The Penny Stock Biotech That Hopes to Cure the Flu

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If there's one thing I've learned about Radical Technology Profits Editor Michael Robinson in the six months that we've worked together, it's this: Anytime you talk with that guy, you'll come away knowing at least two new ways of making money.

Let me share a story that demonstrates what I mean.

Michael and I have very similar backgrounds. We're both authors and former financial journalists. And we both have fathers who worked in the defense/aerospace sector: my Dad with defense contractors and Michael's with the prestigious Aviation Week and Space Technology magazine.

So we have a lot in common and enjoy sharing "war stories" from our journalism days.

During one of our talks a week ago, I recounted my flu-shot saga – how after a fruitless weekend of running around, I finally got vaccinated by stopping in at my neighborhood Rite-Aid every single morning for a week …and finally hit the jackpot by arriving just after a new vaccine shipment had arrived.

My personal experience with the latest flu-vaccine shortage kicked off a discussion of "synthetic" vaccines – a topic that Michael knows quite a bit about.

And he told me about two biotechs that are now working on synthetic flu vaccines.

As I mentioned to you the other day, one is Vical Inc. (Nasdaq: VICL), a stock that we'd recommended in our highly successful "Biotech Buyout Binge" research report.

The second is a very tiny biotech – essentially a "penny" stock. But it's a penny stock with a lot of promise. With Michael's blessing, I'm going to share it with you.

The company in question is Inovio Pharmaceuticals Inc. (NYSE: INO), a Blue Bell, Penna.-based venture that's working on synthetic vaccines for cancers and for infectious diseases.

At first glance – with a market cap of roughly $92 million and a stock that's trading at 66 cents a share – Inovio looks like the classic penny stock. And because the company currently has no sales, the initial impression is certainly that of an early-stage, penny-stock biotech.

But this is why there's such great value in having access to the insights of a high-tech guru like Michael – who's able to tell us that there's much more to the Inovio story than most investors think.

"Bill, while it's true that Inovio has no sales at present, what's more important to note is that this is a company that's still been able to finance its operations because it has done a superb job raising money from both government sources and foundations," Michael said. "What that tells us is that Inovio has great science. You see, the folks in charge of the funding are able to differentiate between hype and promise, and they can see that Inovio's science has great promise."

Indeed, Inovio's anti-malarial-vaccine initiative has received millions of dollars in funding from a group affiliated with Bill and Melinda Gates. That's been enough to help finance the clinical trials it's pursuing, and to continue its research-and-development efforts.

The biotech is working on vaccines for cervical cancer and leukemia. And it has an injection-enhancing technology that it refers to as "electroporation." As you'll see, that technology is pretty intriguing.

"When a patient gets an injection … a shot … they also receive a quick electric pulse," Michael explained. "That pulse causes cell membranes to open and accept the DNA contained in the injection. Those cells then produce the antigens needed to tell the immune system to fight that particular, targeted disease. It's really quite ingenious."

But it was Inovio's pursuit of a "cure" for the flu – its synthetic vaccine effort – that started this conversation. I urged Michael to tell us more.

"The company is working on a "universal' flu vaccine – which is what we really need to avoid pandemic-like outbreaks," Michael told me. "Right now, vaccine-makers try to develop inoculations that are unique to the current flu season. That means they have to be developed, manufactured and distributed as quickly as possible. And if they "miss' and don't match the vaccine to the virus, or if a new strain of virus emerges, the vaccine isn't effective, and it's usually too late to develop a new one."

The obvious solution is to create an influenza vaccine that can protect us from existing and newly emergent "unmatched" strains of the virus. Lots of companies are trying to do this, and it's also one of Inovio's key goals.

"What we really need to see is a vaccine that can give us protection against current, known strains of the flu – and pre-emptive protection against strains that could emerge," Michael told me. "It takes a unique technology to achieve that objective. And that's what Inovio is trying to do with its "synthetic consensus' design approach – also known as its "SynCon®' technology."

As I've said to you many times, I give a lot of credence to everything Michael says. I've given you many examples of why I do so.

Here's another.

To form their "Buy, Sell or Hold" ratings, most tech analysts read whitepapers, troll news sites, read stock charts, attend trade shows … you get the idea.

Naturally, Michael does all of that.

But he doesn't stop there.

Before he told me about this particular company, Michael actually had dinner with Inovio co-founder and company CEO J. Joseph Kim. So he was able to get his questions answered on a firsthand basis. And Michael also got some great insights on the biotech sector in general.

But that's another story for another time.

Analysts have a consensus target of $2 a share on Inovio. That's 200% above the company's 66-cent share price when I wrote this.

[Editor's Note: This stock is a "Buy" up to a maximum of 75 cents a share. Given Inovio's highly speculative nature, make sure to observe all the usual precautions. Don't chase the stock (use "limit orders" to buy at the price you want and to avoid errant execution). Limit your purchase to no more than 1% of your portfolio. And use "trailing stops" (if you observe the other rules, a "trailing stop" of 40% to 50% is acceptable here). Finally, if you can't stomach volatility, or big losses, steer clear.]

  1. Leon Haven | June 24, 2013

    Sir , do you have any information on a stock that goes by the ticker (SBOTF) a bio-tech stock, that looks promising. Leon Haven

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