Is There a Method to Inovio Pharma’s Cost-Cutting Madness?
Inovio Pharma shares dipped on Wednesday after the company said that it was taking measures to cut costs and its overall burn rate. When a company says it’s cutting costs one thing it can mean is that the firm is…
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Inovio Pharmaceuticals Inc. (NASDAQ: INO) shares dipped on Wednesday after the company said that it was taking measures to cut costs and its overall burn rate. When a company says it is cutting costs, one thing it can mean is that the firm is in for a rough road ahead.
Inovio said that it has sharpened its corporate strategy to focus on the commercial development of its late-stage HPV assets and reallocate capital to develop fast-to-market product candidates.
Inovio has cut selected early-stage research and development programs and discontinued further development of its Phase 1/2 study in advanced bladder cancer, while reducing its annual burn rate by 25% and its workforce by 28%.
It’s important to note that Inovio’s partner-funded programs will be unaffected by the realignment, including MEDI0457 in HPV-related cancers with AstraZeneca; Lassa and MERS vaccine programs with CEPI; the Bill & Melinda Gates Foundation-funded Zika dMAb clinical development program; and Inovio’s commercial intra-dermal 3PSP delivery device development funded by Medical CBRN Defense Consortium.
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Looking on the balance sheet as of the March quarter, the company has roughly $128 million in cash, cash equivalents and short-term investments. This makes up about 44% of Inovio’s market cap of $294 million (prior to the stock move).
Dr. J. Joseph Kim, Inovio’s president and CEO, commented:
From a position of strength with a healthy balance sheet and a 200-person team, Inovio sharpened its focus to create a more efficient organization with greater financial flexibility and a longer runway. With a refined strategy, Inovio will continue to advance our later-stage HPV programs while devoting more resources to develop fast-to-market product candidates such as GBM, RRP and dBTEs. We continue to expect near-term value drivers in the second half of this year that include interim data from Phase 2 studies targeting HPV-related vulvar and anal dysplasia and from our Phase 2 GBM study. We also anticipate the potential for significant new partnerships as our technology continues to attract attention from U.S. and international markets.
Shares of Inovio traded down about 12% on Wednesday at $2.64, in a 52-week range of $2.15 to $6.30. The consensus price target is $10.25.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
