Shares in Inovio Pharmaceuticals dropped as much as 21% after Stifel analyst Stephen Willey cut his rating following a nine-fold increase, driven in part by day traders' enthusiasm for small-cap COVID-19 plays, reported Bloomberg.
"Risk/reward seems less palatable here," Willey said, adding that hope and sentiment have replaced valuation, although he acknowledged "the significant socioeconomic importance of a viable COVID-19 vaccine candidate."
By the end of the month, Investors are expecting a first look at results for Inovio's vaccine candidate INO-4800 in patients, the news source said.
Safety should not be an issue in Willey's opinion, and he expects initial immunogenicity results to be "directionally encouraging." However, Willey indicated that he does see an issue in how it measures up compared to a vaccine from Moderna, whose neutralizing antibody results "represent a challenging competitive hurdle."
Meanwhile, Willey cautioned about Inovio's "stratospheric rise," and Bloomberg noted that another concern will be the company's ability to scale-up production of a potential vaccine.
It is currently in a dispute with the primary manufacturer, GeneOne Life Science and its VGXI unit. Inovio's request for a preliminary injunction against VGXI was denied by a judge recently, according to a recent report, although Willey said he expects a near-term resolution of the dispute.
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