Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: November 8, 2017 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2017 (Q3, third 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 $2.6 million, down sequentially from $20.4 million, and down from $12.5 million in the year-earlier quarter.

Net income was negative $34.1 million, down sequentially from negative $9.5 million, and up from negative $20.8 million year-earlier.

EPS (earnings per share, diluted) was negative $0.39, down sequentially from negative $0.13, and down from negative $0.28 year-earlier.



Quarter Highlights:

CEO Dr. Joseph Kim reviewed the extensive developments of the clinical pipeline. Emphasized combinations of Inovio vaccines with checkpoint inhibitors, working with Regeneron, Genentech and MedImmune. "Could have data by 2019."

The revenue decrease was due to ramp down of the DARPA Ebola grant.

Inovio has a collaboration and license agreement providing ApolloBio Corporation with the exclusive right to develop and commercialize VGX-3100 within Greater China. Waiting approval by ApolloBio shareholders & Chinese regulators.

A Phase 2 study of VGX-3100 for HPV related vulvar neoplasia (VIN) began in April. In June the Phase 3 study of VGX-3100 in cervical dysplasia caused by HPV started.

MedImmune MEDI0457 (was INO-3112) clinical trial, combined with durvalumab, a PD-L1 inhibitor was started in May for HPV-associated head and neck squamous cell carcinoma.

MedImmune has also selected an Inovio product to treat a specific cancer, with a milestone payment expect in 2H 2018.

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 started a Phase 1/2 combination therapy study for glioblastoma. It combinse INO-5401, INO-9012, and Regeneron's REGN2810, a PD-1 inhibitor. Inovio will fund the study.

INO-5401 with Tecentriq (Genentech) started a Phase 1b/2 trial for bladder cancer, or urothelial carcinoma. Patients may have failed prior checkpoint inhibitors.

INO-5150 interim Phase 1b data showed activity and a dampened rise of PSA in recurrent prostate cancer.

dMAb PSMA construct shrank prostate tumors in a preclinical study. dMAb antibiotic construct protected mice from lethal doses of pseudomonas.

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. In October positve data was released showing antibodies and T cell responses. A second Phase 1 study has fully enrolled with 160 patients in Puerto Rico.

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 (GLS-5300) for Middle East Respiratory Syndrome (MERS), GeneOne Life Science Inc., Phase I/2 trial started in Korea. MERS has no current treatment.

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. 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 announced positive preclinical results for Lassa 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 $25.5 million. General and administrative expense was $6.3 million. Total operating expenses were $31.8 million. Operating profit negative $29.2 million. Interest and other income $0.5 million. Loss in change in value of stock warrants was $0.4 million. Loss on investment in an affiliated entity was $5.8 million.

Cash and equivalents balance (including short-term investments) ended at $141.9 million, up sequentially from $92 million million. $75.0 million was raised in Q3 with a stock offering.


Cervical dysplasia program timeline? Each trial will enroll 198 patients, about half from the US. Our focus is on opening sites rapidly. Reveal1 trial has patients 9 months on drug, then a 12 month follow up. We have not seen review boards as rate limiting. We will provide guidance on how well we are tracking towards our 2020 goal.

Puerto Rico trial completed dosing prior to the hurricane. There is a one-year follow up on the Zika trial.

HPV label, broadness? We will approach indications one at a time. Cervical data will come first. We believe we will see lesion regression and virus clearance.

hTERT? The Phase 1 study was an enabling study looking at 9 tumor types and had promising data. Now not planning to develop as a monotherapy, but rather a pan-antigen broad cancer treatment. We are seeing T cell responses in cancer patients.

3100 vulvar and anal trials? Placebo is not needed. We don't want to give the threshold for success. Currently surgery is the only option, and then 50% of patients recur. We want to treat the lessions and clear the virus, as we saw with cervical dysplasia trial. But we note the anal and vulvar tissues are different from cervical tissue.

Reveal2 start by year-end? Likely start after the end of 2017. Reveal 2 has an 11 month shorter timeline, so we are focused on Reveal1 first.

If 5401 is positive, will you develop yourselves? If they have even moderate activity "you will have to beat potential partners away with a stick." Over 80% of patients are refractory to checkpoint therapies. We also expect exciting data from MedImmune.

Glioblastoma trial requirements? We will look at biomarkers including PDL1. MGMC positive and negative patients will be enrolled, also post radiation and surgery. These patients have just 15 month median survival, we hope to see a change in that.

We have a dMAb version of Humira, and checkpoint inhibitors, but they are preclinical. We are starting with infectious disease dMAb variations in 2018.

We believe that if HPV is cleared, and a patient is reinfected, the T cells should clear the new infection, if it is the same subtype. But for the study we just can check if the lesion and virus are cleared.

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Copyright 2017 William P. Meyers