Inovio Pharmaceuticals (NASDAQ:INO)

On Monday, Inovio Pharmaceuticals closed the day down by 17% after the company announced that the FDA had placed its trial initiation on hold. This refers to the phase 3 clinical trial that was supposed to begin shortly treating women with cervical dysplasia or CIN 2/3 lesions. The vaccine to be used in the clinical trial is known as VGX-3100. A clinical hold is a trial that is either halted while ongoing or delayed if the trial has not yet begun.

Major Hold

In the case of Inovio, the phase 3 trial had not yet started. It was supposed to start soon, but now it looks like the phase 3 trial will be delayed much longer until Inovio can get the FDA to lift the clinical hold. The good news to come out of this is that no other trial is affected, only the phase 3 trial that was supposed to start. Many investors were disappointed by this news, as evidenced by the stock falling 17% for the day.

The company may have received notice beforehand, but it didn't get every exact detail necessary to take the necessary course of action right away. In other words, Inovio is awaiting a letter from the FDA which is set to come within the next 30 days. In the initial communication between Inovio and the FDA, the FDA has requested additional information on its CELLECTRA 5PSP immunotherapy delivery device.

Months Of Delay

Investors of Inovio were already anxious for the phase 3 trial to get started, but now it looks like they will have to wait a lot longer. Why is this the case? The reason is because Inovio stated in its press release that data to satisfy the FDA won't be ready until the end of this year. This means that the data wont' be ready until probably late December, and that is if the company remains on track. If Inovio needs more time, or if the FDA has additional questions from comments then it is possible that the delay could be stretched out even longer.

If that were to happen then the stock could fall into a further decline. It is never a good thing when there is a clinical hold on a trial, and biotechnology companies' stock tends to tumble as a result. That seems to be the case so long as the issue remains unresolved. That means Inovio will have to work quickly with the FDA to rectify the situation in a timely manner. There is, however, one major problem. Even if everything was to go smoothly, Inovio anticipates that the phase 3 trial would start in the first quarter of 2017.  Even then that doesn't mean that it will be in the beginning of 2017. It could be pulled back as much as by the end of the first quarter of 2017. Again, that is if there is no other delays in the dialogue between Inovio and the FDA.

Moving Forward

The good news is that nothing else in the pipeline was affected, therefore all the other clinical trials are running as normal. In addition, the clinical hold had nothing to do with the vaccine itself. The company's vaccine is safe, and the hold wasn't even because of the safety of the CELLECTRA device used to inject the vaccine. The clinical hold was because the FDA was worried about the shelf life of the delivery device product. Something so trivial had caused the FDA to put a hold on the trial. The truth is that this matter should be resolved fairly easily, the bad news is that it will delay the phase 3 trial initiation by 5 to 6 months. As long as Inovio is able to resolve this issue with the FDA then the long-term future of the company should remain on track.

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