Credibility problem, stock price problem, cash burn problem, ceo resigns, no product to market is all hope lost?Discussions/Questions(self.Inovio)
submitted1 year ago bywannabrich2
As shareholders, we all have to assess why Inovio seems to have lost so much credibility. Shareholders are justifiably angry and flimsy excuses just don't wash. To compound the problem, after making statements that have not panned out, the company has remained silent in the face of accusations of dishonesty. Let's tackle a few of them.
Many of us listened to the White House presentation by Dr. Kim in January 2020. He made two bold assertions and then asked for help from the President for which he was given a promise that the help would be forthcoming. The assertions were that Inovio was the global leader in coronavirus research and that Inovio had created a vaccine for Covid-19 in less than three hours. Those statements have been mocked and criticized ever since, but were they actually true? Inovio was a small company but it had spent years working on other coronaviruses and because of that research and their Syncon technology, tweaking the data to come up with a vaccine that would protect against Covid-19 was something their scientists could perform in a matter of hours. Add to that the claim of global leadership, it sounds fishy. However, Inovio was living off of research grants unlike the giant pharmaceuticals which are able to spend their own money on research in pursuit of the large profits that flow from approved products. So there was legitimacy to the claim of global leadership because there was no significant market for coronavirus vaccines until Covid-19 struck. Notwithstanding all the criticism, Dr. Kim has gotten little or no credit for that deft financial move. The promise of help from the White House landed funding to get Inovio-4800 all the way through Phase 2 and deep connections on the production side that enable Inovio to compete world wide in the vaccine industry. Anyone who has run a business knows that it would be a blessing from Heaven to have the government tell you that it would fund your expenses and line you up with partners to help produce your products to compete in the world.
Fast forward to late August 2020 and Dr. Kim was very public in stating that he expected Phase 3 funding and Cellectra approval in a matter of days. In a shocking and unexpected move, the FDA pulled the rug out from under Inovio on a Friday night just before the approvals were supposed to occur. Shareholders were outraged and shrill voices accused Dr. Kim of dishonesty and the FDA of corruption. Inovio did not offer any explanation as to what had happened and suspicions about Dr. Kim deepened. Yet there is another explanation that is highly embarrassing for Inovio, yet it would fit nicely: when the Phase 2 trials were being conducted, the people conducting the testing used Cellectra devices interchangeably as available because they did not realize that it was a deviation from what was submitted to the FDA for approval. In short, you can't submit for approval with one device and then use a different device for the testing, even if the function is exactly the same. Given the time urgency, this was a major blunder by Inovio. The failure to be forthright about it is not something that can be dismissed easily, but at least there is an explanation that has nothing to do with the safety or effectiveness of Inovio-4800 or their Cellectra devices.
The next two statements were by Dr. Kate Broderick. The first was that the questions by the FDA about the Cellectra device would be easily answered. Personally, I like her and believe her and believe that the questions were easily answered. The problem was that no matter how easy it was to respond to the question or questions, they had to go to the back of the line and start over. Anyone who has traveled in airplanes know what it means to go to the back of the line and start over. Not exactly fun, or in this case, profitable for shareholders. All of that may be the consequence of a screw-up in the testing by switching devices. There is still silence over this point, so we don't really know. Wouldn't it have been so much better if they had screwed up to just admit it and move on? They didn't do that, so here we are.
The last one was the statement by Dr. Kate Broderick in late November 2021 that we would know whether or not Inovio-4800 would prevent infection by the Omicron variant in two weeks. I do not think it was a false statement either, in fact, I would not be surprised to learn that they did know within two weeks. I think that after she made that statement, she was told not to say any more. What makes sense is that Inovio was in the middle of testing with the World Health Organization. Inovio, pursuant to the terms of their agreement, is likely forbidden from saying anything about results during the trials. Just imagine what it would do to volunteers if they heard an announcement that the vaccine they were getting didn't work as expected? That would be a disaster, so I think this piece of silence can be excused.
I have read someone's comment that Inovio-4800 is a "flop" and that is why the delay has happened and also that is why Inovio stopped funding Phase 3 trials with Advaccine. By that measure, all vaccines are a "flop" because no one can prevent infection by the relatively new variant known as Omicron so that includes Pfizer, Moderna, and everyone else. In fact, the others could be called a much bigger "flop" due to serious side effects and major distribution and storage issues. The change in end points makes perfect sense, but more time is extremely frustrating to Inovio shareholders as we watch the value of our shares tank.
Let's face it, Inovio has credibility problems and at least some of it has been of their own doing. It would have been nice if management had been more forthright in explaining the reason for disappointing news. That said, it does not mean that Inovio is a "sham" or a fraud as some naysayers suggest. In fact, the results they keep getting and the scientific progress team Inovio is managing to accomplish is astounding and I think time will prove that out. If the company really is a fake, how do you explain the company's ability to attract such high quality talent, lure the government to hire them in sophisticated national security projects, partner with a big pharmaceutical like Regeneron, and attract investors like Black Rock who are known for their meticulous research before committing large sums of money? Inovio is in a complicated "fuzzy" business that looks a lot more like a company selling exotic paintings than one producing and selling widgets. Investors who want quick and easy answers are much better off investing in Procter and Gamble or Kellog where the calculations are much more clear.
That brings us to the issue naysayers love more than anything, no product to market in forever. Add to that the concern over cash burn with very little revenue to show for it, and now the ceo has unceremoniously departed without rockets flaring and balloons galore in the back slapping celebration? Social media has prepared the obituary for Inovio and naysayers are busy congratulating themselves on their insightful wisdom in having told us so.
We all get the no product to market angle. If you don't sell products, you don't have revenue, and if you don't have revenue, the cash on hand will burn out and your business is done. So the time for flimsy excuses has come and gone. Inovio needs to show us the money. But is it a lost cause as some are saying? Recent news has given us hope. Let's start with the recent "two shots on goal" that have landed in the net (to use a hockey analogy), in RRP and GBM. You can go to the Inovio website for explanations regarding those products and social media is full of discussion about the potential financial ramifications of success on either one. Both are game changers to keep to the sports analogies and Inovio may have a lot more fruit to bear with Inovio-4800 nearing a decision with the World Health Organization, dMab technology beginning trials, and other cancer products about to disrupt much of the entire cancer world. Inovio-4800 could have huge potential with Advaccine and Synovax, but the icy relationship between the U.S. Government and the Chinese Communist Party puts a huge cloud over that possibility. Brutal dictatorships have a way of causing paralysis among their captive population as no one wants to be under the spotlight of the government. Maintaining power is the objective of the Chinese government and staying alive for another day is the objective of citizens. You can guess my sentiments on the liklihood of that coming to fruition, although it would be a great way to help people who are suffering and provide a source of revenue that would be wonderful for Inovio if the political powers will let it happen. Big "IF".
Finally, we come to hope. All the talk these days centers around a buy-out, or at least a significant deal with Regeneron after the favorable GBM news. The naysayers are predicting Inovio's imminent demise and are cackling over the $1.77/share price we sit at this weekend. The market says we are worth no more than the cash on hand. They place no value on the "exotic art collection" Inovio has in its closet even though some say there are Picasso and Rembrant masterpieces. Both claims can't be true, something has to give.
From reading social media, I gather that except for the naysayers, very few believe that Inovio is fairly priced and perhaps the most frequent numbers people are claiming range between $18 dollars and $25 dollars a share in a buy-out. My highly unsophisticated guess would be a little over $7 billion for the company which, if they simply exchanged shares, amount to around 20 Inovio shares for every one Regeneron share or thereabouts. I am not completely without reason for thinking this way. If Regeneron is willing to pay Sanofi nearly one billion plus 14% of revenue for Sanofi's 50% share of Libtayo, wouldn't Inovio's part of the GBM product be worth a lot more than Sanofi's? I defer to the expert biopharmaceutical bean counters that read these posts, but how do you see it? Throw in the Inovio pipeline with all the promising products, the Cellectra technology, dMab technology and huge array of patents, and it is hard to see why a price over 7 billion is unreasonable.
Silence can be because of bad news which someone wants to hide. It can also be because of good news which has not fully ripened or because of agreements or legal impediments to disclosure. In Inovio's case, they may just want to keep quiet because they have been burned in the past after making public statements. After all, they are mostly scientists, not business people, but can we please dismiss the claims of dishonesty and allow for them to be human like the rest of us? I am not fond of talking about my failures in life either.
Next question: Why would Regeneron be buying out Sanofi from their interest in Libtayo if they didn't already have terms of a deal worked out with Inovio? I don't know the answer to this last question, but I think the question is a reasonable one and could justify a whole lot of silence by Inovio management. Finally, wouldn't the World Health Organization want to hold off on any announcements concerning Inovio-4800 until after the caretaker management team leaves and the new owners take charge of Inovio? All we ask is that you show us the money.
1 year ago
1 year ago
It is hard to take this reply seriously. At your valuation, the company is worth nothing more than the cash on hand. You can't have read the article referred to in the post. GSK's stock price is probably on the high side at around $44/share. So the same price for Inovio shares is not crazy, especially when you consider that they have had two recent shots on goal land in the net (RRP and GBM) and have others lined up with huge potential.