Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: November 12, 2019 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2019 (Q3, third quarter)

Forward-looking statements

Overview: Reported strong results in a Phase 2 glioblastoma trial in collaboration with Sanofi.

Basic data (GAAP):

Revenue was $0.9 million, up sequentially from $0.1 million, and down from $2.0 million in the year-earlier quarter. Revenue is from research collaborations.

Net income was negative $23.1 million, up sequentially from negative $29.4 million, and up from negative $25.0 million year-earlier.

EPS (earnings per share, diluted) was negative $0.25, up sequentially from negative $0.30, and up from negative $0.27 year-earlier.



Quarter Highlights:

Dr. J. Joseph Kim, Inovio's CEO said, "Our recently presented INO-5401 data demonstrated promising efficacy results, in terms of progression-free survival rates, against a very difficult to treat cancer in GBM and highlighted the potential of our immunotherapies utilizing tumor-associated antigens in cancer treatments. Looking ahead, the next 12 months should be a transformational period for Inovio, as we expect to have data readouts from multiple Phase 3 and Phase 2 programs. With our sharpened focus on advancing and commercializing products for HPV-related diseases and fast-to-market opportunities, the company is uniquely positioned to bring multiple products to the market." By November 2020 we will have shown you GBM survival data, cervical dysplasia topline efficacy data, and Phase 2 results for vulvar and anal dysplasia.

In July restructured to focus on more advanced programs. Reduced headcount. The reallocation of resources focuses the company's commercialization efforts for its lead asset, VGX-3100, while also developing high-value, fast-to-market product candidates, such as INO-3107 to treat RRP and INO-5401 for GBM

Inovio reported positive interim data from its ongoing Phase 2 trial of newly diagnosed GBM (glioblastoma multiforme), which combines Inovio's INO-5401 and INO-9012, in combination with Libtayo, a PD-1 blocking antibody produced by Regeneron Pharmaceuticals in collaboration with Sanofi (but they do not have a license for 5401). 80% (16 of 20) of MGMT gene promoter methylated patients and 75% (24 of 32) of unmethylated patients were progression-free at six months (PFS6), substantially exceeding historical standard-of-care data. The data was presented at the Society for Immunotherapy of Cancer 2019 Annual Meeting. Inovio will report 12- and 18-month overall survival data next year.

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 Q4 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.

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 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 and enrollment is complete. Partner CEPI will fund the Phase 1b trial, enrollment to begin in 2020.

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 $94 million, down sequentially from $106 million. $61 million in debt in senior notes. In August raised $15 million by selling 1% convertible bonds in Korea.

R&D expense was $19.1 million. General and administrative expense was $5.7 million. Total operating expenses were $24.8 million. Operating profit negative $24.0 million. Interest and other expense $0.4 million.

Q&A summary:

China IND? China accepted the IND from Apollo Bio. Preparing for the VGX-3100 trial in China, will execute on it in 2020.

VGX-3100 biomarker test with Qiagen will allow us to better target patients. Mostly developed by Inovio, but to be marketed by Quiagen.

AstraZeneca reduction of enrollment? It is a positive. They should have data midyear next year.

VGX-3100 Phase 2 data move to Q1 2020? Enrollment was on track. Q1 is to have a good conference to present the data.

Regeneron would be a good partner for 5401, but currently it just supplies its drug and gets data, it has not licensed 5401 from Inovio.

PFS v. OS debate in GBM? The field is split on PFS6 prediction of overall survival. We are excited about our 6 month survival data. Soon we will have OS12, then OS18; we just have to wait, we are optimistic, but we cannot predict success based on PFS6.

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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