Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: August 10, 2020 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2020 (Q2, second quarter)

Forward-looking statements

Overview: On course for HPV precancer therapy Phase 3 results in Q4. Covid vaccine looking good too.

Basic data (GAAP):

Revenue was $0.267 million, down sequentially from $1.3 million, and up from $0.136 million in the year-earlier quarter. Revenue is from research collaborations and grants.

Net income was negative $128 million, down sequentially from negative $32.5 million, and down from negative $30 million year-earlier.

EPS (earnings per share, diluted) was negative $0.83, down sequentially from negative $0.26, and down from negative $0.30 year-earlier.


Cash sufficient for multiple years.

Quarter Highlights:

Dr. J. Joseph Kim, Inovio's CEO said, "The second quarter further demonstrated the versatility and potential of Inovio's DNA medicines platform to meet urgent global health needs. In addition to advancing our DNA vaccine INO-4800 to combat the ongoing COVID-19 pandemic, Inovio presented encouraging results for one of the most devastating and difficult-to-treat cancers, GBM. We believe our DNA medicines are ideally suited to safely drive robust immune responses across infectious diseases and cancer, and we look forward to publishing our latest INO-4800 data, starting our Phase 2/3 COVID-19 clinical study in the U.S. in September, and expanding the manufacturing capacity to produce at least 100 million doses of INO-4800 in 2021 via our growing global coalition of partners and funders." Looks forward to moving INO-4800 to a Phase 2/3 trial in September, assuming FDA concurrence. The data set for Phase 1 will be extensive, but cannot be released before publication. Safety and immune responses were strong.

In Q2 Inovio released topline Phase 1 data for INO-4800. Full data will be published, is currently undergoing peer review. 100% of patients demonstrated overall immune response, 95% antibody response, 90% T cell response. Preclinical animal challenge data was also positive. Inovio received $71 million from the Dept. of Defense to scale up Cellectra device manufacturing. Scaling up vaccine manufacturing. the International Vaccine Institute in partnership with Seoul National University Hospital has initiated a Phase 1/2 clinical trial of INO-4800 in South Korea. Collaborating with Advaccine to advance the development of INO-4800 in China.

In Q2 2020 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. Inovio presented the 12-month overall survival efficacy data at the American Society of Clinical Oncology (ASCO20) in May 2020.

The Phase 3 study of VGX-3100 in cervical dysplasia caused by HPV continued, with enrollment on track. Enrollment of Reveal 1 completed, data to be reported Q4 2020. Reveal 2 enrolling as of March 2019. Reveal 1 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 [high-grade squamous intraepithelial lesions (HSIL)] Phase 2 continued and is cosponsored by the AIDS malignancy consortium with both HIV positive and negative patients. Positive interim VGX-3100 Phase 2 precancerous anal and vulvar dysplasia was reported at ASCCP in Q2 2020.

In February 2020, INOVIO announced the FDA accepted its Investigational New Drug application to evaluate INO-3107 in a Phase 1/2 trial for treatment of recurrent respiratory papillomatosis (RRP), a rare disease cause by PPV. Expects 63 patients in the trial, post surgery. Endpoint will be doubling time between surgical interventions. Applying for orphan disease designation.

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.

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

INO-4700 for MERS (Middle East Respirator Syndrome) showed 100% immune response after 3 shots. (Q2 2020) Inovio's vaccines are stable at room temperature, and advantage over most other vaccine types. INO-4800 is based on this vaccine. With previously announced CEPI funding of $56 million, Inovio is preparing for a Phase 2 clinical trial to begin in the Middle East later this year.

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.

With the Parker institute for cancer immunotherapy, started 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. The Phase 1b data showed a slowing in prostate-specific antigen doubling time. Eighty five percent (53 out of 62) of patients remained radiographically progression-free at Week 72 of the study.

Inovio Phase 1 trial for its Zika vaccine, GLS-5700, continues.

Inovio plans to initiate a Phase 2 MERS vaccine field trial in the Middle East with full CEPI funding in 2019. Reported more positive Phase 1 MERS results in April 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.

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

Cash and equivalents balance ended at $372 million, up sequentially from $270 million. $66 million in debt in senior notes. Cash balance included net proceeds of $121.7 million received by selling 12,041,178 shares of common stock in Q2 2020.

R&D expense was $22 million. General and administrative expense was $11 million. Total operating expenses were $33 million. Operating profit negative $33 million. Interest and other expense $2 million. The increase in net loss for the quarter was primarily due to the change in fair value of the derivative liability related to the embedded conversion feature in our August 2019 Convertible Bonds, which is revalued at each reporting period. Without this non-cash derivative liability expense, the Company's net loss for the quarter would be consistent with the 2nd quarter 2019 and our net loss per share would be $0.20 per share rather than $0.83 per share, which is $0.10 per share less than the loss per share for the same period in 2019. Subsequent to June 30, 2020, these bonds were converted voluntarily by the bond holders, into common stock.

Q&A summary:

4800 initiating gating factors? We are in active discussions with the FDA on the design. We feel we are close. We have the drug and device to execute. We are seeking external funding. We hope to have an announcement of the start in September.

Non-human primate challenge studies? Underscore how important that data is. We are the only candidate to show protection against the disease.

Phase 1 publication timing? Extensions to study? The Phase 1 extension studies were done before we had the readouts from the 2 cohorts. We added 51+ aged population. We are seeing if one-half milligram is sufficent. We believe 1 and 2 mil doses are very immunogenic and safe. We are urgently waiting for the peer review to be completed, but they are in charge of it. We do not need the publication to take place before starting the Phase 2/3 trial.

Litigation? We do not believe the litigation will affect our trial timeline or our scaleup to 100 million doses.

FDA concurrance just means approval. It is the terminology used. So upon getting FDA OK to move to the next step. We should quickly get through Phase 2 and into Phase 3 as soon as possible. 3 will be placebo controlled, randomized, blinded trial. The size will be of the same order of magnitude of other, similar trials.

For the Phase 1, we are following patients up to 1 year after the second dose, so we will see if immunity lasts.

In China Phase 2 will be several hundred patients. South Korea will be expanded into an older population in larger numbers.

We do not see practical limitations in getting enough volunteers for the trials in the U.S.

Reveal 2 status? We did see a pandemic impact. We are working hard to get back on track.

Older population in clinical trials? Already expanded Phase 1 trial to them, should have data in 2 months. Phase 3 will include a 51+ cohort. We believe our safety profile is the best reported so far, so is attractive for older patients.

Pricing? The vaccines need to be affordable and accessible. We believe we will be in a similar ballpark to the other leading vaccines.

Once the virus is in the cell, to kill it requires a T cell response, so we think that, and measuring T cell responses, is important. We saw both CD4 and CD8 type T cell responses at good levels.

We can boost the capacity over 100 million doses once we hit that capacity level.

How long it takes to get Phase 3 results depends on infection rates, but there will be interim readouts. The higher the infection rate, the quicker the study. So some time in 2021 for an emergency approval, longer for a full approval.

We have not slowed or discontinued any studies in order to pursue the Covid vaccine. Normally we would be talking about how amazing the OS 12 data was at ASCO for INO 5401.

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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 2020 William P. Meyers