Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: November 12, 2013 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2013 (Q3, third quarter 2013)

Forward-looking statements

Overview: Milestone payments offset by non-cash charge for change in fair value of common stock warrants.

Basic data (GAAP):

Revenue was $9.5 million, up sequentially from $786 thousand, and also up from $0.9 million in the year-earlier quarter.

Net income was negative $30.9 million, down sequentially from negative $10.9 million, and down from negative $6.6 million year-earlier.

EPS (earnings per share, diluted) was negative $0.16, down sequentially from negative $0.06, and also down from negative $0.05 year-earlier.



Quarter Highlights:

It was a big quarter for Inovio, which is still a development-stage biotechnology company.

$8.4 million of revenue was from license fee and milestone payments from Roche, $0.1 million was from such payments for an affiliated entity, and $1.0 million was from grants.

The $35.0 million non-cash charge resulted from the change in fair value of warrants following a significant stock price increase in the quarter.

R&D expense was $5.4 million. General and administrative expense was $3.3 million. Total operating expenses were $8.7 million, leaving a $$0.8 million operating profit. There was a $35.0 million loss from change in fair value of common stock warrants and a $3.4 million gain from investment in affiliated entity. Interest and other income was $0.05 million.

Cash and equivalents balance (including short-term investments) ended at $46.3 million, up sequentially from $23.6 million. The increase was due to sale of common stock and the exercise of options and warrants. Accounts receivable jumped to $10.6 million. Liability in common stock warrants $14.1 million.

After the quarter ended $11.1 million was raised by $1.1 million in stock and warrant proceeds and another $10 million from Roche for the new partnership agreement.

Cash appear sufficient to fund the company through the first quarter of 2016. This is the most cash Inovio has ever had.

In the 3rd quarter, Inovio raised $6.1 million, selling 4.25 million shares at an average price of $1.48. Also warrants to purchase 5.3 million shares were exercised, generating $5.3 million for the company. As a result Inovio has sufficient cash to meet its planned needs through Q1 2015.

The new agreement with Roche covers licensing of INO-5150 for prostate cancer and INO-1800 for hepatitis B, and additional vaccines. Roche paid $10 million upfront, will pay all development costs, and could make up to $412.5 million if development and commercial milestones are reached. If commercialized, Inovio "is entitled to receive up to double-digit tiered royalties."

"Inovio has continuing discussions with other large pharmaceutical companies interested in potential strategic partnerships to advance the development of Inovio's numerous SynCon® immunotherapy and vaccine products."

The Phase II cervical dysplasia (HPV-003) trial completed enrollment with first data in mid-2014. Phase II studies of VGX-3100 for HPV-caused cervical cancer, and for head & neck cancer, should begin in 2014. The Phase 1 prostate cancer INO-5150 should be launched with Roche in the first half of 2014. The Phase 1 study for Pennvax-B preventative HIV vaccine is expected to begin in the first half of 2014. In Q4 a Phase 1 study of INO-8000/VGX-6150 for hepatitis C with VGX International was initiated.

Inovio also has a variety of vaccines in preclinical study. See the Inovio Pipeline for an overview.


PD1 targeting agent class? Inovio is the leader in active cancer vaccines, with best T-cell responses. Monoclonal antibodies are also becoming important, and could take the brakes off the T-cells, which is going to be a game-changer in the field. It is an opportunity for us; you need something to drive the therapy besides taking off the brakes. "The Roche deal in prostate cancer is just the tip of the iceberg." Active therapies could be combined with PD1 antibody therapies.

Decision making for HPV future trials? Current trial is for 150 or more women treated three times with VGX-3100. Randomized 3-to-1 drug vs. placebo. Primary endpoint is clearance of lesions; also tracking clearance of HPV from the body. Unblinded data in mid 2014. We see the possibility of expanding the label for cancers. Moving beyond current trials will depend on data readouts, discussions with the FDA, and partnerships. This is a prime target for a partnership. "This is not a Provenge sort of product," because it has a low cost of goods sold.

The first head & neck trial will be a small, flexible trial, looking at safety, as well as survival, but will not be placebo control. So it would be used to get data for a pivotal trial. Our goal is to make our immune therapy the first line of defense. T-cells are the most important immune cells for cancer therapy, and we have proven our products are best at stimulating T-cells.

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Copyright 2013 William P. Meyers