Inovio Pharmaceuticals Reports 2014 First Quarter Financial Results

BLUE BELL, Pa., May 12, 2014 /PRNewswire/ -- Inovio Pharmaceuticals, Inc. (NYSE MKT: INO) today reported financial results for the quarter ended March 31, 2014.

Total revenue was $2.4 million for the three months ended March 31, 2014, compared to $1.5 million for the same period in 2013. Total operating expenses were $12.4 million compared to $8.1 million.

The loss from operations prior to other income (expenses) for the quarter ended March 31, 2014, was $10.0 million, or $0.05 per share, as compared with $6.6 million, or $0.04 per share for the quarter ended March 31, 2013.

The net loss attributable to common stockholders for the quarter ended March 31, 2014, was $10.8 million, or $0.05 per share as compared with a net loss attributable to common stockholders of $8.8 million, or $0.06 per share for the quarter ended March 31, 2013.

The $2.0 million increase in net loss attributable to common stockholders for the quarter ended March 31, 2014, compared with the same period in 2013 resulted primarily from an increase in non-cash stock-based compensation.

Revenue

The increase in revenue for the three-month period was primarily due to $1.4 million of revenue recognized from our agreement with Roche. This revenue from Roche primarily consisted of development fees paid for work conducted by Inovio in Q1.

Operating Expenses

Research and development expenses for Q1 2014 were $8.2 million compared to $5.1 million for Q1 2013. General and administrative expenses were $4.1 million versus $3.0 million, respectively.

Capital Resources

As of March 31, 2014, cash and cash equivalents plus short-term investments were $116.8 million compared with $52.6 million as of December 31, 2013.

On March 4, 2014, the Company closed an underwritten public offering of 21,810,900 shares of the Company's common stock, including 2,844,900 shares of common stock issued pursuant to the underwriter's exercise of its overallotment option, at a price of $2.90 per share. The gross proceeds of this offering were approximately $63.3 million. Net proceeds to the Company, after deducting the underwriter's discounts and commission and other estimated offering expenses payable by the Company, were approximately $59.2 million.

During the three months ended March 31, 2014, warrants and stock options to purchase 8,030,622 shares of common stock were exercised for total proceeds to the Company of $10.7 million.

As of March 31, 2014, the company had 240.1 million shares outstanding and 265.6 million fully diluted.

Based on management's projections and analysis, the Company believes that cash, cash equivalents and short-term investments are sufficient to meet its planned working capital requirements through the end of 2017.

Inovio's balance sheet and statement of operations is provided below. Form 10-Q providing the complete 2014 first quarter financial report can be found at: http://ir.inovio.com/secfilings.

Corporate Update

Corporate Development

Inovio appointed key individuals to newly created management roles in R&D, clinical development and clinical operations, as well as quality assurance. This expansion of the management team will enhance the Company's ability to manage its growing clinical and preclinical pipeline, appropriately fulfill its commitments in its partnership with Roche, and ensure adherence to the numerous regulatory standards under which the Company operates.

Inovio was recognized at the World Vaccine Congress with Vaccine Industry Excellence (ViE) Awards for "Best Therapeutic Vaccine" for its VGX-3100 HPV immunotherapy, "Best Licensing Deal" for its $400 million partnership with Roche for Inovio's prostate cancer and hepatitis B immunotherapies, and "Best Early Stage Vaccine Biotech" for its ability to raise funds and build its broad pipeline of DNA-based immunotherapies and vaccines.

Inovio continues to work toward partnerships with other large pharmaceutical companies interested in Inovio SynCon® immunotherapy and vaccine products.

Clinical Development

In Q3 2013 Inovio completed enrollment and treatment of patients in its double-blinded, placebo-controlled, randomized phase II clinical study (HPV-003). This study is for VGX-3100, our SynCon® immunotherapy against HPV-caused pre-cancers and cancers delivered with our CELLECTRA® electroporation device. We are approaching the primary endpoint, which is nine months from the first vaccination, when data will be unblinded and analyzed. We are on track to report data in mid-2014.

VGX-3100 previously achieved best-in-class T-cell immune responses that generated a strong killing effect against cells targeted by this therapeutic vaccine, as published in Science-Translational Medicine. In this phase II study we are assessing efficacy, HPV infection status, immunogenicity, and safety.

With respect to efficacy, we are measuring regression of disease from late stage cervical pre-cancer (CIN 2/3) to early stage pre-cancer (CIN 1) or elimination of disease. The study is 80% powered to achieve a 27% greater response rate of vaccinated subjects achieving this disease regression versus those treated with placebo plus electroporation. Using 25% as an estimated response rate for natural regression in the placebo group, we are aiming for a response rate in vaccinated subjects of 52% or better. We are also measuring pre- and post-vaccination levels of HPV to assess the impact of the immunotherapy on this cancer-causing virus.

Equally important, we will be comprehensively characterizing immune responses in treated patients. Strong T cell immune response characteristics from this large controlled study will help define the potential of Inovio's active immunotherapy products as stand-alone therapies and their important potential to be used in combination with complementary technologies such as immune activators and checkpoint inhibitors to further enhance potency against cancers and infectious diseases.

Inovio has been advancing preparatory activities for a potential phase III study of VGX-3100. In addition, in Q2 the Company expects to initiate two separate phase I/IIa studies of VGX-3100 against HPV-caused cervical cancer and head and neck cancer. Both of these studies will incorporate an immune activator, DNA-based IL-12, which has been shown to increase antigen-specific T cell generation relating to a targeted disease. This combination is designated INO-3112.

In partnership with Roche, we intend to launch our prostate cancer immunotherapy (INO-5150) phase I in Q3. Preclinical results indicated that this therapeutic vaccine induced potent antibody and T-cell responses in animal models, initial evidence that our concept for a DNA vaccine comprising a broader set of antigens delivered with our CELLECTRA® device may improve the breadth and effectiveness of a prostate cancer immunotherapy. This launch will trigger the first milestone payment from Roche.

Inovio expects to start a phase I study for its global, multi-clade PENNVAX®-GP, its lead preventive and therapeutic HIV DNA vaccine candidate, in the fourth quarter of 2014. Phase I data from Inovio's PENNVAX®-B preventive HIV DNA vaccine (targeting only clade B viruses) in non-infected subjects, published in the Journal of Infectious Diseases, showed best-in-class T-cell responses. Delivery with our CELLECTRA® device achieved a seven-fold increase (7% to 52%) in the response rate of subjects with robust CD8+ killer T-cells compared to delivery without CELLECTRA®. A paper is being prepared for submission to a peer-reviewed scientific journal of immune response data from a separate study in HIV-infected patients.

Inovio also plans to initiate an exploratory human study for breast, lung and pancreatic cancers in the second half of 2014 for INO-1400, its hTERT DNA immunotherapy. Since hTERT is over-expressed in 85% of cancers, this antigen has potential as the basis of a "universal" cancer therapeutic. In an animal study, INO-1400 generated robust and broad immune responses that were 18-fold higher than the previous best results of a peer's hTERT therapeutic vaccine, broke the immune system's tolerance to its self-antigens, induced T-cells with a tumor-killing function, and increased the rate of survival when delivered with Inovio's CELLECTRA® device.

Preclinical Development

Inovio continues to expand its cancer immunotherapy pipeline as its primary product focus. By year end 2014, we aim to have SynCon® constructs designed for a priority set of cancer-associated antigens that we believe are the most promising targets in the battle against cancer. These patented antigen products will in aggregate encompass a variety of different cancer types and provide Inovio with a rich cancer product portfolio to be internally developed or partnered, potentially in combination with checkpoint inhibitors or other complementary technologies.

In Q1 we also announced that a new DNA-based cytokine immune activator, interleukin -33 (IL-33), achieved a more rapid and complete regression of established tumors in the mouse model when added to a DNA immunotherapy. In previous studies the HPV 16 DNA immunotherapy alone did prevent tumor growth and delay progression or cure mice of tumors. Both agents were delivered using Inovio's CELLECTRA® device. Notably, IL-33 significantly increased the magnitude of vaccine-specific CD8 T cell responses. The results were published in a paper, "Alarmin IL-33 acts as potent immunoadjuvant enhancing antigen-specific cell-mediated immunity and inducing potent anti-tumor immunity," in Cancer Research.

Inovio is developing an expanding portfolio of patent-protected cytokine and chemokine immune activators to form combination therapies with its DNA vaccines and immunotherapies with the goal of achieving the greatest possible efficacy against targeted diseases.

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 pre-cancers 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. Partners and collaborators include Roche, the University of Pennsylvania, 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, 2013, our Form 10-Q for the quarter ended March 31, 2014, 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
(Unaudited)






March 31,

2014


December 31,

2013

ASSETS






Current assets:






Cash and cash equivalents

$

98,770,907



$

33,719,796


Short-term investments

18,011,492



18,905,608


Accounts receivable

2,699,570



3,301,563


Accounts receivable from affiliated entity

18,652




Prepaid expenses and other current assets

464,093



637,433


Prepaid expenses and other current assets from affiliated entity

1,657,734



2,057,350


Deferred tax asset

61,839



61,839


Total current assets

121,684,287



58,683,589


Restricted cash

100,849



100,762


Fixed assets, net

3,021,222



2,886,545


Investment in affiliated entity

9,287,624



9,664,587


Intangible assets, net

5,478,966



5,718,778


Goodwill

10,113,371



10,113,371


Common stock warrants

1,410,000



717,500


Other assets

561,326



402,075


Total assets

$

151,657,645



$

88,287,207


LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable and accrued expenses

$

5,250,417



$

5,444,508


Accounts payable and accrued expenses due to affiliated entity

779,500



522,255


Accrued clinical trial expenses

1,735,148



1,446,180


Common stock warrants

6,045,903



19,540,583


Deferred revenue

1,454,065



1,624,388


Deferred revenue from affiliated entity

376,041



388,542


Total current liabilities

15,641,074



28,966,456


Deferred revenue, net of current portion

2,315,158



1,997,333


Deferred revenue from affiliated entity, net of current portion

1,117,944



1,211,694


Deferred rent

3,207,784



3,013,263


Deferred tax liabilities

195,778



195,778


Total liabilities

22,477,738



35,384,524


Inovio Pharmaceuticals, Inc. stockholders' equity:






Common stock

240,147



210,305


Additional paid-in capital

435,183,356



348,109,661


Accumulated deficit

(306,610,037)



(295,788,577)


Accumulated other comprehensive income (loss)

(71,810)



(76,365)


Total Inovio Pharmaceuticals, Inc. stockholders' equity

128,741,656



52,455,024


Non-controlling interest

438,251



447,659


Total stockholders' equity

129,179,907



52,902,683


Total liabilities and stockholders' equity

$

151,657,645



$

88,287,207


 

INOVIO PHARMACEUTICALS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




Three Months Ended

 March 31,


2014


2013

Revenues:






Revenue under collaborative research and development arrangements

$

1,435,727



$

14,259


Revenue under collaborative research and development arrangements with affiliated entity

116,964



106,250


Grants and miscellaneous revenue

804,952



1,334,716


Total revenues

2,357,643



1,455,225


Operating expenses:






Research and development

8,225,480



5,115,112


General and administrative

4,132,218



2,974,153


Total operating expenses

12,357,698



8,089,265


Loss from operations

(10,000,055)



(6,634,040)


Other income (expense):






Interest and other income, net

52,076



39,460


Change in fair value of common stock warrants

(505,926)



(1,427,616)


Loss on investment in affiliated entity

(376,963)



(836,084)


Net loss

(10,830,868)



(8,858,280)


Net loss attributable to non-controlling interest

9,408



14,160


Net loss attributable to Inovio Pharmaceuticals, Inc.

$

(10,821,460)



$

(8,844,120)


Loss per common share—basic and diluted:






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

$

(0.05)



$

(0.06)


Weighted average number of common shares outstanding—basic and diluted

220,636,004



156,155,532


CONTACTS:
Investors: Bernie Hertel, Inovio Pharmaceuticals, 858-410-3101, bhertel@inovio.com
Media: Jeff Richardson, Inovio Pharmaceuticals, 267-440-4211, jrichardson@inovio.com

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SOURCE Inovio Pharmaceuticals, Inc.



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