Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: August 8, 2019 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2019 (Q2, second quarter)

Forward-looking statements

Overview: Received a milestone from AstraZeneca. Preparing a dBTE candidate for an IND.

Basic data (GAAP):

Revenue was $0.1 million, down sequentially from $2.8 million, and down from $24.4 million in the year-earlier quarter.

Net income was negative $29.4 million, about flat sequentially from negative $29.2 million, and down from negative $6.6 million year-earlier.

EPS (earnings per share, diluted) was negative $0.30, flat sequentially from negative $0.30, and down from negative $0.08 year-earlier.



Quarter Highlights:

Dr. J. Joseph Kim, Inovio's CEO said, "Inovio is well-positioned to advance its later-stage HPV programs while devoting more resources to develop fast-to-market product candidates. Through its recent strategic organizational restructuring the company has sharpened its focus to create a more efficient organization with greater financial flexibility and a longer runway. We continue to make excellent progress on expanding our treatment capabilities within the areas of HPV related diseases and we're excited that before year-end we plan to have interim data from our Phase 2 studies involving VGX-3100 targeting vulvar HSIL and anal HSIL, and plan to initiate the next clinical trial of INO-3107 targeting RRP within 12 months."

In July restructured to focus on more advanced programs. Reduced headcount.

The Phase 3 study of VGX-3100 in cervical dysplasia caused by HPV continued, with enrollment on track. Enrollment of Reveal 1 completed. Reveal 2 enrolling as of March 2019. Data should be available in 2020 with a BLA submission in 2021. 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 continued and is cosponsored by the AIDS malignancy consortium with both HIV positive and negative patients. Interim data from the vulvar and anal studies should be available in 2019.

MedImmune MEDI0457 (was INO-3112) combined with durvalumab, a PD-L1 inhibitor, for HPV-associated head and neck squamous cell carcinoma enrollment completed the Phase 2 trial early in Q3 2019. Also expanding to test for other HPV-associated cancers in a separate Phase 2 patient in Q1 2019. One head and neck patient achieved full remission. In December announced a second Phase 2 study of MEDI0457 with with durvalumab targeting a broad array of cancers associated with HPV. MedImmune has also selected MEDI0457 combined with durvalumab to treat a HPV cancer other than head and neck, with a third Phase 2 initiation milestone payment made in Q2 2019. MedImmune is a division of AstraZeneca.

HPV related cancers have spiked 44% since 1999. There were 570,000 HPV associated cervical cancer cases worldwide in 2018. Treatment unmet need is high.

Inovio plans to initiate the next clinical trial of INO-3107 targeting RRP by mid 2020. Surgery is the current standard of care, and RRP almost always recurs after surgery.

Inovio has a subsidiary, Geneos Therapeutics, to develop cancer therapies based on personalized neo-antigens. Geneos raised $10.5 million in capital in February 2019.

Regeneron and Inovio completed a Phase 2 combination therapy study for newly diagnosed glioblastoma in Q2 2019. It combines INO-5401, INO-9012, and Regeneron's REGN2810, a PD-1 inhibitor. Inovio is funding the study. Topline data could be announced before the end of 2019.

INO-5401 with Tecentriq (Roche/Genentech) continued a Phase 1b/2 trial for advanced bladder cancer was stopped due to other therapies becoming available.

INO-5401 with INO-9012 is in a Phase 1/2 trial combined with Regeneron's cemiplimab for newly diagnosed glioblastoma completed enrollment. 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.

In February 2019, the company dosed the first subject in the first-ever human study of Inovio's DNA-encoded monoclonal antibody (dMAb) technology evaluating the dMAb's (INO-A002) ability to prevent or treat Zika virus infection. This study is being fully funded by The Bill and Melinda Gates Foundation.

Preclinical data results for Inovio's transformative dBTE technology were published in JCI Insight. The current bi-specific T cell engager product has only a few hours of half-life and requires several weeks of continuous intravenous infusion. Inovio developed a novel dBTE targeting the HER2 molecule which was tested successfully in therapeutic models for the treatment of ovarian and breast cancers. A single injection of the HER2 dBTE candidate produced bi-specific antibodies that lasted for several weeks and effectively killed HER2-expressing tumor cells resulting in a near-complete tumor clearance.

Inovio is developing Ebola vaccines, including a dMAb (DNA-based monoclonal antibody) version. Phase 1 data was published in the Journal of Infectius Diseases in Q1 2019. Looking for partner funding to advance the program.

Inovio Phase 1 trial for its Zika vaccine, GLS-5700, should report data in 2019.

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 plans to initiate a Phase 2 MERS vaccine field trial in the Middle East with full CEPI funding in 2H 2019. Reported positive Phase 1 MERS results in July 2019. A Phase 1/2 MERS study in Korea should report results in 2019.

INO-4500 vaccine for combatting Lassa fever advanced into the first human trial in Q2 2019.

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. Believes it will be combined with other vaccines and checkpoint inhibitors.

With the Parker institute for cancer immunotherapy, starting a trial (in Q3 2019) with one arm combining INO-5151 with Celldex Therapeutics FLIT3 ligand (CDX-301) and Bristol-Myers CPI nivolumab (Opdivo) for metastatic castration-resistant prostate cancer.

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 $106 million, down sequentially from $128 million. $61 million in debt in senior notes. In August raised $15 million by selling 1% convertible bonds in Korea.

R&D expense was $22.5 million. General and administrative expense was $5.9 million. Total operating expenses were $28.3 million. Operating profit negative $28.2 million. Interest and other expense $2 million.

Q&A summary:

Reveal2 study with Apollo bio site recruitment? They have submitted an IND with China regulators. If we can recruit Chinese sites that would speed up the Reveal2 timeline and help with the Chinese timeline.

VGX-3100 prep for commercialization? We have been preparing for commercial manufacturing, doing other things to prepare for launch if trial results were positive.

VGX-3100 RRP virus clearing? We are not 100% sure we have cleared the virus, but do not know if that is as important as reducing the need for surgery. We are talking to the FDA about booster shots.

Zika timeline? GeneOne is in charge of running the assays, we are waiting for the results.

HIV timeline? That trial is enrolling, should report on safety and immune responses by early 2020.

GBM success bar? We want to see 3 month improvement in overall survival. If we saw that, we would move it quickly to market. PFS will just provide an early look, in November 2019. We expect topline results in 2020.

dBite safety profile? Two parts: safety of DNA based technology, we know it is safe. Bispecific t-cell engagers have their own level of toxicity. So you are bound to see some safety signals, which we hope to ameliorate with our DNA technology.

Vulvar and anal dysplasias are orphan indications with high unmet medical needs.

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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 2019 William P. Meyers