Why Inovio Pharmaceuticals Isn't the Best Zika Stock Right Now

By Markets Fool.com

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Shares of Inovio Pharmaceuticals (NASDAQ: INO) enjoyed a boost this week after the company achieved another milestone. On Monday, Inovio announced the launch of its second clinical trial for its experimental Zika vaccine. The biotech has emerged as one of the hottest Zika plays on the market. However, I don't think Inovio is necessarily the best Zika stock right now. Here's why.

Early birds don't always get the worm

My primary concern about overhyping Inovio's Zika vaccine is that it's still very early in the process. The first human study began just a couple of months ago. That clinical trial included 40 patients in the U.S. and Canada.

Inovio's second study is in Puerto Rico and will enroll 160 adult patients. Half of the patients will receive the GLS-5700 Zika vaccine developed by Inovio and its partner,GeneOne Life Science. The other half will receive placebo.

Initiation of these studies is definitely great news. The Zika virus is a major health concern across the world. However, other companies are also in the process of developing potential vaccines for the virus. While Inovio has a head start in advancing to human clinical studies, there's no guarantee the company will retain its lead.

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Inovio also has competition from the public sector. The National Institutes of Health (NIH) began a clinical study in early August. This study includes 80 adults, all of whom will receive an experimental vaccine developed by NIH.

That's not the only NIH effort for battling Zika. On Wednesday, a team including researchers from NIH, Florida State University, and Johns Hopkins University announced that they had found two existing drug compounds that both stop the Zika virus from replicating in the body and protect fetal brain cells.

The latter NIH example could pose the greater threat to Inovio's chances. The researchers are focused on finding existing drugs that could treat Zika, which should shorten the lead time for getting on the market.

Better choices for now

I think there are currently a couple of better options for investors looking to benefit from the race to fight Zika. OraSure Technologies (NASDAQ: OSUR) and Spectrum Brands (NYSE: SPB) stand out.

OraSure recently won a contract withthe U.S. Department of Health andHuman Services (HHS) to develop rapid Zika tests. The company's OraQuick test is already on the market for rapidly screening patients for Ebola, hepatitis C, and HIV. OraSure is using its OraQuick platform to develop the rapid Zika assays.

Spectrum Brands'product lineup includes mosquito repellents. The company scored some publicity with the recent Olympic Games in Rio as the official insect repellent for the U.S. Soccer team. Spectrum began registering its insect repellents earlier this year in Latin American countries. The company has launched a campaign in the U.S. to educate consumers about how to protect themselves against the Zika virus.

Why are OraSure and Spectrum better investing options right now than Inovio? All three stocks have generated returns of over 30% so far in 2016. However, OraSure and Spectrum are already getting financial benefits from the concerns about Zika. Both companies stand to profit regardless of who ultimately wins regulatory approval for a Zika vaccine. Also, unlike Inovio, OraSure and Spectrum are both profitable.

Over the long run

While I am cautious about setting expectations too highly for Inovio's Zika vaccine at this point, I still like the company's prospects over the long run. There is a real possibility that Inovio develops the most effective vaccine for Zika and reaps the rewards for doing so.

Beyond that, though, Inovio has several other pipeline candidates with solid potential. Cervical dysplasia vaccine VGX-3100 is on track to begin phase 3 testing later this year. Cervical cancer immunotherapy INO-3112, which combines VGX-3100 with DNA-based immune activator encoded for interleukin 12 (IL-12), is in a couple of early-stage studies. Results are expected later in 2016.

Inovio also has other infectious disease vaccines in the works. Multiple early-stage clinical studies are in progress for vaccines to combat Ebola, hepatitis B, hepatitis C, HIV, and MERS.

In my opinion, OraSure and Spectrum Brands are safer Zika plays than Inovio -- for now, at least. But the company's Zika vaccine combined with other pipeline opportunities makes Inovio a stock for long-term investors to consider.

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Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.