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Inovio (INO) Q3 Loss Wider than Expected, Revenues Beat

AZN ANIK INO CBM

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Inovio Pharmaceuticals, Inc. (INO - Free Report) reported a loss of 28 cents per share in the third quarter of 2016, wider than the Zacks Consensus Estimate of 26 cents. In the year-ago quarter, the company had posted earnings of 7 cents.

Total revenue in the quarter was down 48.3% to $12.5 million. Revenues in the third quarter of 2015 had included upfront payment received under the company’s partnership agreement with MedImmune, the global biologics research and development arm of AstraZeneca PLC (AZN - Free Report) .

Reported revenues were, however, above the Zacks Consensus Estimate of $4.5 million.

In the third quarter of 2016, research and development expenses increased 67.7% year over year to $27 million due to increased pipeline investment – notably the DARPA-funded Ebola program and the company’s preparations for the initiation of a phase III study on VGX-3100.

Likewise, general and administrative expenses rose 31.8% to $5.8 million.

Pipeline Update

In Oct 2016, the FDA placed a clinical hold on the company’s proposed phase III program on its lead pipeline candidate, VGX-3100, for the treatment of HPV-16/18-related high-grade cervical dysplasia. Inovio has neither initiated the phase III program on the candidate nor has it begun enrolling or dosing patients.

The FDA has requested for additional data to support the shelf life of the newly designed and manufactured disposable parts of the Cellectra 5PSP immunotherapy delivery device. Inovio expects to receive a formal letter from the FDA this month.

The phase III program is now expected to begin in the first half of 2017, subject to the resolution of the issues raised by the FDA.

Meanwhile, the company is working on the development of other candidates in its pipeline. Currently, it is evaluating INO-5150 (phase I) for the treatment of prostate cancer and INO-3112 (phase I/IIa) for HPV-related cervical, head and neck cancers.

Inovio is also working on developing vaccines for Ebola, Zika and Middle East Respiratory Syndrome (MERS).

INOVIO PHARMAC Price, Consensus and EPS Surprise

INOVIO PHARMAC Price, Consensus and EPS Surprise | INOVIO PHARMAC Quote

Our Take

Inovio’s third-quarter results were mixed with the company reporting a wider-than-expected loss but revenues surpassing estimates. We are further pleased with the company’s efforts on developing vaccines for Ebola, MERS and Zika virus.

Going ahead, we expect investor focus to remain on pipeline updates by the company.

Zacks Rank & Key Picks

Inovio currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Anika Therapeutics Inc. (ANIK - Free Report) and Cambrex Corp. (CBM - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika’s earnings estimates have increased from $1.96 to $2.06 for 2016 and from $2.03 to $2.09 for 2017 over the last 60 days. The company has posted a positive earnings surprise in all of the four trailing quarters with an average beat of 33.14%.

Cambrex’s earnings estimates have increased from $2.46 to $2.55 for 2016 and increased from $2.91 to $3.06 for 2017 over the last 60 days. The company has posted a positive earnings surprise in three of the four trailing quarters with an average beat of 19.78%.

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