What Does Roche Holding Ltd. (ADR) (RHHBY)’s Inovio Pharmaceuticals Inc (INO) Deal Mean for Investors?

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Especially in the health care sector, a company’s technology can matter much more than most other aspects of its business. Inovio Pharmaceuticals Inc (NYSEMKT:INO) is a case in point. For the last two months or longer, some have questioned the stock, while many longs have looked for a windfall without focusing on what Inovio Pharmaceuticals Inc (NYSEMKT:INO) is all about from a purely health care perspective.

Inovio Pharmaceuticals Inc (NYSEAMEX:INO)

Then yesterday, Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) went ahead and signed a deal that added a new twist to the story.

In the deal, Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) has agreed to pay $10 million up front and milestones of more than $400 million plus double-digit royalties for two of Inovio Pharmaceuticals Inc (NYSEMKT:INO)’s vaccines and the technology used to administer them. These vaccines, one for prostate cancer and the other for hepatitis B, are still in pre-clinical development, but shares are up since the start of the month. Therefore, it is very important for investors to really figure out what health care research Inovio Pharmaceuticals Inc (NYSEMKT:INO) is doing.

What cancer immunotherapy is all about
The human immune system has a natural ability to fight foreign bodies. The so-called white knights doing most of the fighting at a cellular level are white blood cells known as T-cells. Cancerous cells manage to dupe these T-cells into “thinking” that they are not the enemy. So, the natural killing abilities of T-cells are suppressed, letting cancer cells grow and destroy the body.

Chemotherapy is an external means of killing cancer cells. It is not an intelligent method — it kills indiscriminately. Recent research has therefore focused on developing the body’s own immune system to fight against cancer, mostly by enhancing, activating, and increasing the number of T-cells in the body.

Inovio Pharmaceuticals Inc (NYSEMKT:INO)’s prostate cancer pipeline product INO-5150 has been shown to markedly improve T-cell response in animal studies, and it is expected that once it gets into clinical trial, similar robust T-cell response should be found in human studies as well. This is very, very important for the future of cancer research, which is where Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY)’s interest is coming from.

The hepatitis-B vaccine
The hepatitis-B virus, or HBV, apart from causing potentially life threatening hepatitis B infection, also attacks the liver and may also progress into cirrhosis of the liver and liver cancer. There is no specific treatment, and HBV vaccine that produces protective antibody levels is the mainstay of prevention. INO-1800, Inovio Pharmaceuticals Inc (NYSEMKT:INO)’s candidate for a hepatitis-B vaccine, demonstrated that it not only produces antibody responses but could also kill targeted liver cells in mice by inducing strong T-cell response.

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