Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: November 8, 2018 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2018 (Q3, third quarter)

Forward-looking statements

Overview: Continues to develop vaccines for cancers and infections, led by VGS-3100 for cervical dysplasia, which is in Phase 3.

Basic data (GAAP):

Revenue was $2.0 million, down sequentially from $24.4 million, and down from $2.6 million in the year-earlier quarter.

Net income was negative $25.0 million, down sequentially from negative $6.6 million, and up from negative $34.1 million year-earlier.

EPS (earnings per share, diluted) was negative $0.27, down sequentially from negative $0.07, and up from negative $0.40 year-earlier.


Quarter Highlights:

Dr. J. Joseph Kim, Inovio’s CEO said, "Utilizing ample resources, Inovio is making significant advancements on many fronts. The Phase 3 REVEAL 1 study for our lead VGX-3100 program is on track to fully enroll in 2019 and our three separate immuno-oncology, checkpoint combination Phase 2 trials, being executed with top partners and collaborators, MedImmune, Genentech, and Regeneron, are also advancing well. In fact, we saw a potential preview of what could come from the ongoing cancer efficacy studies in a new publication in Clinical Cancer Research which showcased the first complete responder from our Phase 1 MEDI0457 head & neck cancer trial. Also progressing well are our externally funded vaccine programs including the CEPI-funded Lassa vaccine program as well as IVI-funded MERS and GeneOne-funded Zika vaccine trials. Overall, these clinical trial advancements ensure that we will have multiple, meaningful data catalysts in the coming months."

The Phase 3 study of VGX-3100 in cervical dysplasia caused by HPV continued, with enrollment on track. Full enrollment of Reveal1 expected in 2019, with Reveal2 following. Data should be available in 2020. Two phases each will enroll 198 patients. Inovio has a collaboration and license agreement providing ApolloBio Corporation with the exclusive right to develop and commercialize VGX-3100 within Greater China. A Phase 2 study of VGX-3100 for HPV related vulvar neoplasia (VIN) continued. An anal dysplasia Phase 2 started and is cosponsored by the AIDS malignancy consortium with both HIV positive and negative patients.

MedImmune MEDI0457 (was INO-3112) combined with durvalumab, a PD-L1 inhibitor, for HPV-associated head and neck squamous cell carcinoma is in Phase 2. Also expanding to test for other HPV-associated cancers in a separate Phase 2 study. One head and neck patient achieved full remission.

MedImmune has also selected MEDI0457 combined with durvalumab to treat a HPV cancer other than head and neck, with a milestone payment expected in 2018.

Inovio has a subsidiary, Geneos Therapeutics, to develop cancer therapies based on personalized neo-antigens. Geneos plans a capital raise in 2018.

Regeneron and Inovio started a Phase 1/2 combination therapy study for newly diagnosed glioblastoma in November 2017. It combines INO-5401, INO-9012, and Regeneron's REGN2810, a PD-1 inhibitor. Inovio is funding the study. Could get 6 month PFS data in 2019.

INO-5401 with Tecentriq (Roche/Genentech) continued a Phase 1b/2 trial for advanced bladder cancer, or urothelial carcinoma. Patients may have failed prior checkpoint inhibitors. Phase 2 interim data should be available in 2019.

INO-5150 interim Phase 1 data showed activity and a dampened rise of PSA in recurrent prostate cancer. Data presentation was made at ESMO showed 86% of patients progression free at week 72. Plans to partner remain on track.

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.

Inovio Phase 1 trial for its Zika vaccine, GLS-5700, should complete study in Q3 with data in Q4.

Inovio’s randomized trial to evaluate safety and tolerability of PENNVAX®-GP, the company’s "universal" DNA vaccine for HIV continued enrollment. Interim results expected in 2019.

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.

CEPI (Coalition for Epidemic Preparedness Innovations) will provide up to $56 million to support development of INO-4500 for Lassa fever and INO-4700 for MERS. Reported positive Phase 1 MERS results. Another Phase 1 MERS study will start in Korea.

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.

Completed enrollment of 62 subjects in the phase I study of our INO-5150 prostate cancer immunotherapy.

Inovio received a $2.2 million grant from the Gates Foundation to advance its dMAb (DNA-encoded monoclonal antibody) platform. Plans first-in-human trial for first product in 2019.

A Phase 1 trial for INO-8000 for Hepatitis C continued, partnered with the NCI and Mayo Clinic. Will measure safety, tolerability, and immune response.

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

Cash and equivalents balance (including short-term investments) ended at $85.5 million, down sequentially from $95.6 million.

R&D expense was $21.9 million. General and administrative expense was $6.8 million. Total operating expenses were $28.5 million. Operating profit negative $26.6 million. Interest and other income $0.4 million. gain on investment in an affiliated entity was $1.0 million. Change in value of warrants $0.2 million.

Q&A summary:

VGX-3100 number of sites? More than 90 sites are open globally. Over 70 are actively enrolling patients so far.

5401 endpoints? Very excited about this trial. In bladder looking for PR and CR, overall response or ORR. GBM study has a slightly different design, primary endpoint is overall survival and progression free survival is a secondary endpoint. Antigens in 5401 were vetted systematically.

How much read-through is there from one HPV setting to another? It is the same bar no matter which cell type is infected. We demonstrated high p-values in Phase 2, so we think the mechanism of action should clear lesions in other organs, but we have to prove that.

HIV study is high-risk high benefit. No amount of drugs can clear HIV in humans. Maybe a vaccine plus drugs could clear HIV. We are hoping we can demonstrate that, but it is very ambitious.

General partnership environment, assigning valuations? It is an evolving landscape. IO is exciting, but PD1 and PDL1 have good but limited effects. So how do we improve on the 20% ceiling? The jury is still out. Inovio's value proposition is that you need need CDA positive activated T cells to kill tumors. Our vaccines speeded up the response to checkpoint inhibitors.

We have a very close relationship with MedImmune which continues to improve. Their durva has a lot of competition, our product, if it works, could help them take market share. If we demonstrate our efficacy, the potential deals with multiple partners are almost limitless.

The anal dysplasia trial is about half enrolled, has been going on 14 months.

First in human dMAb product? Have had success in animals including monkeys. We are doing infectious disease targets first, but we have published some anti-cancer data. So first in humans will be for an infectious disease.

Number of trial participants for io studies in general? It is competitive, particularly for bladder and melanoma. So we have to go where the patients are.


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Disclaimer: My analyst summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. This is journalism, not financial advice.

Copyright 2018 William P. Meyers