One welcome sign with the COVID-19 pandemic is how many companies, both large and small, have scrambled to develop diagnostic tests, antiviral treatments, and vaccines. Sure, these companies are in business to make money and have a profit motive behind their efforts. But every company has the same motivation. For that matter, nearly every person is motivated by making money.
Inovio Pharmaceuticals (NASDAQ: INO) ranks as one of the leaders in the race to develop a COVID-19 vaccine. Regeneron Pharmaceuticals (NASDAQ: REGN) is among the top contenders in developing an antiviral treatment for the novel coronavirus disease. Which of these two coronavirus-focused biotech stocks is the better pick for investors who have their own profit motivation?
Image source: Getty Images.
The case for Inovio
Inovio is no stranger to the arena of coronavirus research. The biotech was already evaluating an experimental vaccine for MERS, a member of the coronavirus family, in a phase 2 study well before the COVID-19 outbreak. This earlier research provided a solid launchpad for Inovio to move forward with its COVID-19 vaccine program.
in January, Inovio set out to develop an experimental COVID-19 vaccine and received a grant from the Coalition for Epidemic Preparedness Innovations (CEPI) to help fund its efforts. By April, the company was ready to begin an early stage clinical study of its experimental novel coronavirus DNA vaccine INO-4800. Inovio completed enrollment in the study near the end of the month and expects to report results in June.
While Inovio is progressing rapidly with its COVID-19 vaccine testing, the biotech has other irons in the fire. The most important one, for now, is VGX-3100. Inovio is evaluating the immunotherapy in late-stage clinical trials for treating cervical high-grade squamous intraepithelial lesions (HSIL) caused by human papillomavirus (HPV). It’s also studying VGX-3100 in phase 2 studies for treating anal HSIL and vulvar HSIL.
VGX-3100 just might become Inovio’s first product to win regulatory approval and make it to market. Its two late-stage studies for the drug are scheduled to wrap up in April and May of next year. If all goes well, the company could launch VGX-3100 in 2022.
Inovio’s pipeline includes several other programs in phase 2 testing. INO-3107 and MEDI0457 target other HPV-caused conditions. INO-5401 targets an aggressive form of brain cancer. INO-5151 targets prostate cancer. The company also has experimental vaccines in early and mid-stage clinical trials for immunizing against Ebola, HIV, Lasso fever, and Zika as well as the aforementioned experimental vaccines for MERS and COVID-19.
The main problem for Inovio is that it remains unprofitable, which means that the company faces the threat of running out of cash occasionally and has to resort to issuing new shares. In addition, Inovio’s track record so far isn’t good at all. The biotech has been in business for decades with no approved product to show for all of its efforts.
The case for Regeneron
Regeneron, on the other hand, has been successful for quite a long time. The big biotech delivered strong revenue and earnings growth in the first quarter of 2020 thanks largely to continued momentum for asthma and eczema drug Dupixent, which marketed by Regeneron’s partner Sanofi.
But Dupixent is just one of several big winners for Regeneron. Sales are soaring for its cancer immunotherapy Libtayo and rheumatoid arthritis drug Kevzara. Cholesterol drug Praluent is also picking up more traction in the marketplace.
Eylea isn’t generating the level of growth that it once did. However, the eye-disease drug remains Regeneron’s biggest moneymaker with nearly $1.2 billion in U.S. sales in Q1 plus nearly $254 million from royalties from Bayer’s sales of the drug outside of the U.S.
Regeneron’s pipeline includes eight late-stage programs and 12 programs in phase 2 clinical studies. Several of these programs target additional indications for already-approved drugs.
What about Regeneron’s COVID-19 efforts? The biotech plans to being a clinical study of its experimental antibody cocktail targeting COVID-19 in June. If successful, the cocktail could be used both as a prophylactic treatment to prevent infection by the novel coronavirus as well as a treatment for patients diagnosed with COVID-19.
The company has had one setback with another COVID-19 program, though. In April, Regeneron stopped clinical studies of Kevzara in treating patients with severe cases of COVID-19 who weren’t in critical condition because of a lack of clinical benefit. However, it’s still evaluating the drug in treating patients with COVID-19 who are in critical condition.
Better coronavirus stock
As a small biotech with a market cap of less than $2 billion, Inovio has the most room to run if it’s successful with its COVID-19 vaccine or VGX-3100. However, my view is that Regeneron is clearly the better stock — regardless of whether or not its COVID-19 cocktail works well.
Regeneron is profitable. It’s growing. It has a solid pipeline. Inovio simply can’t match up, at least right now.
Having said that, though, I’m not calling Regeneron as a stock to buy. The company’s growth is likely to slow down over the next few years. I think there are better biotech stocks to buy than Regeneron.
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