Shares of Inovio Inc. (NASDAQ:INO) fell 25% to $6.85 on April 23 after the company said the U.S. Department of Defense scratched funding for the phase III portion of an ongoing trial of its COVID-19 vaccine candidate, INO-4800, in light of the broad availability of other COVID-19 vaccines in the U.S. The news followed recent phase I data showing '4800 performed about in line with already available competitors against SARS-CoV-2 variants now dominant in the U.S.

Inovio, which already faced trouble in the form of an FDA partial clinical hold on the more advanced study, said it's now planning for a predominantly ex-U.S. phase III trial of '4800, as well as evaluating a pan-COVID variant of the DNA vaccine, INO-4802.

The funding decision "results from the changing environment of COVID-19 with the rapid deployment of vaccines," DoD's Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (JPEO-CBRND) told Inovio, according to the company. It "is not a reflection of the awardee or product, rather a fast-moving environment associated with the former Operation Warp Speed on decisions related to future products," the office added. DoD funding will continue for the ongoing phase II segment of the trial, called Innovate.

News of the funding withdrawal wasn't completely surprising. U.S.-based progress on Innovate has been hampered since September, when the FDA placed a partial clinical hold on the study over questions relating to an intradermal delivery device Inovio uses with INO-4800. But how much had already been invested by DoD in supporting the trial and the exact amount of financial support Inovio is losing out on wasn't entirely clear on April 23.

Potential impacts on other elements of DoD support were unclear, too, as they were not addressed in Inovio's announcement. In June 2020, the DoD pledged $71.1 million to support large-scale manufacturing and procurement of two versions of the delivery device, called Cellectra, as well as production of doses of '4800. That followed a March 2020 award by the Office of the Assistant Secretary of Defense for Health Affairs and Defense Health Agency of an $11.9 million contract award to Ology Bioservices Inc. to support work with Inovio on DNA technology transfer to rapidly manufacture DNA vaccines.

A representative of Inovio said the company had nothing more to share beyond a press release. Neither JPEO nor Ology responded to requests for further information.

Inovio said it would continue to advance planning with the Seoul-based nonprofit International Vaccine Institute and China's Advaccine Biopharmaceuticals Suzhou Co. Ltd. for the phase III trial of INO-4800 based on an upcoming evaluation of phase II safety and immunogenicity data.