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Why Inovio Pharmaceuticals Inc. Is Sinking Today

What happened

In response to the company reporting disappointing third-quarter results, shares of Inovio Pharmaceuticals (NASDAQ: INO), a clinical-stage biotech focused on vaccines, fell 14% as of 2:15 p.m. EST on Thursday.

So what

Here's a review of the headline numbers from the quarter:

  • Revenue was $2.6 million. That's a sharp drop off from the $12.5 million that was recorded in the year-ago period, and nowhere near the $9.4 million in revenue that Wall Street had projected. However, Inovio's revenue is primarily earned from grants and collaboration agreements, so the huge lumpiness is understandable.
  • Net loss was $34.1 million, or $0.39 per share. That's higher than the year-ago period, which makes sense given the lower revenue. This figure also included a $5.8 million investment loss in an "affiliated entity." Overall, the $0.39 loss was much worse than the $0.25 loss that investors were expecting.
  • Cash balance at quarter-end was $142 million. That should be enough capital to keep the doors open for at least another year, if current spending rates persist.

Looking beyond the financials, here's a quick overview of some of the company's recent clinical news:

  • A late-stage study of VGX-3100 -- the company's hopeful treatment for cervical dysplasia caused by human papillomavirus -- was restarted in June. That's great news for investors, because the U.S. Food and Drug Administration had previously placed this study on clinical hold.
  • The company reported positive safety and immune-response results from an early-stage clinical trial studying its Zika vaccine in October.
  • Inovio initiated an early-stage trial evaluating Regeneron's PD-1 inhibitor, REGN2810, in combination with Inovio's INO-5401 and INO-9012 as a potential treatment for glioblastoma.

Despite the upbeat clinical news, traders kept their focus on the underwhelming financial numbers.

Image source: Getty Images.

Now what

Hearing that the VGX-3100 trial is back on track is great news, but investors won't get a look at the data until sometime in 2019. That's unfortunate, because the company will almost certainly have to raise capital before then. Since shares have fallen by more than a third since the start of the year, a common stock offering at today's prices isn't an appealing option.

Overall, Inovio's technology remains fascinating, but the company's worrisome financial position can't be ignored. For that reason, my plan is to ignore today's drop and root for this company from the sidelines.

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Brian Feroldi owns shares of Regeneron Pharmaceuticals. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.