Inovio Pharmaceuticals Reports 2013 Third Quarter Financial Results

BLUE BELL, Pa., Nov. 12, 2013 /PRNewswire/ -- Inovio Pharmaceuticals, Inc. (NYSE MKT: INO) today reported financial results for the quarter ended September 30, 2013.

Total revenue was $9.5 million and $11.7 million for the three and nine months ended September 30, 2013, compared to $855,000 and $3.0 million for the same periods in 2012.

Total operating expenses were $8.7 million and $23.3 million for the three and nine months ended September 30, 2013, compared to $7.1 million and $20.3 million for the same periods in 2012.

The income (loss) from operations prior to other income (expenses) for the three and nine months ended September 30, 2013 was $766,000, or $0.00 per share, and $(11.5 million), or $(0.07) per share, as compared with $(6.3 million), or $(0.05) per share, and $(17.3 million), or $(0.13) per share, for the three and nine months ended September 30, 2012.

The net loss attributable to common stockholders for the three and nine months ended September 30, 2013, was $30.9 million, or $0.16 per share, and $50.6 million, or $0.29 per share, as compared with a net loss attributable to common stockholders of $6.6 million, or $0.05 per share, and $19.0 million, or $0.14 per share, for the three and nine months ended September 30, 2012.

The $24.3 million and $31.6 million increase in net loss attributable to common stockholders for the three and nine months ended September 30, 2013, compared with the same periods in 2012, resulted primarily from a non-cash accounting expense related to the 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, which increased significantly in the third quarter.

Revenue

The increase in revenue for the comparable periods was primarily due to $8.4 million of revenue recognized from our agreement with Roche. The increase was also attributable to higher revenue recognized from our PATH Malaria Vaccine Initiative ("MVI") grant, our U.S. Department of Defense Small Business Innovation Research Grant and our grant subcontract with the University of Pennsylvania on universal flu vaccines.

Operating Expenses

Research and development expenses for the three and nine months ended September 30, 2013, were $5.4 million and $15.0 million, compared to $5.0 million and $13.5 million for the same periods in 2012. The increase for the nine month period was primarily due to a $1.1 million sub-license fee payable based on the $10.0 million up-front payment received under our Roche partnership agreement as well as higher costs related to work performed for our Malaria Vaccine Initiative contract.

General and administrative expenses for the three and nine months ended September 30, 2013, were $3.3 million and $9.3 million versus $2.7 million and $7.9 million for the same periods in 2012. The increase for the nine month period was primarily due to an increase in rent expense related to deferred rent on the new building lease as well as transaction costs associated with the issuance of warrants in the 2013 financing, among other variances. 

Capital Resources

As of September 30, 2013, cash and cash equivalents plus short-term investments were $46.3 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 0.5 shares of common stock at an exercise price of $0.7936 per share.

During the nine months ending September 30, 2013, the Company sold 14,011,526 shares of common stock under its ATM common stock sales agreement for net proceeds of $15.1 million, with an average price of $1.11 per share. Stock options and warrants to purchase 22,094,569 shares of common stock were exercised for total proceeds to the Company of $19.1 million.

Subsequent to the quarter, the Company received an additional $11.1 million in new capital. The Company sold 348,995 shares of common stock under its ATM common stock sales agreement for net proceeds of $782,000, with an average price of $2.31 per share. Warrants to purchase 375,000 shares of common stock were exercised for total proceeds of $298,000. Roche paid the Company $10 million as the upfront payment for a partnership agreement announced during the third quarter (details below).

As of November 8, 2013, the company had 208.4 million shares outstanding and 239.6 million shares on a fully diluted basis.

Based on management's projections and analysis, the Company believes that cash and cash equivalents are sufficient to meet its planned working capital requirements into the first quarter of 2016.

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

Corporate Update

Corporate Development

In a major commercial development for the Company, Inovio announced that Roche and Inovio entered into an exclusive worldwide license agreement to research, develop and commercialize Inovio's highly-optimized, multi-antigen DNA vaccine products targeting prostate cancer and hepatitis B. Roche licensed Inovio's therapeutic vaccines INO-5150 for prostate cancer and INO-1800 for hepatitis B as well as the use of Inovio's CELLECTRA® electroporation technology for delivery of these vaccines. Roche also obtained an option to license additional vaccines in connection with a collaborative research program for prostate cancer.

Roche agreed to an upfront payment to Inovio of $10 million (paid subsequent to the quarter), will pay all preclinical and clinical development costs for these products, and will make milestone payments potentially up to $412.5 million upon reaching certain development and commercial milestones for INO-5150 and INO-1800. Additional development milestone payments could be made to us if Roche pursues other indications with INO-5150 or INO-1800. Inovio is entitled to receive up to double-digit tiered royalties on product sales.

Inovio has continuing discussions with other large pharmaceutical companies interested in potential strategic partnerships to advance the development of Inovio's numerous SynCon® immunotherapy and vaccine products.

Clinical Development

Inovio previously reported that its SynCon® immunotherapy 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. In this quarter, Inovio completed enrollment of its double-blinded, placebo-controlled, randomized phase II clinical trial (HPV-003) focused on cervical dysplasia and expects to report unblinded efficacy data in mid-2014. Inovio has initiated preparatory activities for a potential phase III study and also plans to initiate phase II studies of VGX-3100 against HPV-caused cervical cancer and head and neck cancer in 2014.           

In partnership with Roche, we intend to launch our prostate cancer immunotherapy (INO-5150) into phase I in the first half of 2014. 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 electroporation may improve the breadth and effectiveness of a prostate cancer immunotherapy. The start of this phase I study will trigger the first milestone payment from Roche.

Inovio and Roche are conducting the preclinical work required to advance INO-1800, Inovio's hepatitis B therapeutic vaccine, into a phase I clinical trial. Prior preclinical data showed that INO-1800 generated robust T-cell and antibody responses that led to the elimination of targeted liver cells in mice, indicating the potential to treat human hepatitis B infection and prevent progression of the infection to liver cancer.

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 CD8+ killer T-cells compared to delivery without electroporation. 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. Based on manufacturing delays, Inovio expects the phase I study for this vaccine to begin in the first half of 2014.

Subsequent to the quarter, Inovio and its partner VGX International announced that VGX has initiated a phase I clinical trial of Inovio's highly optimized therapeutic hepatitis C (HCV) DNA vaccine (INO-8000/VGX-6150) delivered with its CELLECTRA® device. Published preclinical results from this multi-antigen SynCon® HCV vaccine demonstrated robust T-cell responses in the liver as well as in the periphery. This study is being fully funded by VGX and will be conducted at multiple study sites in Korea to test safety, tolerability, and immunogenicity. Additional clinical studies will begin in the U.S. in 2014.

Inovio continues to focus on its most important commercial opportunities and proprietary programs funded by third parties. To build on promising preclinical and clinical data from Inovio's universal influenza vaccine program, the Company is actively seeking additional grant funding and partnerships to further develop its potentially paradigm-changing flu products.

The University of Southampton has indicated that its UK phase II clinical study of its WT1 leukemia vaccine delivered using Inovio's electroporation technology is not currently recruiting new subjects due to an interruption in sponsor funding. Efforts are under way to re-establish funding, however, the study is on hold pending the outcome of these refunding efforts. There have been no safety concerns identified during the study. Inovio's aim is to maximize shareholder value by advancing its wholly-owned, integrated proprietary SynCon® vaccine and electroporation technology platform. Inovio has designed a SynCon® cancer vaccine candidate based on the WT1 antigen and has generated promising preclinical data. This new candidate will be a part of multiple cancer immunotherapeutic programs in Inovio's growing oncology pipeline.

Preclinical Development

In addition to VGX-3100 and INO-5150, Inovio continues to expand its cancer immunotherapy product pipeline. The first of several to move from research into product development is INO-1400, Inovio's hTERT DNA-based cancer immunotherapy. 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® electroporation technology. Because high levels of hTERT expression are found in 85% of human cancers, this antigen has potential as the basis of a "universal" cancer therapeutic. Inovio plans to advance INO-1400 into clinical trials to treat breast and lung cancers in 2014.

Published in Infection & Immunity, Inovio announced that its SynCon® malaria vaccine generated robust and long-lasting T-cell responses that exhibited the functional ability to kill and eliminate malaria-infected cells in small animals and non-human primates. Researchers also found vaccine induced CD-8+ "killer T-cells" in the liver, which is essential for rapid elimination of liver-stage malaria parasites. Inovio expects that a phase I/IIa clinical trial will be initiated in 2014.

Responding to the 2013 H7N9 influenza outbreak, Inovio completed the design, optimization, and manufacturing of an H7N9 DNA vaccine within two weeks. Preclinical data showed that 100% of vaccinated mice were protected against sickness and death when they were challenged with a lethal dose of H7N9 virus. This study further highlights the ability of Inovio's SynCon® vaccine to create cellular immune responses that could reduce the severity of H7N9 infection in a person that acquires the virus and limit the spread of the virus in a pandemic setting.

Several significant new applications of DNA plasmid technology delivered using electroporation have been unveiled in peer-reviewed papers this quarter. First, Inovio announced its success in generating therapeutic monoclonal antibodies using DNA plasmid technology delivered using electroporation. Published in Human Vaccines and Immunotherapeutics, this study demonstrated that a highly optimized DNA-based monoclonal antibody in mice generated antibody molecules in the bloodstream possessing desirable functional activity including high antigen-binding and HIV-neutralization capabilities against diverse strains of HIV viruses. In addition, this DNA delivery strategy resulted in a rapid increase in antibody levels in mice. These results were not previously achievable with other DNA based or viral technologies. DNA-based monoclonal antibodies have the potential to become a powerful technology against cancers, autoimmune diseases, and neurological diseases and compete favorably in the $50 billion monoclonal antibody product market.

Inovio highlighted another new application of DNA technology in a paper highlighting the ability 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). This result was achieved with a DNA therapy encoded for hypoxia-inducible factor-1 alpha (HIF-1α). Results from this mice study were published in the Journal of Vascular Surgery. PAD patients currently have very limited treatment options and this disease represents a multi-billion dollar market opportunity.

These new developments represent significant new medical applications of our potent product development platform that could bring about additional support funding as well as corporate partnerships.

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, 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 September 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.

CONTACTS:
Investors: Bernie Hertel, Inovio Pharmaceuticals, 858-410-3101, [email protected] 
Media: Jeff Richardson, Inovio Pharmaceuticals, 267-440-4211, [email protected]

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SOURCE Inovio Pharmaceuticals, Inc.