Highlights from Technology Investor:
April 3, 2014
Strategy Corner: Lessons From Inovio
Investing in game changers encompasses the highest risks and the biggest rewards. It also often requires a large testing of patience. Our experience with Inovio Pharmaceuticals (INO) certainly has been all this and more.
Ever since the current Inovio was formed by the merging of electroporation technologies with DNA vaccine research and development, the company's evolution has been remarkable.
Inovio's rise is still in the relatively early phases, but today the company bears little resemblance to what it was a few years ago.
Armed with more than $100 million in cash, the company has a market value approaching $1 billion, a partnership with Roche (worth up to $400 million), and the real possibility of redefining the vaccines industry through the prevention and treatment of several major diseases.
Roadmap for Success
The experience with Inovio points to few valuable lessons I've been applying over the years and worth reviewing:
- By engaging a company and its management team ahead of the Street, I gain critical access to key players and ongoing access. This enables me to keep tabs on the situation and to calibrate how well management follows through on what it says and promises.
- Our "two-basket" strategy -- accumulating a long-term position over a lengthy period, while also taking advantage of stock volatility and insights into the situations to tactically trade for significant profits along the way.
- A large dose of patience and discipline is required. Arriving early to the party means we've got to be prepared to let things unfold and to expect many ups and downs on the road to the ultimate payoff.
- Stock sales and dilution are a part of life in the market. What's important is not so much the fact of the sale itself, but the timing and terms of any deal, the quality of investors, and what the company does with the cash (i.e. how it creates new value).
- Technologies and markets rapidly evolve and unless a company is capable of adapting to change it stands little chance of success in the long run.
- A company's partners and agreements reveal a whole lot about a firm's potential value and prospects for growth. A powerful sign is a steady upward progression from deal to deal (bigger, better partners, more money) that reflects increasing value for the company and its technologies and products.
These lessons from Inovio work across our portfolio and serve as a valuable guide -- making use of both art and science for decision-making in the universe of small and emerging technology stocks.
Josh discusses his investment strategy and highlights three biotech game-changers (INO included) in an interview with The Life Sciences Report. Read it here.