Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: November 9, 2015 @ 5:30 AM Pacific Time
for quarter ending: September 31, 2015 (Q3, third quarter 2015)

Forward-looking statements

Overview: Revenue in the quarter came from grants and collaboration as Inovio continues to move therapies towards FDA approval.

Basic data (GAAP):

Revenue was $24.2 million, up sequentially from $5.3 million, and up from $1.8 million in the year-earlier quarter.

Net income was $5.6 million, up sequentially from negative $6.2 million, and up from negative $7.2 million year-earlier.

EPS (earnings per share, diluted) was $0.08, up sequentially from negative $0.09, and up from negative $0.12 year-earlier.



Quarter Highlights:

Revenue came from a DARPA Ebola vaccine grant and recognition of $15 million from MedImmune. These are one-time events. Positive net income "may not be reflective of future quarters," because grant payments and milestones are irregular.

Doctor Joseph Kim, CEO, highlighted MedImmune deal for INO-3112, which will be studied in combination with other MedImmune therapies. The first combination study could start within a few months.

On August 7 a partnership with MedImmune (part of AstraZeneca) was announced for INO-3112, in combination therapies with MedImmune's own molecules. MedImmune paid $27.5 million, will pay all development costs, and milestone payments may total $700 million, with eventual double-digit royalties. The partners will also co-develop two additional DNA-based cancer vaccines, also with potential milestones and royalties for Inovio.

INO-3112 is closely related to VGX-3100 (it adds INO-9012), which has been shown to be effective against HPV (human papillomavirus) induced pre-cancers and cancers [See Inovio Gets Positive HPV Therapy Results, July 23, 2014]. The Lancet medical journal published results from the Phase II VGX-3100 study of patients with cervical dysplasia with very positive results of lesion regression and clearing of virus in a high percentage of patients. A pivotal Phase III study of VGX-3100 is planned for 2016 by Inovio, which is currently preparing for a meeting with the FDA about the trial.

DARPA awarded Inovio $25 million in September for developing its Ebola vaccines, including a dMAb (DNA-based monoclonal antibody) version. Interim Phase 1 data should be available in the next few months.

"Inovio launched a phase I study of INO-5150, its SynCon® immunotherapy targeting prostate-specific membrane antigen and prostate-specific antigen, in men with biochemically relapsed prostate cancer. This study is evaluating the safety, tolerability, and immunogenicity of INO-5150 alone or in combination with Inovio’s DNA-based IL-12 immune activator. The company expects to report interim data from this study in 2016."

"The first patient was dosed in Inovio’s phase I trial to evaluate safety and tolerability of PENNVAX®-GP, the company’s "universal" DNA vaccine for HIV. The trial will measure immune responses following administration of the vaccine in four groups of healthy subjects receiving the vaccine with and without an immune activator (DNA IL-12) and delivered into muscle or skin using Inovio's CELLECTRA® delivery technology. This 94-patient study is being conducted by the HIV Vaccines Trial Network (HVTN) and funded by the National Institute of Allergy and Infectious Diseases (NIAID)."

"Inovio’s partner for its DNA vaccine for Middle East Respiratory Syndrome (MERS), GeneOne Life Science Inc., filed an Investigational New Drug Application (IND) for GLS-5300 with the United States Food and Drug Administration in October and intends to launch a clinical trial in healthy volunteers by the year end."

Revenue included $16.5 million collaboration revenue, $0.1 million from collaboration with an affiliated entity, and $7.6 million in grants and milestones.

While it is too early to make an announcement of specifics, Inovio is testing its immunotherapies in possible combinations with complementary therapies [WPM: CPMs, see Q&A below]. It also continues to evaluate which therapies to advance with partners and which to do alone.

Ongoing studies include INO-1400 in breast, lung and pancreatic cancer and INO-8000 for hepatitis C. A Phase 1 trial for INO-1800 for Hepatitis B is currently recruiting patients, in partnership with Roche.

Inovio is developing a set of DNA-based vaccines that allow cells to create monoclonal antibodies (dMAb technology). During the quarter ended Inovio announced it has positive pre-clinical results from a dMAb vaccine for Dengue fever.

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

R&D expense was $16.1 million. General and administrative expense was $4.4 million. Total operating expenses were $20.5 million. Inovio reported a $3.7 million operating profit. Interest and other income was $0.2 million, investment in an affiliated entity was a loss of $0.7 million, and change in stock warrants was $0.5 million.

Cash and equivalents balance (including short-term investments) ended at $170.8 million, up sequentially from $154.6 million. Liability in common stock warrants $1.1 million.

R&D expense has about doubled in the last year as pre-clinical and clinical development has ramped. Much of the R&D, however, will be paid for by collaborators.


3100 end of Phase 2 meeting schedule? The end of Phase 2 meeting scheduling in immanent, with the meeting taking place in Q1. We are methodically preparing our package including the clinical protocol. It will be very similar to our Phase 2b study with perhaps 350 to 400 patients with 1-to-1 randomization. The study should start within a few months of the Phase 2 meeting.

Would the endpoints be at a year, perhaps, and would this trial be sufficient for approval? We can't provide that kind of answer until after the FDA meeting. We would look to analyze the full patient set, not a cancer-death type of design. See The Lancet for details of the Phase 2b trial.

Due diligence by MedImmune? They did very deep due diligence. They looked at a lot of 3100 data and the head and neck data. 3112's ability to generate T-cells would compliment MedImmune's checkpoint inhibitor molecules.

Recognition of upfront payment, why lumpy not smoothly? It will be based on deliverables in the contract over the next 2 years. 3112 was a deliverable and was recognized upfront. So it is more milestone based, under the new FCC rules. We have the money, it would not ever be returned, it is just a new rule.

Prostate cancer trial, will there be a readout on the drop in PSA? PSA measurement is one of the biomarkers we will track. We can check the anti-PSA responses. Interim safety and immune response data should be available next year. We have shown we can generate antigen specific T-cells. Once we show that we will move the trial into later stages, likely with a checkpoint inhibitor added.

When could we see more dMAb data from Ebola? Other indications? We are building an arsenal of weapons against cancer and hard to treat infectious diseases. Ebola is just the first one. We are working on MERS, MRSA, pseudomonas, and influenza. We expect to see about a half dozen publications of dMAb data in the next few months. We probably have the largest arsenal of cancer vaccines. We want to be the leading immunotherapy and vaccine company. We want to own some of these ourselves, but are willing to use strategic relationships to get us to that point.

Biomarkers in INO-3112? We are analyzing the head and neck cancer patients. We are more likely to see anti-tumor effects in the 3100 study. But with MedImmune combination therapy we should see anti-tumore results going forward.

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Copyright 2015 William P. Meyers