Inovio Pharmaceuticals' Rising Short Interest and the Looming Short Squeeze: A Strategic Analysis

The stock of Inovio Pharmaceuticals (INO) has become a focal point for investors and short sellers alike, with its short interest surging to notable levels in late 2025. As the company advances its lead candidate, INO-3107, toward potential regulatory approval, the interplay between bearish sentiment and bullish catalysts raises critical questions about market dynamics and short squeeze risks. This analysis examines the latest short interest data, contextualizes it within recent corporate developments, and evaluates strategic opportunities for investors navigating this volatile landscape.

Short Interest Data and Market Sentiment

As of December 2025, Inovio Pharmaceuticals had a short interest of 5,633,794 shares, representing 10.66% of its float, according to data from NASDAQ and FINRA. This figure aligns with earlier reports indicating a 10.4% increase in short interest in August 2025, underscoring a persistent bearish outlook among traders as per MarketBeat. However, a separate report from MarketBeat dated December 15, 2025, revealed a more alarming figure: 9.45 million shares shorted, or 14.49% of the float, with a short interest ratio (days to cover) of 7.7 according to MarketBeat. This discrepancy highlights the fluidity of short interest metrics but underscores a consistent trend-short sellers are increasingly betting against INO.

The short interest ratio, a key indicator of short squeeze potential, has also shown volatility. At 2.54 days to cover in early December according to Fintel, the metric suggested a moderate risk of a squeeze. However, the later report of 7.7 days to cover according to MarketBeat implies a significantly higher vulnerability, as short sellers would require nearly a week to offload their positions at the average daily trading volume of 1.74 million shares according to MarketBeat. Such a scenario could trigger a self-reinforcing cycle of buying pressure, forcing short sellers to cover at escalating prices.

Catalysts Driving Investor Sentiment

Recent developments have introduced both optimism and uncertainty for INO. On December 29, 2025, the FDA accepted Inovio's Biologics License Application (BLA) for INO-3107, a DNA-based therapy for Recurrent Respiratory Papillomatosis (RRP), with a PDUFA date set for October 30, 2026 according to Inovio's press release. While this marks a regulatory milestone, the agency raised preliminary concerns about the adequacy of data to justify accelerated approval, signaling potential hurdles as reported in Inovio's press release.

Clinically, INO-3107 has demonstrated robust results, including a 78% reduction in surgeries in Year 2 post-treatment and sustained efficacy independent of viral load or subtype according to Inovio's Q3 results. These findings, published in Nature Medicine, reinforce the therapeutic potential of Inovio's DNA-encoded monoclonal antibody (DMAb™) technology according to Inovio's Q3 results. Such advancements could catalyze investor confidence, particularly if the BLA is accepted without major delays.

Financially, Inovio reported a $45.5 million net loss in Q3 2025, driven by a non-cash warrant liability loss, but operating expenses decreased by 22% year-over-year, extending its cash runway to Q2 2026 according to Yahoo Finance. While the company's cash reserves have dwindled to $50.8 million, the reduction in expenses and focus on key programs suggest a strategic pivot toward capital efficiency according to Yahoo Finance.

Strategic Implications for Short Sellers and Investors

The juxtaposition of rising short interest and positive catalysts creates a high-stakes environment. A short squeeze becomes increasingly likely if INO's stock price rises due to favorable regulatory news or clinical data. For instance, the 7.7 days to cover ratio according to MarketBeat implies that even a modest price uptick could force short sellers to scramble for liquidity, exacerbating upward momentum. This dynamic is further amplified by the 14.49% shorted float, which exceeds the 10% threshold often associated with heightened squeeze risk according to MarketBeat.

For investors, the key lies in timing and risk management. A strategic short covering opportunity may arise if the FDA's concerns about accelerated approval are resolved favorably, or if INO-3107's commercial potential becomes clearer in 2026. However, the company's financial constraints and the FDA's conditional acceptance of the BLA necessitate caution. Investors should monitor cash flow developments and regulatory updates closely, while hedging against short-term volatility.

Conclusion

Inovio Pharmaceuticals stands at a crossroads, with its stock price poised to react sharply to either regulatory success or failure. The surge in short interest reflects skepticism, but the underlying science and regulatory progress suggest a path to value creation. For investors, the challenge is to balance the risk of a short squeeze with the company's long-term potential. As the PDUFA date approaches, INO could become a case study in how market sentiment and corporate milestones intersect to shape investment outcomes.