Inovio Pharmaceuticals ( INO) CEO Joseph Kim is walking back expectations for the phase II study of its DNA vaccine VGX-3100 in women with high-grade cervical intraepithelial neoplasia (CIN 2/3), also known as cervical pre-cancerous lesions. Results from the VGX-3100 study should be announced any day, but I suspect Inovio already has data in hand. Why else would Kim be laying the foundation for a massive spin job, if not to cushion the vaccine's failure?
The red flags flying over Inovio are there for any clear-eyed investor to see:
Inovio pushed through shareholder vote approving a 1-for-4 reverse stock split on May 23, which went into effect on June 5. Why the need for a reverse stock split? Kim explained:
Our stockholders approved a reverse split to have our price and share structure reflect our leadership position in immunotherapies and expand our potential investor audience.
Interesting spin. Drug companies in leadership positions aren't generally valued with stock prices in the $2 range. More typically, terminally depressed stock prices -- like Inovio's -- are the direct result of management incompetence and/or drug development setbacks and failures. Innovio is very good at issuing press releases and promoting its stock to retail investors, but its track record of developing DNA vaccines is abysmal.
Inovio's decision to enact a reverse stock split right before the VGX-3100 results was more likely timed purposefully to keep the stock trading above $1 if the study fails. Well played, Kim!
Kim hints at negative VGX-3100 study results in Monday's interview conducted by a Seeking Alpha contributor.
In the interview, Seeking Alpha contributor Trevor Lowenthal asks Kim, "Inovio is expected to produce a top line data read-out for its experimental HPV immunotherapy, VGX-3100, very shortly. How crucial is this to Inovio's future?"
The upcoming data will help define the potential clinical utility of this HPV immunotherapy for late-stage cervical pre-cancers. But the efficacy and immune response data together are going to help define the broad potential of the products based on our expansive DNA immunotherapy and electroporation technologies as monotherapies and as combinations with complementary technologies, such as checkpoint inhibitors. [Emphasis added.]
Later in the interview, Kim is asked, "What are the primary risks facing the company?"
Again, Kim's response: