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Inovio Pharmaceuticals might see a plunge in its 2020 gains if a class action lawsuit proves the company deliberately misled the public. Yesterday, INO stock lost over 5% of its value.
Inovio Pharmaceuticals Inc (NASDAQ: INO) is one of the market’s most interesting stocks, even outside of the biotech sector. While many companies have suffered terrible effects of the coronavirus pandemic, Inovio Pharmaceuticals has enjoyed an upswing, along with a few other related companies. However, amidst all of its current glory, Inovio is struggling through a class action lawsuit. Its stock price has now fallen in response. Yesterday, the stock lost 5.25% to trade at $10.64.
Class Action Lawsuit against Inovio Pharmaceuticals
The lawsuit filed against Inovio Pharmaceuticals is to investigate claims the company made. Between February 14, 2020, and March 9, 2020, Inovio allegedly took advantage of the coronavirus pandemic to surge its stock. According to the lawsuit, Inovio CEO J Joseph Kim told Fox Business News that the company had developed a vaccine for COVID-19, the disease caused by the coronavirus. In addition to this, Inovio’s SVP of research and development, Kate Broderick said that the company fully designed a vaccine within three hours.
Inovio Pharmaceuticals stock multiplied four times over from the $4.28 it was, on February 28, 2020. The price continued to spike until March 9, 2020, when it hit $19.36. Inovio was one of the first biotech companies to start trials for its vaccine, INO-4800.
Citron Research, in a March 9 tweet, cast doubt on Inovio’s claims. Citron called for an investigation from the Securities and Exchange Commission (SEC), into the “ludicrous and dangerous claim they designed a vaccine in 3 hours.” Citron said it was nothing but a gimmick to promote its stock. In response, INO crashed 30%, eventually closing on the day at $9.83. The lawsuit claims that the statements made by Inovio are false, and were only made to mislead the public, to the stock’s advantage.
Broderick’s statement claims that Inovio used a computer algorithm to design the vaccine. Citron believes that this is false. In a recent report, Citron claims that such an algorithm doesn’t exist because it’s not mentioned in Inovio’s 10-K’s or 10-Q’s, and that no one else has it.
The lawsuit was filed in the U.S. District Court for the Eastern District of Pennsylvania. It was filed on behalf of all shareholders who bought common stock between February 14, 2020, and March 9, 2020.
Inovio (INO) Stock
Inovio is currently in pre-market at $10.52, after falling 1.13% from its $10.64 close yesterday. Its stock trajectory is one reason why many now feel that it’s a go. It has pulled in over 222% returns in 2020, and nearly 200% in the last three months.
The rise is mostly because of the optimism surrounding its INO-4800 vaccine. While there are up to 70 projects aimed at COVID-19 according to the World Health Organization (WHO), Inovio is one of those at the forefront. The company has also had some success with INO-4700. The vaccine for the Middle Eastern Respiratory Syndrome (MERS) looks promising.
On the other hand, there are reasons to be bearish on Inovio stock. Apart from the lawsuit and Citron’s dismissal, there is the problem of scalability. Inovio is a relatively small biotech company and may not be able to produce as many doses as might be necessary. The company plans to produce one million doses by the end of this year. In comparison, Johnson & Johnson (NYSE: JNJ) plans to produce 900 million doses of its vaccine by April 2021.