Results & Analyst Call Summary

Conference date: March 14, 2016 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2015 (Q4, fourth quarter 2016)

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 $5.9 million, down sequentially from $24.2 million, but up from $2.5 million in the year-earlier quarter.

Net income was negative $18.0 million, down sequentially from negative $5.6 million, and down from negative $7.4 million year-earlier.

EPS (earnings per share, diluted) was negative $0.25, up sequentially from negative $0.08, and up from negative $0.43 year-earlier.

Guidance:

None.

Quarter Highlights:

Inovio announced it will acquire all of Biotech Medical Technologies' assets, most notably needle-free injection devices, for $5.5 million. This will supplement Inovio's own electroporation technology.

Doctor Joseph Kim, CEO, said "multiple milestones are coming to fruition this year." Believes Inovio is "uniquely positioned" to respond to emerging virus threats like Zika and Ebola.

A pivotal Phase III study of VGX-3100 is planned for mid-2016 by Inovio, which is currently preparing for a Q2 meeting with the FDA about the trial. This will treat HPV caused pre-cancers that affect 500,000 new patients in the U.S. each year. Inovio has upgraded its production capacity to meet trial needs. Clinical sites are being pre-qualified internationally.

In partnership with MedImmune/AstraZeneca INO-3112 for cancers caused by HPV, in combination with other immunotherapy molecules. A Phase 2 trial should begin in 2016. Milestone payments could reach $700 million. MedImmune will also partner on two other cancer vaccines, in combination with a checkpoint inhibitor, taking at least one into human clinical study in 2016.

Inovio is developing Ebola vaccines, including a dMAb (DNA-based monoclonal antibody) version. Interim Phase 1 data on 75 healthy volunteers should be available in 2016.

Inovio continued 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.

Inovio’s phase I trial continued 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). 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)." Enrollment is going extremely well.

"Inovio’s partner for its DNA vaccine for Middle East Respiratory Syndrome (MERS), GeneOne Life Science Inc., intends to launch a clinical trial in healthy volunteers by the year end." The Phase I trial first patients enrolled in January.

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 ongoing, in partnership with Roche.

A preclinical study of a Zika virus vaccine showed good results in mice in January. A Phase 1 trial could start in 2016.

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

In January Inovio received a $0.5 million grant from the U.S. Army to develop the next-generation, needle-free electroporation device.

A new product, INO-5400, will be added to the pipeline in 2016, in combination with a checkpoint inhibitor, targeting an as yet unannounced type of cancer.

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

R&D expense was $15.6 million. General and administrative expense was $4.9 million. Total operating expenses were $20.5 million. Inovio reported a $14.6 million operating profit.

Cash and equivalents balance (including short-term investments) ended at $163.0 million, down sequentially from $170.8 million. Liability in common stock warrants $1.3 million.

Cash is adequate to fund all key initiatives.

Q&A:

End of Phase 2 meeting for 3100, design question? We want the FDA to concur with us on overall design and endpoints. Our written package has been submitted. There will be dialog before the meeting. The current estimation of sample size is 350 to 400 patients. We hope to start the Phase 3 trial early in Q3. We believe that if the data is as good as it was in the Phase 2 trial, we will be able to obtain commercial approval.

Of our preclinical work, the Zika vaccine has the greatest commercial potential. We are showing that we can react quickly to new viral threats. Our MERS vaccine shows we can go from bench to a human study in less than a year.

Inovio could create a single vaccine that protects against multiple viral diseases.

We are in funding discussions for Zika and MERS, and if they result in agreements we will announce them.

Reduction vs. resolution in 3100 trial? We saw good resolution in Phase 2, one would be the primary endpoint and one the secondary, still to be decided with the FDA.

When dealing with vaccine and CPM combinations there would be a concern about adverse reactions. We have shown our therapies are best at generating T-cells to kill the tumors.

Is Zika as complicated as Dengue to make a vaccine for. Dengue is well studied compared to Zika, so it is hard to tell yet. It looks like Zika is going to be with us for at least several years.

Gardasil effect on number of HPV cancer patients? We would not expect the number of pre-cancers to decrease significantly for a least 10 years. The serotypes of the virus that are prevalent are likely to change. We are working on a second-generation vaccine that treats more serotypes.

Should you limit the number of viral targets to potentially more profitable ones? We can be the wall protecting people from emerging diseases. We use grants to fund much of this work, so we can do it for many targets. Some of the commercial incentive is from the programs to stockpile vaccines by the government.

Cash runway? At least through the end of 2018.

Explained dMAB technology allows the patients' cells to generate their own monoclonal antibodies. "It is a real game-changing technology." We will start seeing clinical studies of dMAB techologies in 2016 and 2017.

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