Results & Analyst Call Summary

Inovio Pharmaceuticals

Conference date: May 9, 2019 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2019 (Q1, first quarter)

Forward-looking statements

Overview: Continues to develop vaccines for cancers and infections, led by VGS-3100 for cervical dysplasia, which is in Phase 3.

Basic data (GAAP):

Revenue was $2.8 million, up sequentially from $2.5 million, and up from $1.5 million in the year-earlier quarter.

Net income was negative $29.2 million, up sequentially from negative $33.0 million, and up from negative $32.4 million year-earlier.

EPS (earnings per share, diluted) was negative $0.30, up sequentially from negative $0.34, and up from negative $0.36 year-earlier.


Quarter Highlights:

Dr. J. Joseph Kim, Inovio's CEO said, "The last several months have been extremely productive for Inovio by validating the company's versatile technology platform. We ended the first quarter by featuring positive data from our Phase 1 Ebola study in a prestigious publication. Inovio further highlighted its capabilities in treating HPV-associated disease after presenting positive data from patients diagnosed with RRP, where we demonstrated a clinical benefit for these patients. Additionally, we initiated the first ever clinical study for our dMAb platform during the first quarter and unveiled an exciting new component within our platform involving our novel dBTE technology, which we're working towards rapidly advancing the first product into clinical testing. Inovio enters the second quarter well-financed following the February raise, placing us in a prime position to continue to deliver on our game-changing clinical programs."

The Phase 3 study of VGX-3100 in cervical dysplasia caused by HPV continued, with enrollment on track. Full enrollment of Reveal 1 nearing completion, with Reveal 2 enrolling as of March 2019. Data should be available in 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 Phase 2 continued and is cosponsored by the AIDS malignancy consortium with both HIV positive and negative patients.

MedImmune MEDI0457 (was INO-3112) combined with durvalumab, a PD-L1 inhibitor, for HPV-associated head and neck squamous cell carcinoma continued the Phase 2 trial. 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 milestone payment made in Q1 2019. MedImmune is a division of AstraZeneca.

HPV related cancers have spiked 44% since 1999. There were 570,000 HPV associated cervical cancer cases worldwide in 2018. Treatment unmet need is high.

Inovio has a subsidiary, Geneos Therapeutics, to develop cancer therapies based on personalized neo-antigens. Geneos raised $10.5 million in capital in February 2019.

Regeneron and Inovio started a Phase 1/2 combination therapy study for newly diagnosed glioblastoma in November 2017. It combines INO-5401, INO-9012, and Regeneron's REGN2810, a PD-1 inhibitor. Inovio is funding the study. Could get 6 month PFS data in 2019.

INO-5401 with Tecentriq (Roche/Genentech) continued a Phase 1b/2 trial for advanced bladder cancer, or urothelial carcinoma. Patients may have failed prior checkpoint inhibitors. Phase 2 interim data should be available in 2019.

INO-5401 with INO-9012 is in a Phase 1/2 trial combined with Regeneron's cemiplimab for newly diagnosed glioblastoma completed enrollment. Phase 2 interim data should be available in 2019.

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.

In February 2019, the company dosed the first subject in the first-ever human study of Inovio's DNA-encoded monoclonal antibody (dMAb) technology evaluating the dMAb's (INO-A002) ability to prevent or treat Zika virus infection. This study is being fully funded by The Bill and Melinda Gates Foundation.

Inovio presented preclinical results at AACR on the company's novel DNA-encoded Bi-specific T Cell Engagers (dBTE) technology. A novel dBTE targeting the HER2 molecule which was tested in therapeutic models for the treatment of ovarian and breast cancers. A single dose of Inovio's HER2 dBTE resulted in high levels of corresponding BiTE in mice for four months, far exceeding what is typically displayed with conventional BiTE's short half-life of only a few hours. The HER2 dBTE effectively killed HER2-expressing tumor cells resulting in a near-complete tumor clearance. Also presented was Inovio's CD19 dBTE which can kill B cell cancers by targeting B cell specific marker CD19.

Inovio is developing Ebola vaccines, including a dMAb (DNA-based monoclonal antibody) version. Phase 1 data was published in the Journal of Infectius Diseases in Q1 2019. Looking for partner funding to advance the program.

Inovio Phase 1 trial for its Zika vaccine, GLS-5700, should report data in 2019.

Inovio’s randomized trial to evaluate safety and tolerability of PENNVAX®-GP, the company’s "universal" DNA vaccine for HIV continued enrollment. Interim results expected in 2019.

Inovio plans to initiate a Phase 2 MERS vaccine field trial in the Middle East with full CEPI funding in 2H 2019. Reported positive Phase 1 MERS results. A Phase 1/2 MERS study in Korea should report results in 2019.

Inovio received IND approval for another CEPI funded vaccine for combatting Lassa fever, which will advance into the first human trial in the second quarter.

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.

Enrollment is complete for the phase I study of INO-5150 prostate cancer immunotherapy.

A Phase 1 trial for INO-8000 for Hepatitis C continued, partnered with the NCI and Mayo Clinic. Will measure safety, tolerability, and immune response.

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

Cash and equivalents balance (including short-term investments) ended at $128 million, up sequentially from $81.2 million. $61 million in debt in senior notes. In February and March 2019, the Company completed a private placement of $78.5 million aggregate principal amount of 6.50% convertible senior notes due 2024, or the Notes; $75.7 million net proceeds.

R&D expense was $24.4 million. General and administrative expense was $7.0 million. Total operating expenses were $31.4 million. Operating profit negative $28.5 million. Interest and other expense $0.1 million. Loss on investment in an affiliated entity was $0.8 million.

Q&A summary:

Reveal1 timeline? Will release data at week 88.

August Reveal trial update? We expect to complete enrollment of Reveal1, with some idea of how enrollment is going in Reveal2. We will share some biomarker data in the next call.

5401 and other key value events? GBM study completed enrollment. It is a very difficult disease to treat. We believe the combination has a good shot. By year end we should have PFS6 and in about half the population PFS12.

DMAB platform initial goals? First trial is for Zika. Checking for expression, activity of binding to Zika. Escalating the dose. In non-human primates we have been scaling up the dose successfully. We are particularly excited about DBITEs because they are effective in human serums in hundred picogram levels.

Genital warts would be the next big target for VGX-3100.

Bristol 498 study not meeting endpoint in GBM? It is not surprising that a checkpoint would work as a single agent in GBM. That is why we are doing INO-5401 plus a PD-1 inhibitor.

Either the HER2 targeted or the CD19 targettd DBITE will be the first brought to the clinic.

What would be the advantage of a DBITE therapy over a ADC therapy? ADCs certainly have a roll. We need more DBITE data to cross compare. Our platform can pump out any number of candiates, if we can find partners for them.

Would cytokine release syndrome be of concern with DBITE? Yes, we will be careful in our dosing escalation partly for this reason. We believe our DBITE can give a longer, lower, less dangerous dose.

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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 2019 William P. Meyers