Inovio Pharmaceuticals, Inc. (NYSEMKT:INO) announced early-stage study results on its HIV vaccine candidate PENNVAX-GP. The study results were very encouraging, with the company claiming that it "produced amongst the highest overall levels of immune response rates (cellular and humoral) ever demonstrated in a human study by an HIV vaccine". The near-100% response rate to the vaccine is obviously very good news and investor sentiment was positive as the stock opened the day at $9.65, up 35% from Tuesday's close of $7.13.

However, the stock faded all day and closed at $8.68 on very heavy volume of 28.6 million shares, about 40% of the stock's float. Why would a sell off on such heavy volume occur on such good news? As an investor who has been involved in many speculative biotech stocks, both on the long and short side, I have seen this enough times before. I believe that the reason why the stock traded the way that it did on Wednesday is that there is dilution, or the expectation of dilution. Dilution for biotech stocks usually accompanies a big news release like this because retail investors fall in love with the story and provide enough buy volume to facilitate the offering of shares.

READ FULL ARTICLE HERE