Results & Analyst Call Summary

Conference date: May 10, 2017 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2017 (Q1, first quarter)

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 $10.4 million, up 22% sequentially from $8.5 million, and up 28% from $8.1 million in the year-earlier quarter.

Net income was negative $23.1 million, up sequentially from negative $26.2 million, and down from $8.0 million year-earlier.

EPS (earnings per share, diluted) was negative $0.31, up sequentially from negative $0.35, and down from negative $0.11 year-earlier.

Guidance:

none

Quarter Highlights:

CEO Dr. Joseph Kim said: "Investors have expressed great interest in the VGX-3100 hold."

A pivotal Phase III study of VGX-3100 for cervical dysplasia was planned for initiation in Q4 2016 by Inovio, which completed its post Phase 2 meetings with the FDA and EMA about the trial. But the FDA has placed the trial on hold, with a complete response letter, apparently related to manufacturing the delivery device, not to the data from prior trials. Inovio believes it has fully complied with the FDA request. If the FDA releases its hold, the trial could start in Q2.

"Subsequent to year end Inovio announced a collaboration and license agreement providing ApolloBio Corporation (NEEQ:430187) with the exclusive right to develop and commercialize VGX-3100 within Greater China. In this agreement, Inovio will receive a $3 million signing fee and a $12 million milestone upon lifting of the VGX-3100 phase 3 pre-initiation clinical hold by the FDA. ApolloBio will also invest in Inovio common stock subsequent to lifting of the clinical hold at a volume weighted average price encompassing a trading period prior to and following the lifting of the clinical hold. The aggregate investment, expected to be completed in the first half of 2017, will not exceed $35 million and may be a lower amount such that ApolloBio will not be the largest shareholder in Inovio." If successful would also generate double-digit royalties.

A Phase 2 study of VGX-3100 for vulvar neoplasia (VIN) began in Q2.

Inovio created a subsidiary, Geneos Therapeutics, to develop cancer therapies based on personalized neo-antigens. Operating capital will be independently secured by Geneos.

Regeneron and Inovio recently announced an agreement to study a combination therapy for glioblastoma. It will combine INO-5401, INO-9012, and Regeneron's REGN2810, a PD-1 inhibitor. The phase 1b/2a study will be open label. It should start later this year. Inovio will fund the study.

Inovio completed enrollment of 22 subjects in the Phase I study of the HPV-driven cancer immunotherapy, INO-3112, in head & neck cancer patients. Reported interim immune response and safety data in 4Q 2016 that showed robust responses in first 4 of 5 subjects. 3112 is licensed to MedImmune, which will start an additional combination trial with a PD1 checkpoint inhibitor in the first half of 2017. This study if fully funded by MedImmune.

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. An additional 125 healthy subjects have been enrolled. Antibody data for the second stage should be available in 2017.

Inovio initiated a Phase 1 trial for its Zika vaccine, GLS-5700, in July. That is in partnership with GeneOne Life Science. All 39 subjects have been dosed. Interim immune response and safety data showed high levels of antibody in all subjects.

Inovio’s phase I trial to evaluate safety and tolerability of PENNVAX®-GP, the company’s "universal" DNA vaccine for HIV has completed enrollment. 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)." Data should be available in the first half of 2017.

Inovio’s partner for its DNA vaccine for Middle East Respiratory Syndrome (MERS), GeneOne Life Science Inc., Phase I trial is now fully enrolled. MERS has no current treatment. Preliminary data reported in Q4 2016 was positive, with 98% of subjects showing immune responses.

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 5 trial sites with 54 subjects. Interim immune response data from first indications in 2017. The final readout will be in 2018, but could start later stage studies based on earlier cohort data. Believes it will be combined with other vaccines and checkpoint inhibitors.

A Phase 1 trial for INO-1800 for Hepatitis B enrollment completed, with preliminary data possible in 2017. The 90 patient study just completed enrollment.

Completed enrollment of 62 subjects in the phase I study of our INO-5150 prostate cancer immunotherapy. We expect to report interim immune response and safety data in 2017.

Initiated a Phase 1 trial for INO-8000 for hepatitis C partnered with the NCI and Mayo Clinic. Will measure safety, tolerability, and immune response.

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.

A new product, INO-5401, has a list of cancer antigens, and could work as a universal cancer therapy in combination with checkpoint inhibitors.

MedImmune continues to work towards getting its MEDI0457 (INO-3112) for cancers caused by HPV, in combination with durvalumab, into a Phase 2 trial, with enrollment expected to begin this quarter.

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

R&D expense was $24.5 million. General and administrative expense was $7.8 million. Total operating expenses were $32.3 million. Operating profit negative $21.9 million. Loss on investment $1.6 million. Interest and other income $4.5 million.

Cash and equivalents balance (including short-term investments) ended at $89.7 million, down sequentially from $104.8 million million.

Cash is adequate to fund all key initiatives. Continues to seek non-dilutive funding including grants to develop its products.

Q&A:

Cervical dysplasia, confidence in timeline? We submitted a complete response regarding the device, the FDA is reviewing the submission, we can launch Phase 3 if we get approval.

INO 4212 for Ebola next step? 200 subjects enrolled currently. We had a 95% serum conversion rate. Plan to hold a meeting with FDA for an approval pathway based on data to date.

Timelines for MedImmune and Regeneron collaborations? Each will have about 50 patients. MedImmune will control its timeline. On 5401 we hope to open 30 sites as expediently as possible. Once we start enrollment we will try to project the possible timeline for data announcements.

Pennvax GP update? HIV vaccine collaborator completed enrollment last year. In may data will be presented in an HPTN plenary talk. We also have a grant to combine Pennvax with a checkpoint inhibitor to see if that will clear the virus.

3112 focus now completely on head and neck? MEDI0457 may expand into cervical and genital cancers; we will inform you when they inform us. We will have a poster at ASCO with results from the monotherapy.

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