Inovio's Robust Pipeline, Why so undervalued?

Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

          When you glance at a few biotech stocks out there , you see a lot of them that have a small pipeline and trade at very high prices. But there are times when you can catch , if you look hard enough, at a gem biotech that is trading way below it's current value. This brings me to a small cap biotech stock Inovio Pharmaceuticals Inc.(NYSE: INO). This is one of a few biotech stocks that you can find that has a huge pipeline that trades at such a low stock price. 

           Let's start with the pipeline of the company, which is by far very imrpessive. The company is working on three phase II trials which are Hepatitis C (partnership with Chrontech pharma in Sweden), Leukimia, and the flagship product of the company VGX-3100 for cervical Dysplasia! Produts in Phase I include HIV (All glades of HIV) , and Influenza. Some pre clinical products are Malaria, Prostate cancer(going to phase I in 1st half 2013) and INO-8000(INO's vaccine for Hepatitis C). Now if you just look at the company first glance you are wondering "why does INO trade so low?" and that is my thought as well! In my opinion there are two logical reasons that I can think of. For one Marxe Austin an institutional investor which was a 10% owner of INO sold off most of their shares putting a lot of pressure on the stock and bringing down the share price substantially. The second reason I think it is undervalued is because some Investor's are waiting for efficacy on phase II trials before putting down any capital into the stock. For these reasons I think the share price has been supressed and has left the stock trading at under $1. 

          One thing I will mention is that this company trades under the NYSE which is nice because INO doesn't need to maintain a $1 or above share price to stay listed and doesn't need to go through a reverse stock split like many other biotech companies out there. This gives investors breathing room to feel comfortable buying the stock and investing long term. The technology is robust and the company has 400 patents that are current and pending for Electroporation. Electroporation allows the uptake of DNA vaccine and amplifies the efficacy of the vaccine Times 1000, allowing the vaccine to create strong and robust T-cells to fight the difference forms of cancers and diseases that Inovio is tackling. The electroporation technology is unique and may give Inovio an edge over other Vaccine companies and other pharmaceuticals.

           The company was developed by David B. Weiner and Joseph Kim! David Weiner is considered to be "The father of DNA vaccines" and Joseph kim used to work for Merck Vaccines Division. Which brings me to my next point, this company which trades at such a low value has an amazing management team. Three of the executives in INO used to work for Merck and some for Sanofi. Some of the management team was responsible for blockbuster drugs such as Gardasil, Rotateq, Zostovax, Proquad! This management team has experience and I think it can deliver value to shareholders. 

            Overall INO has a big pipeline, Good management team, and Robust Technology with impressive pre clinical and phase I results. One investing in the biotech sector should definately due Due Diligence and take a look at this company because there may be some huge value behind it if one of it's phase 2 trials proves to be successful. Keep on eye on it this quarter as INO expects to report it's Hepatitis C phase II interim data with partner Chrontech pharma, which may prove to show efficacy of the vaccine's ability and technology to work. Don't forget to check out the other catalysts coming up like Cerivcal dysplasia phase II final results in Q4 2013 and the HIV phase I results due out in 1st half of 2013. The technology of electroporation used to increase efficacy of DNA vaccines can probably allow the company to live up to it's motto of " We Are Revolutionizing Vaccines". Now investors should see the true value of Inovio Pharmacueticals Inc. with all mentioned. 

            


I am Long on Inovio pharmaceuiticals Inc.

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