We are downgrading INO shares to Underperform from Neutral, due to the increasingly limited market opportunity for INO-4800 (COVID-19 vaccine) and as the next major nonCOVID value driver, the REVEAL-2 readout, isn’t until 2H22.
While we believe the stock could underperform based on a declining value for the COVID-19 franchise, we do see value in Inovio’s cervical high grade squamous intraepithelial lesion (HSIL) program, VGX-3100. VGX-3100 has a good string of developmental updates for 2H21, it’s anticipated to 1) present safety and durability of response data for 18 months follow up for its pivotal phase 3 trial in 2H21 (REVEAL-1), 2) present biomarker data in collaboration with Qiagen for a diagnostic tool and 3) continue to enroll for an additional phase 3 trial (REVEAL-2). We are positive on VGX3100, but we remain cautious, as these near term updates are only incremental to the program and are not key value drivers. We await data readouts from REVEAL-2, a pivotal phase 3 trial that is currently enrolling, to more fully de-risk the program. But, results are not expected until 2022 and due to the clinical hold on Inovio’s Cellectra administration device for COVID-19, which may also affect VGX-3100, we are decreasing our PoS to 45% (from 50%). Inovio's glioblastoma program, INO-5401, is also on track to present 24 month overall survival data in 4Q21 at a medical conference, including correlative immunology and tissue data from its phase 1/2 trial of INO-5401 and INO-9012 in combination with PD-1 inhibitor Libtayo. While the collaborations with Regeneron and Sanofi help to validate INO-5401, the program is still quite early with a small number of patients, and with the clinical hold on the Cellectra device, we are also incrementally decreasing our PoS to 25% (from 30%). Overall, we are positive on the programs in the long term, but due to lack of key value drivers in the near term, we remain cautious. BofA Global Research