Institute of Health. The company also has 424 patents pending or issued for vaccines and development processes.
With multiple vaccines in its pipeline, many of which have undergone phase 1 and phase 2 testing, the company has positioned itself as a major player in the synthetic vaccine market. But without products on the market for investors to review, many may have difficulty in determining a comfortable level of risk.
Worth the Risk?
Overall, I think investors should take a closer look at Inovio. According to the companyâ€™s second quarter balance sheet, it has $5.95 million in cash and $13.49 million in short-term investments with current total assets of $21.32 million. With total liabilities of $12.24 million, the company can cover its expenses without fear of going into bankruptcy or having to divert funds set aside for research and development to pay for extraneous or sudden expenses.
And with grants and other funding from health organizations along with forming partnerships with pharmaceuticals companies like Merck (MRK), the company can easily maintain current operations and even show a profit in the future. Partnering with Merck to expand its knowledge of electroporation, a process that helps cells absorb synthetic vaccines faster, allows the company to develop quick-acting vaccines that could make them more popular than older vaccines and treatments currently on the market.
Inovio isnâ€™t the first biotech/pharma company to operate without selling any products. Keryx (KERX), for example, whose only product is a renal disease drug treatment called Zerenex, has yet to be released into the marketplace. But unlike Keryx, Inovio has many products in its pipeline along with patents to protect treatments during clinical trials. The company also has its own patented vaccine creation process called SynCon. Diligence in protecting its current and future assets along with ongoing research, Inovio has definite plans for the future.
I think long-term investors will probably see the most return from their investment in Inovio. Depending on how various clinical trials turn out, the struggles for FDA and other health agency approval worldwide, along with consumer demand, no one knows for sure when any of these vaccines will reach the market or how well the vaccines will fare against the competition.
Short-term investors looking to score big should probably skip investing in this company as the return may not come as quickly for Inovio as it does for more established companies like Abbott Laboratories (ABT) or Johnson & Johnson (JNJ).
In addition to selling a variety of drug treatments on the market, Abbott Laboratories concluded phase 2 testing of its Hepatitis C drug treatment earlier this year, while Johnson & Johnson, working in partnership with pharmaceutical company Vertex (VRTX), earned FDA approval for its Hepatitis C drug, Incivek, this past May. While neither treatment is classified as a synthetic vaccine, both will provide ample competition for Inovio once it enters the Hepatitis C treatment arena.
Transparency/Disclosure: I am not a registered investment advisor and do not provide specific investment advice. The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research. I am a consultant to a third-party and have received two thousand dollars for a full monthâ€™s coverage of independent research. Always discuss investments with a licensed professional advisor before making any financial decisions. Statements made herein are often â€œforward-looking statementsâ€ as stipulated under Section 27A of the Securities Act of 1933, Section 21E of the Securities Act of 1934, and the Private Securities Litigation Reform Act of 1995. While I have researched this company thoroughly, my due diligence is not a substitute for your own.