October 20, 2020 | AtoZ Markets – After reaching an all-time high of $33 per share on June 29, Inovio Pharmaceuticals (NASDAQ: INO) has continued to plunge, losing more than half of those gains within a matter of days. Just last month, Inovio stock nearly doubled before nosediving once again.
While Inovio stock are up 259% year to date, the biotech firm based in Philadelphia has been struggling since September to keep pace with its competitors such as AstraZeneca (NASDAQ:AZN), Moderna (NASDAQ:MRNA), Novavax (NASDAQ:NVAX), and Johnson & Johnson (NYSE:JNJ).
Two reasons why Inovio stock dropped
The reason for the downward spiral Inovio stock is attributed to the company's announcement that the Food and Drug Administration (FDA) has paused its DNA-based COVID-19 vaccine candidate, INO-4800. That is not all. Inovio is also engaged in a legal battle with its long-time Texas-based distributor VGXI, Inc. VGXI is a contract DNA Plasmid manufacturer based in Woodlands Texas, and was once run by Inovio's CEO Joseph Kim.
In its lawsuit, Inovio argues it is entitled to the manufacturing information because VGXI did not have the manufacturing capacity to make the quantity of the vaccine materials Inovio required. VGXI has countered by saying it was never given the opportunity to do, and the information Inovio is seeking is proprietary.
Last week, however, Inovio filed a Form 8-K to the Securities Exchange Commission (SEC) which outlines the separation of the two companies. The company has, however, also ramped up its production capacity of INO-4800 by teaming up with healthcare giant Thermo Fisher Scientific.
While Inovio and its investors await the FDA's response that they have completed their investigation and can now continue with clinical trials of its COVID-19 vaccine. Is possible that INO stock could deliver yet another huge comeback?
Inovio Stock Price Analysis
The technical rating of INO is bad and it also does not present a quality setup at the moment. The price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. INO stock is currently trading in the middle of its 52-week range. The S&P500 Index however is currently trading near new highs, so INO stock is lagging the market.
Considerably lower volume is observed in the last couple of days. Both the long and short-term trends are negative. It is better to avoid buying stocks with negative trends.
In the last month, INO has a been trading in the $10.28 - $18.69 range, which is quite wide. It is currently trading near the lows of this range. Prices have been falling strongly lately, it is better to avoid new long positions here.
We found 2 important support areas.
- Support @10.88 from a trend line in the daily time frame.
- A support zone ranging from $10.50 to $10.66. This zone is formed by a combination of multiple trend lines in multiple time frames.
When analyzing the resistance we notice 2 important areas.
- Resistance @11.62 from a trend line in the daily time frame.
- A resistance zone ranging from $12.83 to $13.12. This zone is formed by a combination of multiple trend lines and important moving averages in the daily time frame.
In conclusion, we can say that INO stock might face bearish pressure if it breaks below the current level in the medium term. The stock has been facing a downtrend after it breaks the weekly lows. As per the charts, the investors should wait for a bullish signal or the break-in resistance zone from $12.82 to $13.12 price mark for long-term investment.