Results & Analyst Call Summary

Conference date: May 9, 2016 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2016 (Q1, first 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 $8.1 million, up sequentially from $5.9 million, and up from $5.2 million in the year-earlier quarter.

Net income was negative $8.0 million, up sequentially from negative $18.0 million, and up from negative $10.6 million year-earlier.

EPS (earnings per share, diluted) was negative $0.11, up sequentially from negative $0.25, and up from negative $0.18 year-earlier.

Guidance:

None.

Quarter Highlights:

CEO Dr. Joseph Kim stated the number one takeaway from the call should be "Inovio is executing."

A pivotal Phase III study of VGX-3100 is planned for 2016 by Inovio, which completed its post Phase 2 meetings with the FDA and EMA 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. Commercial scale manufacturing of the vaccine has begun.

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 INO-4212 Phase 1 data on 75 healthy volunteers showed it was safe and generated strong immune responses. The increase in revenue was largely due to the DARPA grant for this.

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. Enrollment should complete this quarter (Q2). 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., enrolled first patients in January for the Phase I trial. MERS has no current treatment. Data should be reported in 2016.

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 HTERT breast, lung and pancreatic cancer has now been extended to more tumor types: head & neck squamous cell, ovarian, colorectal, gastric and esophageal cancers. Enlarging to 6 trial sites. Interim immune response data from first indications by year end. Believes it will be combined with other vaccines and checkpoint inhibitors.

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 will 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. Inovio's Chikungunya dMAB vaccine showed good preclinical results.

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 "signed collaborative research agreements with the Wistar Institute for therapeutic and preventive DNA-based immunotherapy applications and products for cancers and infectious diseases developed by David B. Weiner, Ph.D., and his Wistar laboratory. Inovio will have the exclusive right to in-license new intellectual property developed in this collaboration."

Completed the acquisition of Bioject.

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

R&D expense was $18.2 million. General and administrative expense was $5.4 million. Total operating expenses were $23.6 million. Operating profit negative $15.5 million. Gain on investment $7.5 million. Interest and other income $0.3 million. Loss from fair value of stock warrants $0.4 million

Cash and equivalents balance (including short-term investments) ended at $146.7 million, down sequentially from $163.0 million. Liability in common stock warrants $1.7 million.

Cash is adequate to fund all key initiatives.

Q&A:

VGX-3100 trial details? Meetings with regulators provided constructive guidelines. Endpoints will be similar to the Phase 2 design. Between 350 and 400 total patients. Getting the trial started as soon as possible. We will provide design details when the study starts.

Cost of VGX-3100 trial? The 2015 fundraising was to fully fund the trial.

Infectious diseases, favorite for demonstrating feasibility? We have over 1000 patent filings protecting our assets. Commercially the leader is the Hepatitis B program partnered with Roche. 250 million people with HPB globally. The global Phase 1 study is being tested on patients on antiviral drugs, looking to clear the infections. Our HIV vaccine in Phase 1 funded by the NIH will finish enrolling 94 patients this year.

For Ebola we are hoping for an FDA approval based on the new animal-trial data rule.

Believes Inovio will have the first Zika vaccine to be tested in humans.

We are still waiting to get the written comments back from the FDA Phase 2 meeting for VGX-3100; our statements are based on the oral discussions. "We have a clear path to our Phase 3."

Is a grant available for Zika, would you start without such a grant? We would start without a partner, other than GeneOne. We think Zika is a bigger problem than Ebola or MERS, so we think there will be funding available for our leading vaccine candidate.

Zika vs. Dengue in terms of difficulty? It depends. We know less about Zika. Dengue is well-studied, and it is understood why making an effective vaccine is so difficult. We see a need for a combination vaccine that combines Zika, Dengue, and Chikungunya.

For the prostate cancer vaccine we will be monitoring PSA and tumor size, though the main thing we are looking at is safety.

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