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Inovio Pharmaceuticals Reports 2014 First Quarter Financial Results

Companies mentioned in this article: Inovio Pharmaceuticals, Inc.

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,                 December 31,

                                                     2014                            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.