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Inovio Digs for Truffles With Swine-Flu Drug (Part 1)

Stocks in this article: INO

This is the first part of a two-part series on Inovio. Click here for the second part.

SAN DIEGO ( TheStreet) -- The pattern is so familiar it's almost a tradition. A public health scare develops. A tiny drug development firm issues a press release saying it may have a cure. Its stock price explodes.

Speculative traders know the pattern and try to exploit it. Retail investors often get caught up in it.

Lately the scare has been swine flu, and last week saw the most dramatic case yet of an H1N1 bidding frenzy, when the American Stock Exchange-listed shares of a little-known biotech research firm in San Diego, Inovio Biomedical (INO), more than quadrupled in value.

The company did what such companies do. It issued a press release announcing results from a pre-clinical study of a vaccine it's been testing in H1N1-infected pigs. According to the company's findings, the vaccine, dubbed SynCon, seemed to protect those animals 100% of the time.

But when Inovio initially broadcast these results, back on July 13, the stock just sat there.

Sixteen days later, Inovio issued a second release. The differences between the two were, at least on the surface, difficult to discern. A cynic might conclude that the company had deployed that ancient biotech tactic: the recycled press release.

The company, of course, disagrees: It says the first announcement, pegged to the presentation of its findings at a medical conference in Beijing, showed that SynCon could protect pigs of the swine version of the swine flu.

The second release, on the other hand, disclosed an update to the ongoing study -- that the vaccine could protect pigs of the "currently circulating" human version of the swine flu (now designated A/H1N1).

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