Results & Analyst Call Summary

Conference date: March 17, 2014 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2013 (Q4, fourth quarter 2013)

Forward-looking statements

Overview: Successfully raised cash in anticipation of future product commercialization.

Basic data (GAAP):

Revenue was $1.7 million, down sequentially from $9.5 million, and up from $1.1 million in the year-earlier quarter.

Net income was negative $15.5 million , improved sequentially from negative $30.9 million, but down from negative $0.7 million year-earlier.

EPS (earnings per share, diluted) was negative $0.07, improved sequentially from negative $0.16, but down from $0.00 year-earlier.

Guidance:

none

Quarter Highlights:

It was a big quarter for Inovio, which is still a development-stage biotechnology company. A great deal of cash was raised to improve the balance sheet. Subsequent to the end of the quarter a large financing was closed that will allow Inovio to "proactively advance various product and technology programs." More data from Phase II trials will be reported mid-year.

As of December 31, 2013, after warrants were exercised, Inovio ha 420.9 million shares outstanding on a fully-diluted basis.

On March 4, 2014 another 21.8 million shares were sold in a public offering, generating another $59.2 million in cash.

Roche licensed INO-5150 for prostate cancer and INO-1800 for Hepatitis B from Inovio for $10 million plus potential milestone payments. The first Phase I prostate cancer trial should begin in the first half of 2014. The Hep B trial is likely to start in early 2015.

"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."

R&D expense was $6.4 million. General and administrative expense was $4.3 million. Total operating expenses were $9.7 million, so there must have been a $1 million benefit. Inovio reported a a negative $8.0 million operating profit. There was also a loss from change in fair value of common stock warrants due to the significant increase in stock price during the year. Which does not add up to the net loss, but then they did not bother to provide a P&L table for Q4, just the full year. I might get the figures later.

Cash and equivalents balance (including short-term investments) ended at $52.6 million, up sequentially from $46.3 million. Accounts receivable ended at $3.3 million. Liability in common stock warrants $19.5 million.

Cash appear sufficient to fund the company through 2017. This is the most cash Inovio has ever had.

The VGX-3100 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 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.

Preclinical development efforts include INO-1400 hTERT cancer vaccine, with the first clinical trials in breast, lung and pancreatic cancer scheduled for the second half of 2014.

While combining Inovio therapies with checkpoint inhibitors is the next logical step, a trial of this type is not planned at this point.

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

Q&A:

How many new oncology antigens do you plan to generate in 2014, and how will they be developed? hTERT plus 4 to 6 other candidates that should be ready for the clinic by the end of the year. We should be able to target almost every cancer type. We will partner some and retain some. We believe in the multi-antigen approach.

Roche deal, is that multi-antigen? Yes, includes two antigen. Roche is also a firm believer in the multi-antigen approach.

Would not a Phase III trial prevent having cash through 2017? If the Phase II results are positive for 3100 we would expect a good partnership or the ability to raise funds, about $100 million, to do the trials. Having cash in the bank now allows us to negotiate from a position of strength.

What would define success in cervical dysplasia? It is a placebo controlled study of over 150 women. We expect sufficient statistical power in the trial to show significance between the active and placebo group. [gave detailed numbers]

It is only a theory that T-cell generation correlates with efficacy. This will be the first trial to correlate and characterize the T-cell level to efficacy.

Biomarkers for Hepatitis B with Roche? Will not start until early 2015. Roche is funding, but we are "quarterbacking" the studies. We will be looking at T-cells in periphery and liver, and liver enzymes. We will learn a lot from the first study. Hep B is a huge market, with 3 to 4 times the number of chronic patients at the Hep C market.

Prostate cancer biomarkers? Will track T-cells in periphery and prostate, and will measure PSA. We will release more details as we go forward.

Response compared to dendritic cells? DNA plasmids can generate higher levels of killer T-cells. We will measure our data against anyone's. There is a lot of noise in the field of immune therapies. It is all about the T-cells. You need a basal level of T-cells to make checkpoint inhibitors work.

The pathology and histology slides will be blindly reviewed by three expert pathologists to remove any noise from the Phase II VGX-3100 results.

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