The coronavirus vaccine race made 2020-2021 an interesting time to be a biotech investor. Companies announced vaccine programs and saw their shares soar, only to later be crushed by setbacks or ground down by 2022's turbulent bear market.
If you're still hanging onto hope for a few of the vaccine race's laggards, it may be time to wrap it up. And that's particularly true if you're still keeping watch on this pair of stocks.
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1. Inovio Pharmaceuticals
Inovio Pharmaceuticals (INO 0.54%) wants to be the DNA-based medicine company in the way that Moderna is known as the messenger RNA (mRNA) medicine company. But in the last three years, its shares have fallen by 65%; it still doesn't have a coronavirus vaccine on the market, and there isn't much hope for a near-term revival. Nor are its prospects for growth very compelling: It still has no recurring revenue as it hasn't ever commercialized a medicine, and there's a solid chance it never really will. Even if its coronavirus jab makes it to the market, it'll be faced with an abundance of well-entrenched competition with no competitive advantage of its own to speak of.
Aside from that, its other program in phase 3 clinical trials is a vaccine for preventing cervical dysplasia, a condition caused by infection with human papillomavirus (HPV), which is preventable using HPV vaccines that are already on the market. So even if it manages to get its candidate approved, it'll be entering another market with established competitors.
Furthermore, on Jan. 31, it announced that it was slashing its workforce by 11%; that announcement came on the heels of another late last year in which it terminated further work on several of its pipeline programs. The move will save the company an estimated $4.3 million per year, which doesn't sound like much considering that over the last 12 months, it burned some $219 million in cash. Now, it only has around $22 million in cash and equivalents despite having $260 million in short-term investments.
It seems like the cuts won't be anywhere near enough to keep the lights on. Those short-term investments will need to pay out big or be liquidated within a year for the company to survive, assuming that it doesn't take out fresh debt or issue more shares before that. There's not much real hope left with this stock, so I'd advise closing your Inovio position or removing it from your watchlist and not waiting for it to recover.
2. Novavax
Since the shares have fallen by more than 88% in the last 12 months alone, Novavax (NVAX -2.24%) investors might rightly decide to call it quits. While the company's Nuvaxovid jab to prevent coronavirus is commercialized worldwide and appears to be quite effective and safe, there's little chance that Novavax will be able to seize a sizable share of the global market. Unfortunately, because its competitors have beaten it to commercializing updated coronavirus vaccines, simply following through on its plans to commercialize an updated jab of its own won't be enough to move the needle.
Its other pipeline programs in late-stage development, like the NanoFlu shot for seasonal influenza in older adults, will also likely struggle to find a home in crowded markets, even if the biotech succeeds in getting regulators to give the OK.
In sum, there's reason for pessimism, at least according to Wall Street analysts. Whereas they predict on average that Novavax's 2022 revenue will be close to $2 billion, for 2023 they estimate that it'll only bring in around $1.2 billion thanks to crashing global coronavirus vaccine sales. As Novavax isn't profitable now, at what will likely be the apex of its sales for at least a few years, it's hard to see how it would become profitable once sales start to crater.
Over the last 12 months, the company has hemorrhaged more than $727 million in cash, though it still has more than $1.2 billion in cash and equivalents, so it will be able to survive for at least another year or so. Nonetheless, with a bearish competitive landscape that's unlikely to improve and a downwardly mobile share price, it's probably better to invest in something else, and stop waiting for this company to recover.
