Results & Analyst Call Summary

Conference date: August 8, 2017 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2017 (Q2, second quarter)

Forward-looking statements

Overview: Revenue in the quarter came from grants and collaboration as Inovio continues to move therapies towards FDA approval, including its first Phase 3 trial.

Basic data (GAAP):

Revenue was $20.4 million, up sequentially from $10.4 million, and up from $6.2 million in the year-earlier quarter.

Net income was negative $9.5 million, up sequentially from negative $23.1 million, and up from negative $18.7 million year-earlier.

EPS (earnings per share, diluted) was negative $0.13, up sequentially from negative $0.31, and down from negative $0.26 year-earlier.

Guidance:

none

Quarter Highlights:

CEO Dr. Joseph Kim said: "The FDA agreed with us and lifted our clinical hold, allowing Inovio to deliver on our promise to initiate the Phase 3 study for our lead product. . . we have activated 27 sites." Inovio's goal is to own HPV treatment, period. Dr. Kim noted he is the largest single shareholder of Inovio, and tries to avoid dilution, but the cash raised is necessary to make sure we have a sufficient balance sheet to support our lead stage candidate.

A pivotal Phase III study of VGX-3100 for cervical dysplasia started in Q2.

Inovio has a collaboration and license agreement providing ApolloBio Corporation 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 and approval by Chinese regulators. 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, will not exceed $35 million and may be a lower amount such that ApolloBio will not be the largest shareholder in Inovio.

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

The revenue increase came from $13.8 million in revenue recognized (previously deferred) from the MedImmune MEDI0457 deal. A new clinical trial, combined with durvalumab, a PD-L1 inhibitor was started in May for HPV-associated head and neck squamous cell carcinoma.

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 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 showed 95% of subjects generated an immune response and strong safety data compared to other ebola vaccines.

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 showed it "produced amongst the highest overall levels of immune response rates (cellular and humoral) ever observed in a human study by an HIV vaccine."

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.

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. A collaboration agreement with Genentech was signed in June to test it with a PD-L1 checkpoint inhibitor (Tecentriq) and INO-9012 on bladder 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 $23.9 million. General and administrative expense was $6.2 million. Total operating expenses were $30.0 million. Operating profit negative $9.6 million. Interest and other income $0.2 million.

Cash and equivalents balance (including short-term investments) ended at $92 million, up sequentially from $89.7 million million. $24.1 million was raised in the quarter with a stock offering. Another $75.0 million was raised in Q3 with a stock offering.

Q&A:

VGX-3100 cervical dysplasia, goal by end of year for enrollment? We only announce enrollment when it is completed. We plan to open 100 sites across the globe. We would like to recruit subjects as rapidly as possible.

Are patients in screening or enrolled? We have multiple patients in screening. We were preparing our sites during the hold, we were ready when it was lifted. Most patients will be from the U.S. and Europe, but we will be opening sites in Asia and Africa.

3100 sequence of data release, any interims? Both Reveal1 and Reveal2 and set to be unblinded at the end of each study. Reveal2 will be started later, but have a shorter safety segment. So our hope is to unblind them at the same time in 2020 and submit our BLA (if data is positive) in 2021.

ApolloBio clinical development plan? We are waiting for the Chinese approval process. There will be a lot of leveraging of Reveal1 and Reveal2 with them. China has over 10 times as many patients who could benefit from 3100 as there are in the U.S.

Vulvar neoplasia enrollment, timeline? VIN just got approved to start the Phase 2 trial, but we already have sites up. It is a 36 patient study, randomized but open-label. Women have high recurrence rates even after surgery. Doctors can follow progress visually. Data could be late 2018 or 2019.

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