Inovio Pharmaceuticals Reports 2013 Second Quarter Financial Results

BLUE BELL, Pa., Aug. 9, 2013 /PRNewswire/ -- Inovio Pharmaceuticals, Inc. (NYSE MKT: INO) today reported financial results for the quarter ended June 30, 2013.

Total revenue was $786,000 and $2.2 million for the three and six months ended June 30, 2013, compared to $436,000 and $2.1 million for the same periods in 2012.

Total operating expenses were $6.5 million and $14.5 million for the three and six months ended June 30, 2013, compared to $7.2 million and $13.1 million for the same periods in 2012.

The net loss attributable to common stockholders for the three and six months ended June 30, 2013, was $10.9 million, or $0.06 per share, and $19.7 million, or $0.12 per share, as compared with a net loss attributable to common stockholders of $4.1 million, or $0.03 per share, and $12.4 million, or $0.09 per share, for the three and six months ended June 30, 2012.

Revenue

The increase in revenue for the comparable periods was primarily due to higher revenue recognized from our PATH Malaria Vaccine Initiative ("MVI") grant as well as an increase in revenue from our U.S. Department of Defense Small Business Innovation Research Grant and our grant subcontract with the University of Pennsylvania. The variance is also due to the timing of work performed under the company's contract with the National Institute of Allergy and Infectious Diseases (NIAID). This NIAID contract, which provides up to $25.3 million of funding over seven years, is facilitating Inovio's development of a universal, preventive HIV DNA vaccine, PENNVAX®-GP.

Operating Expenses

Research and development expenses for the three and six months ended June 30, 2013 were $4.4 million and $9.5 million, compared to $4.5 million and $8.6 million for the same periods in 2012. The increase for the six month period was primarily due to $520,000 in higher clinical expenses related to our ongoing HPV-003 phase II clinical trial. General and administrative expenses for the three and six months ended June 30, 2013, were $3.0 million and $6.0 million versus $2.7 million and $5.2 million for the same periods in 2012.

Net Loss Attributable to Common Stockholders

The $6.8 million and $7.3 million increase in net loss for the three and six months ended June 30, 2013, compared with the same periods in 2012, resulted primarily from a higher (non-cash) change in fair value of common stock warrants, based on a required quarterly mark to market adjustment to reflect changes in the Company's stock price, as well as a decrease in the fair market value of the Company's investment in its affiliated entity, VGX International.

Capital Resources

As of June 30, 2013, cash and cash equivalents plus short-term investments were $23.6 million compared with $13.8 million as of December 31, 2012.

On March 7, 2013, we closed an underwritten offering of 27,377,266 shares of our common stock and warrants to purchase an aggregate of up to 13,688,633 shares of common stock. The shares and warrants were sold in units at a price of $0.55 per unit, with each unit consisting of one share of common stock and a warrant to purchase 0.50 shares of common stock at an exercise price of $0.7936 per share. The warrants have a term of five and one-half years. The net proceeds, after deducting the underwriters' discounts and other offering expenses, and assuming no exercise of the warrants, were approximately $14.0 million.

During the first quarter ending March 31, 2013, the Company sold 8,222,966 shares of common stock under its ATM common stock sales agreement for net proceeds of $5.6 million. There were no sales of common stock through the ATM in the second quarter ending June 30, 2013. Subsequent to the quarter, the Company sold 4,248,455 shares of common stock under its ATM common stock sales agreement for net proceeds of $6.1 million, with an average price of $1.48 per share.

Subsequent to the quarter, warrants to purchase 5,273,392 shares of common stock were exercised for total proceeds to the Company of $5.3 million.

Based on management's projections and analysis, the Company believes that cash and cash equivalents are sufficient to meet its planned working capital requirements through the first quarter of 2015.

Inovio's balance sheet and statement of operations is provided below. Form 10-Q providing the complete 2013 second quarter financial report can be found at: http://ir.inovio.com/secfilings.

Corporate Update

Clinical Development

Inovio previously reported that its SynCon® vaccine against HPV-caused pre-cancers and cancers (VGX-3100), delivered with its CELLECTRA® electroporation technology, achieved best-in-class T-cell immune responses that generated a strong killing effect against cells targeted by this therapeutic vaccine. Subsequent to the quarter, Inovio successfully completed enrollment of its double-blinded, placebo-controlled, randomized phase II clinical trial (HPV-003) focused on cervical dysplasia.  Allowing for the nine month period post-first vaccination plus analysis, we now expect to report unblinded, top-line efficacy data from this trial in mid-2014. Furthermore, Inovio has already initiated preparatory activities for a potential phase III study.

Inovio intends to advance its prostate cancer DNA vaccine (INO-5150) into phase I by the end of 2013. Preclinical results indicated that this therapeutic vaccine induced potent antibody and T-cell responses in animal models, providing initial evidence that its concept for a DNA vaccine comprising a broader set of antigens could improve the breadth and effectiveness of a prostate cancer immunotherapy when delivered with electroporation.

Subsequent to the quarter, phase I data from Inovio's PENNVAX®-B preventive HIV DNA vaccine trial was published in the Journal of Infectious Diseases. Results from this trial showed best-in-class T-cell responses, with delivery with Inovio's optimized electroporation technology achieving a seven-fold increase (7% to 52%) in the response rate of subjects with robust T-cells compared to delivery without electroporation. This paper represents the second of two peer-reviewed publications demonstrating best-in-class T-cell responses from separate Inovio products targeting two different, hard-to-treat diseases. Knowledge gained from the study of this single-clade HIV vaccine has been incorporated into the Company's globally-oriented, multi-clade PENNVAX-GP, which is now Inovio's primary preventive and therapeutic HIV DNA vaccine candidate. Inovio expects a phase I study of this vaccine to begin by year end 2013.

Inovio and its partner VGX International intend to move Inovio's highly optimized therapeutic hepatitis C (HCV) DNA vaccine (INO-8000) delivered with its CELLECTRA® device into a phase I/IIa clinical trial in the first quarter of 2014. Published preclinical results from this multi-antigen SynCon® HCV vaccine demonstrated robust T-cell responses in the liver as well as in the periphery.

Preclinical Development

Subsequent to the quarter, Inovio reported that its synthetically optimized hTERT DNA cancer vaccine (INO-1400) delivered with its CELLECTRA® electroporation technology generated robust and broad immune responses, broke the immune system's tolerance to self-made TERT antigens, induced T-cells with a tumor-killing function, and increased the rate of survival in two vaccinated animal models. The results were published in Cancer Immunology Research. Because high levels of hTERT expression are found in 85% of human cancers, regardless of type, INO-1400 holds the potential to perform as a "universal" cancer therapeutic based on these early but unprecedented results. Inovio plans to advance INO-1400 into clinical trials to treat breast and lung cancers in 2014.

Responding to the virulent, newly emergent H7N9 virus, Inovio completed the design, optimization, and manufacturing of an H7N9 DNA vaccine within two weeks. Preclinical data showed that 100% of vaccinated mice challenged with a lethal dose of the virus remained healthy and survived while non-vaccinated mice did not. Inovio was the first to report protection data from a lethal H7N9 challenge study in animals. This study further highlighted Inovio's ability to construct DNA vaccines capable of mounting a robust defense against unmatched viruses with pandemic potential, and to do so rapidly when a new family of virus emerges. As a potential pandemic product, progression of Inovio's H7N9 vaccine into human studies will be contingent upon funding from third parties.

In a published preclinical study of Inovio's SynCon® DNA vaccine against Ebola and Marburg filoviruses, the vaccine induced immune responses capable of defending the body against emerging potent bioterrorism viral threats with pandemic potential. The results, published in Molecular Therapy, demonstrated 100% protection against death following a challenge with multiple variants of the pathogen in two animal models, suggesting the vaccine's potential to provide broad protection encompassing multiple families of filoviruses.

Subsequent to the quarter, Inovio's CELLECTRA® electroporation delivery technology was found to significantly enhance the ability of a DNA therapy encoded for hypoxia-inducible factor-1 alpha (HIF-1α) to stimulate blood vessel growth, limb function recovery, and survival from limb necrosis and amputation, which may be beneficial for the treatment of critical limb ischemia (CLI) and other forms of peripheral arterial disease (PAD). The results were published in the Journal of Vascular Surgery. While early, this new application in treating PAD and other major chronic diseases offers Inovio a promising therapeutic avenue and additional commercial opportunity.

Corporate Development

Inovio continues to advance discussions with large pharmaceutical companies with the goal of securing strategic partnerships to advance the development of SynCon® vaccines.

Inovio and the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) received a $3.5 million grant from the National Institute of Allergy and Infectious Diseases (NIAID) to advance the development of Inovio's next generation DNA vaccine delivery device capable of simultaneously administering multiple synthetic vaccines via skin surface electroporation.

Inovio was recognized with Vaccine Industry Excellence (ViE) Awards for "Best Early Stage Biotech" and "Best Therapeutic Vaccine," for its HPV vaccine, VGX-3100, at the World Vaccine Congress. The ViE Awards recognize outstanding vaccine advancements and achievements of vaccine developers across the global industry as judged by a panel of global biotech industry stakeholders.

About Inovio Pharmaceuticals, Inc.

Inovio is revolutionizing vaccines to prevent and treat today's cancers and challenging infectious diseases. Its SynCon® vaccines, in combination with its proprietary electroporation delivery, are generating best-in-class immune responses, with therapeutic T-cell responses exceeding other technologies in terms of magnitude, breadth, and response rate. Human data to date have shown a favorable safety profile. Inovio's lead vaccine, a therapeutic against HPV-caused precancers and cancers, is in phase II. Other phase I and preclinical programs target prostate, breast, and lung cancers as well as HIV, influenza, malaria and hepatitis C virus. Partners and collaborators include the University of Pennsylvania, Merck, NIH, HIV Vaccines Trial Network, National Cancer Institute, U.S. Military HIV Research Program, University of Southampton, US Dept. of Homeland Security, University of Manitoba and PATH Malaria Vaccine Initiative. More information is available at www.inovio.com.

This press release contains certain forward-looking statements relating to our business, including our plans to develop electroporation-based drug and gene delivery technologies and DNA vaccines and our capital resources. Actual events or results may differ from the expectations set forth herein as a result of a number of factors, including uncertainties inherent in pre-clinical studies, clinical trials and product development programs (including, but not limited to, the fact that pre-clinical and clinical results referenced in this release may not be indicative of results achievable in other trials or for other indications, that the studies or trials may not be successful or achieve the results desired, that pre-clinical studies and clinical trials may not commence or be completed in the time periods anticipated, that results from one study may not necessarily be reflected or supported by the results of other similar studies and that results from an animal study may not be indicative of results achievable in human studies), the availability of funding to support continuing research and studies in an effort to prove safety and efficacy of electroporation technology as a delivery mechanism or develop viable DNA vaccines, the adequacy of our capital resources, the availability or potential availability of alternative therapies or treatments for the conditions targeted by the company or its collaborators, including alternatives that may be more efficacious or cost-effective than any therapy or treatment that the company and its collaborators hope to develop, evaluation of potential opportunities, issues involving product liability, issues involving patents and whether they or licenses to them will provide the company with meaningful protection from others using the covered technologies, whether such proprietary rights are enforceable or defensible or infringe or allegedly infringe on rights of others or can withstand claims of invalidity and whether the company can finance or devote other significant resources that may be necessary to prosecute, protect or defend them, the level of corporate expenditures, assessments of the company's technology by potential corporate or other partners or collaborators, capital market conditions, the impact of government healthcare proposals and other factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2012, our Form 10-Q for the quarter ended June 30, 2013, and other regulatory filings from time to time. There can be no assurance that any product in Inovio's pipeline will be successfully developed or manufactured, that final results of clinical studies will be supportive of regulatory approvals required to market licensed products, or that any of the forward-looking information provided herein will be proven accurate.


 

 

INOVIO PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



June 30,

2013


December 31,
2012


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

10,352,170


$

5,646,021

Short-term investments

13,107,779


8,034,001

Accounts receivable

540,345


830,433

Accounts receivable from affiliated entity


36,234

Prepaid expenses and other current assets

710,289


471,328

Prepaid expenses and other current assets from affiliated entity

763,357


887,167

Deferred tax asset

62,728


62,728

Total current assets

25,536,668


15,967,912

Restricted cash

100,586


100,410

Fixed assets, net

348,119


363,021

Investment in affiliated entity

7,835,197


10,703,332

Intangible assets, net

6,596,287


7,489,315

Goodwill

10,113,371


10,113,371

Common stock warrants

265,500


267,200

Other assets

197,143


134,193

Total assets

$

50,992,871


$

45,138,754

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued expenses

$

3,336,480


$

3,181,574

Accounts payable and accrued expenses due to affiliated entity

45,287


187,275

Accrued clinical trial expenses

1,732,247


1,405,896

Common stock warrants

13,453,937


2,859,899

Deferred revenue

89,828


353,391

Deferred revenue from affiliated entity

413,541


388,542

Total current liabilities

19,071,320


8,376,577

Deferred revenue, net of current portion

85,286


88,609

Deferred revenue from affiliated entity, net of current portion

1,399,194


1,586,694

Deferred rent

601,077


65,076

Deferred tax liabilities

164,393


164,393

Total liabilities

21,321,270


10,281,349

Inovio Pharmaceuticals, Inc. stockholders' equity:




Common stock

180,059


144,313

Additional paid-in capital

278,570,240


263,897,116

Accumulated deficit

(249,456,837)


(229,760,129)

Accumulated other comprehensive income

(96,436)


73,362

Total Inovio Pharmaceuticals, Inc. stockholders' equity

29,197,026


34,354,662

Non-controlling interest

474,575


502,743

Total stockholders' equity

29,671,601


34,857,405

Total liabilities and stockholders' equity

$

50,992,871


$

45,138,754

 

 

INOVIO PHARMACEUTICALS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended 

June 30,


Six Months Ended
June 30,


2013


2012


2013


2012

Revenues:








License fee and milestone revenue

$

14,311


$

20,907


$

28,570


$

45,745

License fee and milestone revenue from affiliated entity

106,250


106,250


212,500


212,500

Grants and miscellaneous revenue

665,049


308,925


1,999,765


1,870,958

Total revenues

785,610


436,082


2,240,835


2,129,203

Operating expenses:








Research and development

4,411,082


4,527,086


9,526,194


8,569,665

General and administrative

3,046,586


2,696,909


6,020,739


5,184,997

Gain on sale of assets

(1,000,000)



(1,000,000)


(651,000)

Total operating expenses

6,457,668


7,223,995


14,546,933


13,103,662

Loss from operations

(5,672,058)


(6,787,913)


(12,306,098)


(10,974,459)

Other income (expense):








Interest and other income, net

37,391


41,036


76,851


72,580

Change in fair value of common stock warrants

(3,199,878)


3,594,782


(4,627,494)


46,609

Loss on investment in affiliated entity

(2,032,051)


(992,373)


(2,868,135)


(1,553,917)

Net loss

(10,866,596)


(4,144,468)


(19,724,876)


(12,409,187)

Net loss attributable to non-controlling interest

14,008


11,289


28,168


21,059

Net loss attributable to Inovio Pharmaceuticals, Inc.

$

(10,852,588)


$

(4,133,179)


$

(19,696,708)


$

(12,388,128)

Loss per common share—basic and diluted:








Net loss per share attributable to Inovio Pharmaceuticals, Inc. stockholders

$

(0).06)


$

(0.03)


$

(0.12)


$

(0.09)

 

CONTACTS:


Investors:

Bernie Hertel, Inovio Pharmaceuticals, 858-410-3101, bhertel@inovio.com

Media:

Jeff Richardson, Inovio Pharmaceuticals, 267-440-4211, jrichardson@inovio.com

(Logo: http://photos.prnewswire.com/prnh/20120131/LA44118LOGO)

SOURCE Inovio Pharmaceuticals, Inc.



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