Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: August 9, 2023 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2023 (Q2, second quarter)

Forward-looking statements

Overview: Still has lots of cash and a pipeline.

Basic data (GAAP):

Revenue was $226 thousand, down sequentially from $115 thousand , and down from $784 thousand in the year-earlier quarter. Revenue is from research collaborations and grants.

Net income was negative $35.5 million, up sequentially from negative $40.6 million, and up from negative $108.5 million year-earlier.

EPS (earnings per share, diluted) was negative $0.13, up sequentially from negative $0.16, and down from negative $0.46 year-earlier.


Has cash to support activities to Q3 2025.

Quarter Highlights:

Dr. Jacqueline [Jackie] Shea, Inovio's CEO said, "We continue to make progress with INO-3107, our candidate for the treatment of recurrent respiratory papillomatosis (RRP). Following positive results from our Phase 1/2 trial earlier this year, we are pleased to announce that we are targeting to have the first patient dosed in a Phase 3 trial in adults in the first quarter of 2024, moving us one step closer to delivering on the promise of DNA medicines for patients suffering from this debilitating disease. Based on our interactions with the U.S. Food and Drug Administration we believe that we have an acceptable trial design. We are addressing what we believe to be their final questions before we commence our pivotal Phase 3 trial for patients with RRP. As we move forward with our pipeline, we are focused on making sure our company is scaled for success in light of the challenging funding environment, particularly for pre-commercial biotech companies like Inovio. With that in mind, we made the difficult decision to further reduce our headcount and operational spending to better align with our strategic priorities. We believe that with the pipeline reprioritization announced today, we are well-positioned to execute on our development plans for INO-3107 while also advancing other promising candidates, such as INO-3112, INO-5401, VGX-3100 for anal HSIL and INO-4201. We expect that our existing cash resources will allow us to achieve important catalysts for these programs."

Inovio has decided to cease all further development of VGX-3100 as a potential treatment for cervical HSIL in the United States. This decision is driven by a number of factors, including the recent analysis of biomarker data from REVEAL2 indicating that substantial work would be needed to refine this novel biomarker before it could be used in any further Phase 3 trials. During the first quarter, Inovio shared topline results from REVEAL2, the second Phase 3 trial for VGX-3100 as a treatment for cervical HSIL. The trial results did not meet the primary endpoint in the biomarker-selected population, but the trial did achieve statistical significance in the all-participants population. The FDA had already indicated that at least one additional trial would be necessary for VGX-3100 for cervical HSIL. But Apollo Bio will continue development for the China market.

But, pending discussions with regulators, Inovio plans to investigate opportunities to advance VGX-3100 as a potential treatment for anal HSIL, an indication that continues to have significant unmet need.

The INO-3107 Phase 3 trial for RRP should begin in Q1 2024. On May 5, 2023, data from the Phase 1/2 trial of INO-3107 for RRP (Recurrent Respiratory Papillomatosis) were presented at American Broncho-Esophagological Association (ABEA) at the Combined Otolaryngology Spring Meetings (COSM) in Boston, Massachusetts. The presentation highlighted the safety profile of INO-3107, which was well tolerated by participants in the trial and resulted in mostly low-grade (Grade 1) treatment-emergent adverse effects (TEAEs). There were no high-grade TEAEs deemed related to treatment and no TEAEs leading to treatment discontinuation. Treatment with INO-3107 induced cellular immune responses against both HPV-6 and HPV-11, with activated CD4 and CD8 T cells, including cytotoxic CD8 T cells thought to be important for clearance of virally infected cells. Preliminary analysis indicates a potential correlation between T-cell responses and reduction of surgeries: 26 of 32 patients showed reduced surgical interventions. T-cell responses were also observed at Week 52, indicating a persistent cellular memory response. A positive EU orphan drug designation was aunnounced in May 2023. Inovio plans to meet with EU authorities to discuss further development. Has had favorable FDA feedback for the Phase 3 trial.

Inovio is also working to advance its oncology product candidates, INO-5401 and INO-3112, which target glioblastoma (GBM) and HPV-related cancers, respectively; other candidates in its early-stage clinical pipeline targeting infectious diseases; and the Ebola vaccine candidate, INO-4201. Progress for these candidates has continued in the areas of manufacturing, regulatory submissions, and partnership discussions. The next stage of clinical development will most likely require additional funding or partnerships.

Inovio in Q2 announced plans to further reduce its workforce by 58 employees, or 30%. The company estimates the cost savings from the headcount reduction will provide annual savings of approximately $9.9 million, which alongside other reductions in spending would allow the company to extend its cash runway into the third quarter of 2025. Expects a $2.1 million one-time charge in Q3 2023 for the reduction.

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 $195 million, down sequentially from $224 million.

R&D expense was $23.7 million. General and administrative expense was $13.5 million. Total operating expenses were $37.3 million. Operating profit negative $37.0 million. Interest and other income $1.4 million.

Q&A selective summary:

Strategic moves possible? We are confident in our pipeline. Will continue to look for partnerships to develop the pipeline.

RRP discussion with FDA for Phase 3? Focus is on starting in Q1 2024, FDA interactions have been positive, far along in discussions, getting ready to open trial sites. Questions remaining are about devices.

3100 anal biomarker? Currently not planning on using a biomarker for the anal program. We learned a lot from the HSIL biomarker, could come in useful in other programs.

3107 number of patients, possible timeline? Same patient population. No patient number announcement yet, but will be a global trial, hope to recruit in a timely manner. Believes surgical criteria will be standardized.

5401 update? Study is still wrapping up, some patients are still getting dosed. Talking to Regeneron about the right next steps.

4201 update? Ebola booster data was positive. Planning with regulators and partners.

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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 2023 William P. Meyers