Inovio Pharmaceuticals Reports 2011 Third Quarter Financial Results

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Nov 07, 2011, 04:00 ET

BLUE BELL, Pa., Nov. 7, 2011 /PRNewswire/ -- Inovio Pharmaceuticals, Inc. (NYSEAMEX: INO) today reported financial results for the quarter ended September 30, 2011.

Total revenue was $2.6 million and $8.2 million for the three and nine months ended September 30, 2011, compared to $1.3 million and $3.8 million for the same periods in 2010.

Total operating expenses for the three and nine months ended September 30, 2011, were $9.0 million and $24.0 million as compared to $5.8 million and $17.7 million for the same periods in 2010.

The net loss attributable to common stockholders for the three and nine months ended September 30, 2011, was $4.5 million, or $0.04 per share, and $9.8 million, or $0.08 per share, as compared with a net loss attributable to common stockholders of $1.4 million, or $0.01 per share, and $11.3 million, or $0.11 per share, for the three and nine months ended September 30, 2010.

Revenue

The increase in revenue for the three and nine months ended September 30, 2011, as compared with the same periods in 2010, was primarily due to an increase in revenue from the company's contract with the National Institute of Allergy and Infectious Diseases ("NIAID"). This contract revenue amounted to $1.9 million and $6.4 million for the three and nine months ended September 30, 2011, as compared with $895,000 and $2.7 million for the same periods in 2010. This NIAID HIV Vaccine Design and Development Teams contract, which exceeds $23 million over five years (plus two additional option years), is facilitating Inovio's development of a universal, preventive HIV DNA vaccine, PENNVAX™-GP, focused on providing coverage against a broad set of global HIV clades, or sub-types.

Operating Expenses

Research and development expenses for the three and nine months ended September 30, 2011, were $7.0 million and $15.9 million as compared to $3.0 million and $8.8 million for the same periods in 2010. The increase was primarily due to higher clinical trial costs related to multiple clinical studies, including the initiation of the Phase II study of Inovio's cervical dysplasia/cancer DNA vaccine, VGX-3100, as well as higher costs related to work performed for the NIAID HIV contract.

Net Loss Attributable to Common Stockholders

The $3.1 million and $1.5 million decrease in net loss attributable to common stockholders for the three and nine months ended September 30, 2011, respectively, compared with the same periods in 2010, resulted primarily from the increase in grant revenue, increase in other income from the required quarterly revaluation of registered common stock warrants and decrease in general and administrative expenses, offset by the increase in research and development expenses.

Capital Resources

As of September 30, 2011, cash and cash equivalents plus short-term investments in certificates of deposit were $31.1 million, compared with $21.8 million as of December 31, 2010. This change primarily resulted from the January 2011 financing, from which the Company received net proceeds of approximately $23.0 million, partially offset by expenditures related to our research and development and general and administrative activities.

Based on management's projections and analysis, the Company believes that its cash and cash equivalents are sufficient to meet its planned working capital requirements through the second quarter of 2013.

A summary of Inovio's consolidated balance sheet and statement of operations is provided at the end of this release. The Form 10-Q providing the complete 2011 third quarter financial report can be found at: http://ir.inovio.com/secfilings.

Corporate Update

Corporate Development

In the third quarter, Inovio announced it had expanded its existing license agreement with the University of Pennsylvania, adding exclusive worldwide licenses for technology and intellectual property for novel DNA vaccines against prostate cancer, CMV (cytomegalovirus), malaria, hepatitis B, RSV (respiratory syncytial virus), and MRSA (methicillin-resistant staphylococcus aureus) as well as a new optimized IL-12 cytokine gene adjuvant.

Inovio entered into a Cooperative Research and Development Agreement with the United States Department of Homeland Security Science and Technology Directorate Plum Island Animal Disease Center to evaluate the efficacy of its synthetic vaccines for foot & mouth disease in animal models.

Inovio also established a product development agreement with its affiliate, VGX International Inc., to co-develop Inovio's SynCon® therapeutic vaccines for hepatitis B and C infections.

The company expanded its scientific advisory board with the appointment of two prominent leaders in the fields of vaccines and cancer immunotherapeutics: Dr. Thomas S. Edgington, Emeritus Professor of the Scripps Research Institute; and Dr. Philip D. Greenberg, Professor of Medicine (Oncology) and Immunology, Department of Medicine, University of Washington.

Clinical Development

Long-term durability of T cell immune responses of up to two years (at the latest time measured) was observed following a fourth (Phase I) vaccination of VGX-3100, Inovio's SynCon® DNA vaccine for treating cervical dysplasia and cancer caused by human papillomavirus. The company continues to set up sites and enroll patients for its Phase II clinical trial assessing the vaccine in women with CIN 2/3 or CIN 3 cervical dysplasias, the stages of abnormal cells preceding cervical cancer. The company expects to enroll 148 patients in 25 study centers in the U.S., South Korea, South Africa, Australia, and Canada. Data is expected in the second half of 2013.

Significant T cell and antibody responses were observed in its proof-of-principle Phase I clinical study of Inovio's preventive H5N1 (avian) influenza SynCon® DNA vaccine, VGX-3400X. The vaccine, delivered using Inovio's proprietary electroporation system, was generally safe and well tolerated at all dose levels, with no vaccine-related serious adverse events. Additional data are expected in 4Q 2011.

Inovio launched a second Phase I clinical study as part of its universal influenza vaccine, INO-3510, a SynCon® vaccine for H1N1 and H5N1 influenza, using its skin-targeted ID delivery device. Preliminary safety and immune response data are expected in the first quarter of 2012.

Strong immune responses and safety were demonstrated from the first (US) cohort of healthy subjects in a Phase I study assessing Inovio's PENNVAX™-G global HIV vaccine plus a virus vector vaccine, Modified Vaccinia Ankara-Chiang Mai Double Recombinant (MVA-CMDR), as a unique prime-boost preventive HIV vaccination strategy. Enrollment is continuing at three sites in Africa in the next phase of the study.

Best-in-class immune responses were observed in the final data from a Phase I clinical study of Inovio's PENNVAX™-B, its product for the prevention of the HIV sub-type prevalent in the US and Europe. The investigators in this study concluded that PENNVAX™-B + IL-12 plasmid delivered via electroporation led to frequencies and magnitudes of cellular immune responses equal to or greater than those reported from current vector-based HIV vaccines such as adenovirus or traditional DNA vaccination without electroporation.

Enrollment is ongoing in the Phase II clinical studies being run by Inovio's collaborators ChronTech and the University of Southampton for their DNA vaccines for hepatitis C virus and acute and chronic myeloid leukemia, with interim data expected in 2012.

Inovio previously announced a research collaboration with ChronTech Pharma AB and Transgene S.A. to test the immunogenicity of a DNA/electroporation prime - MVA boost approach against HCV by combining two promising, previously studied clinical candidates. A Phase I clinical study is anticipated to start in Q4 2011.

About Inovio Pharmaceuticals, Inc.

Inovio is developing its revolutionary synthetic consensus immunogen technologies to extend the profound medical benefits of the 20th century's immune-system-stimulating vaccines by preventing and treating today's cancers and challenging infectious diseases. Its SynCon® vaccines are designed to provide universal cross-strain protection against known as well as newly emergent unmatched strains of pathogens such as influenza. These synthetic vaccines, in combination with Inovio's proprietary electroporation delivery method, have been shown in humans to be safe and generate best-in-class immune responses. Inovio's clinical programs include Phase II studies for cervical dysplasia/cancer, leukemia and hepatitis C virus and Phase I studies for influenza and HIV. Partners and collaborators include the University of Pennsylvania, Merck, ChronTech, National Cancer Institute, U.S. Military HIV Research Program, NIH, HIV Vaccines Trial Network, University of Southampton, US Dept. of Homeland Security 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, 2010, our Form 10-Q for the quarter ended September 30, 2011, 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
Media: Jeff Richardson, Richardson & Associates, 805-491-8313

INOVIO PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2011	December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$ 25,302,689	$ 19,998,489
Short-term investments — certificates of deposit	5,763,535	1,846,271
Accounts receivable	426,948	32,887
Accounts receivable from affiliated entity	28,246	72,149
Prepaid expenses and other current assets	866,027	273,975
Prepaid expenses and other current assets from affiliated entity	346,262	653,436

Total current assets	32,733,707	22,877,207
Fixed assets, net	288,854	276,795
Intangible assets, net	9,773,176	11,180,002
Goodwill	10,113,371	10,113,371
Investment in affiliated entity	9,911,949	11,360,888
Common stock warrants	237,000	—
Other assets	208,262	259,128

Total assets	$ 63,266,319	$ 56,067,391

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$ 3,285,279	$ 3,410,610
Accounts payable and accrued expenses due to affiliated entity	606,755	1,680,947
Accrued clinical trial expenses	817,598	178,328
Common stock warrants	4,520,716	370,926
Deferred revenue	72,211	420,897
Deferred revenue from affiliated entity	401,042	375,000

Total current liabilities	9,703,601	6,436,708
Deferred revenue, net of current portion	81,853	72,780
Deferred revenue from affiliated entity, net of current portion	2,055,444	2,336,694
Deferred rent	68,280	67,112
Deferred tax liabilities	53,186	53,186

Total liabilities	11,962,364	8,966,480

Stockholders' equity:
Inovio Pharmaceuticals, Inc. stockholders' equity:
Common stock	127,257	105,038
Additional paid-in capital	255,238,121	241,233,334
Accumulated deficit	(204,614,933)	(194,838,229)
Accumulated other comprehensive income	(5,206)	2,850

Total Inovio Pharmaceuticals, Inc. stockholders' equity	50,745,239	46,502,993
Non-controlling interest	558,716	597,918

Total stockholders' equity	51,303,955	47,100,911

Total liabilities and stockholders' equity	$ 63,266,319	$ 56,067,391

INOVIO PHARMACEUTICALS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,		Nine Months Ended September 30,
	2011	2010	2011	2010
Revenue:
License fee and milestone revenue	$ 76,888	$ 39,330	$ 129,712	$ 161,825
License fee and milestone revenue from affiliated entity	106,250	93,750	305,208	219,556
Grant and miscellaneous revenue	2,454,423	1,075,563	7,727,669	3,335,510
Miscellaneous revenue from affiliated entity	—	67,900	—	67,900

Total revenue	2,637,561	1,276,543	8,162,589	3,784,791

Operating expenses:
Research and development	6,987,824	2,951,067	15,873,601	8,764,891
General and administrative	2,323,188	2,881,994	8,734,806	8,959,745
Gain on sale of assets	(337,000 )	—	(587,000 )	—

Total operating expenses	8,974,012	5,833,061	24,021,407	17,724,636

Loss from operations	(6,336,451)	(4,556,518)	(15,858,818)	(13,939,845)
Other income (expense):
Interest income, net	5,724	14,714	26,298	62,869
Other income, net	346,970	522,760	7,566,676	2,226,932
Gain/ (loss) from investment in affiliated entity	1,427,176	2,604,311	(1,550,062)	320,727

Net loss	(4,556,581 )	(1,414,733 )	(9,815,906 )	(11,329,317)
Net loss attributable to non-controlling interest	14,649	4,585	39,202	9,045

Net loss attributable to Inovio Pharmaceuticals, Inc.	$ (4,541,932)	$ (1,410,148)	$ (9,776,704)	$ (11,320,272)

Loss per common share — basic and diluted:
Net loss per share attributable to Inovio Pharmaceuticals, Inc. stockholders	$ (0.04)	$ (0.01 )	$ (0.08 )	$ (0.11)

Weighted average number of common shares outstanding — basic and diluted	127,256,907	102,928,096	125,184,087	102,832,795