Results & Analyst Call Summary

Conference date: March 16, 2015 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2014 (Q4, fourth quarter 2014)

Forward-looking statements

Overview: Inovio is a development stage company with a broad pipeline of DNA-based vaccine candidates. The call mostly consisted of reviewing previously announced 2014 events.

Basic data (GAAP):

Revenue was $2.5 million, up sequentially from $1.8 million, and up from $1.7 million in the year-earlier quarter.

Net income was negative $7.4 million, down sequentially from negative $7.2 million, and up from negative $15.5 million year-earlier.

EPS (earnings per share, diluted) was negative $0.12, flat sequentially from negative $0.12, and up from negative $0.30 year-earlier.

Guidance:

None. No where near having any commercial products on the market.

Quarter Highlights:

Reviewed the data and events of 2014. The new announcement was a $12.2 million DARPA grant for DNA-based monoclonal antibodies, which Inovio will share with MedImmune and the University of Pennsylvania.

Revenue in the quarter came from the collaboration agreement with Roche, recognizing an earlier milestone payment.

2015 will see steps towards Inovio's first phase III therapy trial, as well as initiating new Phase I trials. Dr. Joseph Kim, CEO, reviewed what the characteristics are for the ideal vaccine.

After the quarter ended Inovio announced a Phase I study of PENNVAX-B for HIV infections "revealed that induced immune response characteristics were similar to those observed in extremely rare HIV-infected individuals who without treatment do not progress to further stages of the disease ("long-term non-progressors"). It is believed that part of their ability to control infection may lie in their unique immune responses."

Today an NIAID grant for $16 million over 5 years to Inovio and partners to develop a vaccine for HIV was announced.

The first Phase I human study for INO-1400 DNA immunotherapy targeting hTERT in solid cancers (breast, lung, and pancreas) is underway.

Funded in part by an NIH contract, PENNVAX-GP vaccine for HIV will start a Phase I study in the first quarter of 2015.

A Phase I trial of INO-4200 for Ebola will start likely in Q2 2015 in collaboration with GeneOne Life Sciences. Animal data from the vaccine had been positive. There is also a study underway with GeneOne for a hepatitis C vaccine.

The Phase I hepatitis B vaccine trial in collaboration with Roche should commence soon, triggering a milestone payment. However, in November Roche terminated the agreement to develop INO-5150 for prostate cancer.

Complete data from the VGX-3100 HPV Phase II study is being prepared for publication in a medical journal. Inovio believes the data shows the vaccine to be safe, effective, and efficient. The Phase III study should begin in 2016 following an end of Phase II meeting with the FDA.

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

R&D expense was $9.2 million. General and administrative expense was $4.2 million. Total operating expenses were $13.5 million. Inovio reported a a negative $11.0 million operating profit.

Cash and equivalents balance (including short-term investments) ended at $93.6 million, down sequentially from $100.9 million. Liability in common stock warrants $2.2 million.

Management believes cash is sufficient to operate the company through the end of 2017, excluding funding for Phase III of VGX-3100, which will require raising additional funds.

Q&A:

VGX-3100 timeline, FDA? Phase 3 products must meet commercial launch rules, Inovio is using a third party. Inovio is also scaling up production of its electroporation devices. Is preparing for end of phase 2 meeting with FDA, which could occur midyear. Could start the Phase 3 trial in 2016, perhaps earlier. The Phase 3 trial might be between 300 and 400 patients. The endpoint would be full clearance of lesions, which would help eliminate placebo effects, but that is not final yet. The entire trial should cost between $80 and $100 million.

Key differences with other DNA vaccines? The biggest difference is safety. Our vaccines are pure DNA and water. We have strong safety track record. We also have clear mechanisms of action. The competition is more nebulous.

Prostate cancer vaccine? All of our products are up for a partnership with the right partner at the right price. For a future trial we would want to look for earlier stage patients and the T-cell response.

Any possibility that Phase 3 of VGX-3100 could be delayed? Things can go wrong and cause delays, but we don't see any such delays at this time. We don't expect any real surprises from week 88 follow up data. But you never know when you are dealing with the FDA.

Believes will be able to get good results from the prostate cancer program, despite the disappointment that Roche dropped it.

VGX-3100 patient age distribution? The commercial vaccines are prevenative, and the patients are typically teens. Our therapy is for people who already have HPV and lesions from it. The women patients were 18 to 55 years old. The details of age stratification will be in the printed article.

Our annual cash burn projection is about $30 million. Many of our trials are financed with other people's money. We will raise additional capital for HPV Phase 3 if we cannot find a suitable partner. We might raise money in either case.

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