Is Inovio Pharmaceuticals Stock Poised for a Rebound?

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2017 was shaping up to be a good year for Inovio Pharmaceuticals (NASDAQ: INO). The stock was up more than 15% halfway through the year. And then shareholders got the bad news.

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In July, Inovio announced yet another dilutive stock offering. To make matters worse, the biotech priced the offering at only $6 per share. Inovio's share price was close to $8 before the announcement. As a result, the stock tanked and is now down nearly 20% year to date. But is Inovio now poised for a rebound? Here are three reasons why the answer could be "yes."

1. Light at the end of the tunnel for VGX-3100 

At long last, DNA immunotherapy VGX-3100 appears to be on track. After promising phase 2 results in treating cervical dysplasia caused by human papillomavirus (HPV), Inovio was seemingly ready to move forward with a late-stage study that would hopefully lead to regulatory approval. However, the U.S. Food and Drug Administration (FDA) in October 2016 placed that late-stage study on clinical hold.

It took a little longer than Inovio anticipated, but the company finally satisfied the FDA's questions about the delivery device used for VGX-3100. Inovio began enrolling for its two parallel phase 3 studies in June. Results from the studies should be announced in 2020. 

The potential for VGX-3100 is significant if ultimately approved. There are more than 400,000 new cases each year in the U.S. and Europe of HPV-caused pre-cancerous cervical lesions. Currently, invasive surgery is the only treatment available -- and it doesn't address the underlying HPV infection. If it's approved, VGX-3100 could reach peak annual sales of up to $500 million.  

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2. Multiple potential other catalysts 

While Inovio awaits news from the VGX-3100 studies, the biotech has several other pipeline candidates that could be catalysts in the meantime. The one that has received the most attention over the last couple of years is its experimental Zika virus vaccine. Inovio and partner GeneOne Life Science were the first to advance to clinical studies for a Zika vaccine. Initial results from a phase 1 study of the vaccine should be available later this year. 

The biotech also expects to announce results from three other studies in the next few months. Data from a phase 1 study of INO-5150 in treating prostate cancer should be reported in the third quarter. Results from a phase 1 study of INO-1800 in treating hepatitis B is anticipated in the fourth quarter, as is interim immune response and safety data from a phase 1 study of INO-1400 in treating solid tumors. 

3. Further dilution shouldn't be a concern for a while

Inovio's latest stock offering wasn't great for current shareholders, but it could be for investors looking to buy the biotech stock now. The company had $92 million at the end of the second quarter. The stock offering in July netted Inovio a little over $70 million. Inovio should be in good shape from a cash standpoint for quite a while.

It could even get better for the company's financial position. Inovio entered a collaboration and license agreement in February 2017 with ApolloBio. If the agreement is approved, Inovio stands to receive $50 million -- $15 million for licensing VGX-3100 in the greater China market and up to $35 million in an equity investment from ApolloBio. 

With a more solid financial position, Inovio stock performance now depends primarily on its clinical results. Based on how things were going earlier this year, that could bode well for the stock heading into 2018. 

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.