Inovio Pharmaceuticals Reports 2010 Fourth Quarter and Year End Financial Results
BLUE BELL, Pa., March 17, 2011 /PRNewswire/ — Inovio Pharmaceuticals, Inc. (NYSE AMEX: INO) today reported financial results for the fourth quarter and year ended December 31, 2010.
Total revenue was $2.4 million and $6.1 million for the quarter and year ended December 31, 2010, compared to $2.6 million and $9.1 million for the quarter and year ended December 31, 2009.
Total operating expenses for the quarter and year ended December 31, 2010, were $7.6 million and $25.4 million, compared to $6.4 million and $23.1 million for the quarter and year ended December 31, 2009.
The net loss attributable to common stockholders for the quarter and year ended December 31, 2010, was $6.3 million, or $0.06 per share, and $17.6 million, or $0.17 per share, compared with a net loss attributable to common stockholders of $7.3 million, or $0.07 per share, and $24.4 million, or $0.33 per share, for the quarter and year ended December 31, 2009.
Revenue from license fees and milestone revenue was $146,000 and $527,000 for the quarter and year ended December 31, 2010, compared to $298,000 and $4.9 million for the quarter and year ended December 31, 2009. The decreases in the respective periods were mainly due to no revenue being recognized in 2010 under the terminated Wyeth collaboration and licensing agreement as a result of the cancellation of the agreement in July 2009.
During the quarter and year ended December 31, 2010, Inovio recorded grant and miscellaneous revenue of $2.2 million and $5.6 million, compared to $2.4 million and $4.0 million for the quarter and year ended December 31, 2009. The decrease for the comparable three-month periods was primarily due to lower revenue recognized from our contract with the National Institute of Allergy and Infectious Diseases (NIAID) offset by the $733,000 grant awarded in October 2010 under The Patient Protection and Affordable Care Act of 2010 (“PPACA”). The increase for the comparable annual period was primarily due to more revenue recognized from our contract with the NIAID during the first and second quarters of 2010 as well as the PPACA grant.
Research and development expenses for the quarter and year ended December 31, 2010, were $4.5 million and $13.3 million, compared to $3.9 million and $9.4 million for the quarter and year ended December 31, 2009. The increases in the respective periods was primarily due to higher costs related to work performed for the NIAID contract as well as higher other outside services and contract labor expenses related to research and development projects. The increase was partially offset by a decrease in research and development expenses incurred by Inovio AS and Inovio Tec, as these entities ceased operations in 2009, as well as lower stock based compensation expense.
General and administrative expenses, which include business development expenses and amortization of intangible assets, for the quarter and year ended December 31, 2010, were $3.1 million and $12.1 million, compared to $2.6 million and $13.7 million for the quarter and year ended December 31, 2009. The increase for the three-month period was primarily due to a reversal of a deferred tax liability in the fourth quarter of 2009, which did not occur in 2010. The decrease for the annual period was primarily due to lower legal and related fees. These decreases were partially offset by an increase in recurring operating expenses, including the amortization of intangible assets acquired in the 2009 merger, due to a full year operating as a combined company in 2010.
Net Loss Attributable to Common Stockholders
The $6.8 million decrease in net loss attributable to common stockholders for the year ended December 31, 2010, compared with the year ended 2009, resulted primarily from a decrease in the loss related to the change in fair market value of our investment in VGX International as of December 31, 2010, increase in other income from the revaluation of registered common stock warrants, increase in grant and miscellaneous revenue, and a decrease in general and administrative expenses.
As of December 31, 2010, cash and cash equivalents plus short-term investments in certificates of deposit were $21.8 million, compared to $30.3 million in cash and cash equivalents as of December 31, 2009. This change primarily resulted from the use of cash for research and development as well as general and administrative expenses, offset by $3.0 million received from VGX International in connection with the March 2010 Collaboration and License Agreement.
In 2010 Inovio issued 1,994,672 shares at an average price of $1.20 per share with net proceeds to the Company of $2.3 million. These shares were sold under an At-the-Market Equity Offering, the details of which were filed with the SEC under Form 8-K on August 27, 2010. This Offering allows the company to sell shares from time to time at its discretion through an agent into the market.
In January 2011 the Company entered into an investor purchase agreement with a single investor relating to the issuance and sale of (a) 21,130,400 shares of common stock and (b) warrants to purchase a total of 10,565,200 shares of common stock with an exercise price of $1.40 per share, for an aggregate purchase price of approximately $24.3 million. The shares of common stock and warrants were sold in units consisting of one share of common stock and a warrant to purchase 0.50 of a share of common stock. The purchase price for the share and warrant was $1.15 per unit. The Company received net proceeds from the transaction of approximately $23.0 million after deducting the placement agent’s fee and estimated offering expenses payable by the Company.
The number of shares of common stock issued and outstanding was 127,254,031 as of February 24, 2011.
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 end of 2013.
During 2010, Inovio expanded its existing license agreement with the University of Pennsylvania, adding exclusive worldwide licenses for technology and intellectual property for novel DNA vaccines against pandemic influenza, Chikungunya, and foot-and-mouth disease. The amendment also encompassed new chemokine and cytokine molecular adjuvant technologies.
Inovio received financial support from multiple government and non-government agencies:
- PATH Malaria Vaccine Initiative (MVI) agreed to provide follow-on funding to continue evaluation and development of Inovio’s malaria DNA vaccine candidate in non-human primates.
- Inovio and the University of Pennsylvania received a grant of $3.1 million from the National Institutes of Health (NIH) Director’s Office Transformative Research Award to further fund Inovio’s universal SynCon(TM) flu vaccine development.
- Inovio and its collaborators from Drexel University, Cheyney University, and the University of Pennsylvania received a $2.8 million grant to develop a DNA vaccine to treat hepatitis C virus.
- Inovio received a $733,438 grant under The PPACA. The grant was related to three of the Company’s projects, including the Phase II clinical trial of VGX-3100, a therapeutic vaccine for cervical dysplasia and cancer as well as development projects for SynCon(TM) universal flu and dengue vaccines.
Subsequent to year end Inovio signed an agreement with OncoSec Medical Inc. for the sale to OncoSec of certain non-DNA vaccine technology and intellectual property relating to electroporation technology useful for electrochemical and cytokine based immune therapies for treating solid tumors.
Preclinical DNA Vaccine and Electroporation Device Development
During 2010 Inovio received recognition in multiple scientific journals for various advances in its research and development programs. Examples include:
- Molecular Therapy published a paper describing that co-delivery of Inovio’s DNA-based interleukin (IL)-28B immunoadjuvant and an optimized SynCon(TM) DNA vaccine using its proprietary electroporation technology significantly enhanced antigen-specific killer T-cell responses in rhesus monkeys.
- The Journal of Infectious Diseases published an article describing 100% protection of non-human primates against a highly pathogenic monkeypox challenge after vaccination with Inovio’s smallpox DNA vaccine.
- Gene Therapy published a paper demonstrating that a new intradermal low voltage DNA vaccine delivery device, which does not penetrate the skin, produced strong antibody and T-cell immune responses and achieved protection from lethal challenge in multiple animal models including non-human primates. This delivery method also further enhances the previously established tolerability of Inovio’s electroporation devices. Inovio also made various announcements regarding other new minimally and non-invasive electroporation devices.
- Subsequent to year end, PLoS Neglected Tropical Diseases highlighted positive results from Inovio’s multi-antigen Chikungunya virus DNA vaccine, which induced robust antibody and T-cell immune responses and provided 100% protection of mice against a challenge with this tropical infectious disease. Studies in rhesus macaques demonstrated generation of strong neutralizing antibody responses which mimicked those observed in CHIKV-infected human patients who subsequently recovered from this disease.
During 2010, Inovio announced it achieved best-in-class immune responses in its Phase I dose escalation study of VGX-3100, its DNA vaccine to treat pre-cancerous cervical dysplasias and cancers caused by human papillomavirus (HPV) types 16 and 18. All dose groups developed significant antibody and T-cell immune responses; notably, in the third and final dose group, five of six (83%) patients developed unprecedented T-cell responses not achieved by any other non-replicating vaccine platform in humans. VGX-3100 delivered using Inovio’s proprietary CELLECTRAÂ® intramuscular electroporation delivery device was generally safe and well tolerated at all dose levels. There were no vaccine-related serious adverse events; reported adverse events and injection site reactions were mild to moderate and required no treatment.
Subsequent to year end, Inovio initiated a Phase II clinical trial for VGX-3100. The study will assess adult females with CIN 2/3 or CIN 3, the pre-cancerous stages of abnormal cells that precede cervical cancer, and biopsy-proven HPV 16 or 18, which are responsible for 70% of CIN 2/3 and cervical cancer incidences. The randomized, placebo-controlled, double-blind study will evaluate cervical tissue changes after three 6 mg doses of VGX-3100 are administered by injection in combination with Inovio’s CELLECTRAÂ® electroporation delivery device. The company expects that a total of 148 patients will be enrolled in 25 study centers in the U.S., South Korea, South Africa, Australia, and Canada.
During 2010, Inovio observed in an interim analysis high vaccine-induced response rates and strong magnitude of immune responses in its Phase I clinical study of PENNVAX(TM)-B, a DNA vaccine for the prevention of HIV infection.
A Phase I study, called RV262, began to evaluate a unique prime-boost preventive HIV vaccination strategy aimed at global coverage. The prime is Inovio’s plasmid DNA vaccine, PENNVAXTM-G. The NIAID, part of the U.S. National Institutes of Health (NIH), is sponsoring the study, which is being conducted by the U.S. Military HIV Research Program (MHRP) through its clinical research network in the U.S. and east Africa.
The company launched a U.S. Phase I clinical trial to evaluate its SynCon(TM) H5N1 (avian) influenza DNA vaccine, VGX-3400X, using intramuscular electroporation delivery. This H5N1 vaccine study represents the first step in demonstrating Inovio’s novel universal influenza vaccine approach, which aims to bypass the current requirement for annual strain and subtype-specific influenza vaccines by developing a single vaccine to potentially protect against all strains within multiple targeted subtypes, such as H5N1 and H1N1, posing risk to humans. Inovio’s affiliate, VGX International, also initiated a phase I clinical study of this vaccine candidate in Korea.
Subsequent to year end, Inovio’s collaborator the University of Southampton initiated a Phase 2 clinical trial (WIN Trial) to treat leukemia utilizing Inovio’s new ELGEN 1000 automated vaccine delivery device. This open-label, multi-center clinical trial is evaluating a DNA vaccine to treat chronic myeloid leukemia and acute myeloid leukemia.
Another partner, ChronTech Pharma AB, initiated a Phase IIb clinical study of its ChronVac-CÂ® DNA vaccine for hepatitis C virus (HCV) delivered by Inovio’s proprietary electroporation DNA vaccine delivery technology in combination with standard of care. In a Phase I clinical trial of ChronVac-C using Inovio’s MedPulserÂ® electroporation device the therapy resulted in a robust increase in T-cell immune responses against HCV and was safe and well-tolerated. Post-study observation of subjects who completed the protocol and then entered into standard of care (SOC) treatment using interferon and ribavirin showed a complete and rapid viral response (four weeks) in 70% of those participants (5 of 7 patients). More significantly, 83% of the participants (5 of 6 patients) who were monitored for an extended period of time continued to show undetectable virus levels six months after they completed SOC. SOC treatment alone usually results in about 40-50% of patients reaching undetectable virus levels after six months of treatment.
About Inovio Pharmaceuticals, Inc.
Inovio is developing a new generation of vaccines, called DNA vaccines, to treat and prevent cancers and infectious diseases. These SynCon(TM) vaccines are designed to provide broad cross-strain protection against known as well as newly emergent strains of pathogens such as influenza. These vaccines, in combination with Inovio’s proprietary electroporation delivery devices, have been shown to be safe and generate significant immune responses. Inovio’s clinical programs include three separate programs in Phase II clinical studies, including VGX-3100 for treating cervical dysplasia and cancer. Other Inovio clinical programs include those for avian flu (preventive) and HIV vaccines (both preventive and therapeutic). Inovio is developing universal influenza and other vaccines in collaboration with scientists from the University of Pennsylvania. Other partners and collaborators include Merck, ChronTech, National Cancer Institute, U.S. Military HIV Research Program, NIH, HIV Vaccines Trial Network, University of Southampton, 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 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 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, our ability to successfully integrate Inovio and VGX Pharmaceuticals, 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 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: --------- Bernie Hertel, Inovio Investors: Pharmaceuticals, 858-410-3101 Jeff Richardson, Richardson & Media: Associates, 805-491-8313
Inovio Pharmaceuticals, Inc. CONSOLIDATED BALANCE SHEETS
December 31, ------------ 2010 2009 ---- ---- ASSETS Current assets: Cash and cash equivalents $19,998,489 $30,296,215 Short-term investments- certificates of deposit 1,846,271 - Short-term investments- auction rate securities - 10,397,530 Auction rate security rights - 3,145,156 Accounts receivable 32,887 259,207 Accounts receivable from affiliated entity 72,149 58,853 Prepaid expenses and other current assets 273,975 409,845 Prepaid expenses and other current assets from affiliated entity 653,436 - ------- --- Total current assets 22,877,207 44,566,806 Fixed assets, net 276,795 343,457 Intangible assets, net 11,180,002 12,968,934 Goodwill 10,113,371 10,113,371 Investment in affiliated entity 11,360,888 12,330,802 Other assets 259,128 305,547 ------- ------- Total assets $56,067,391 $80,628,917 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $3,410,610 $3,445,750 Accounts payable and accrued expenses due to affiliated entity 1,680,947 445,091 Accrued clinical trial expenses 178,328 299,261 Line of credit - 12,114,760 Common stock warrants 370,926 2,774,850 Deferred revenue 420,897 270,326 Deferred revenue from affiliated entity 375,000 - ------- --- Total current liabilities 6,436,708 19,350,038 Deferred revenue, net of current portion 72,780 82,594 Deferred revenue from affiliated entity, net of current portion 2,336,694 - Deferred rent, net of current portion 67,112 11,338 Deferred tax liabilities 53,186 - ------ --- Total liabilities 8,966,480 19,443,970 --------- ---------- Commitments and contingencies Inovio Pharmaceuticals, Inc. stockholders' equity: Preferred stock-par value $0.001; Authorized shares: 10,000,000, issued and - - outstanding: 26 and 26 at December 31, 2010 and December 31, 2009, respectively Common stock-par value $0.001; Authorized shares: 300,000,000, issued and 105,038 102,746 outstanding: 105,038,192 at December 31, 2010 and 102,746,058 at December 31, 2009 Additional paid-in capital 241,233,334 237,577,970 Accumulated deficit (194,838,229) (177,224,433) Accumulated other comprehensive income 2,850 105,796 ----- ------- Total Inovio Pharmaceuticals, Inc. stockholders' equity 46,502,993 60,562,079 Non-controlling interest 597,918 622,868 ------- ------- Total stockholders' equity 47,100,911 61,184,947 ---------- ---------- Total liabilities and stockholders' equity $56,067,391 $80,628,917 =========== ===========
Inovio Pharmaceuticals, Inc. CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years ended December 31, ------------------- 2010 2009 2008 ---- ---- ---- Revenues: License fee and milestone revenue $213,916 $4,929,309 $791,401 License fee and milestone revenue from affiliated entity 313,306 18,222 - Revenue under collaborative research and development arrangements - 125,996 1,077,967 Grants and miscellaneous revenue 5,549,583 4,005,719 228,264 Miscellaneous revenue from affiliated entity 67,900 40,865 - ------ ------ --- Total revenues 6,144,705 9,120,111 2,097,632 --------- --------- --------- Operating expenses: Research and development 13,256,606 9,408,457 5,750,494 General and administrative 12,108,261 13,669,409 10,005,602 ---------- ---------- ---------- Total operating expenses 25,364,867 23,077,866 15,756,096 ---------- ---------- ---------- Loss from operations (19,220,162) (13,957,755) (13,658,464) Other income (expense): Other income/ (expense), net 2,476,816 (1,258,848) 49,006 Interest income, net 74,514 2,293 643,836 Loss from investment in affiliated entity (969,914) (9,244,614) - -------- ---------- --- Net loss (17,638,746) (24,458,924) (12,965,622) Net loss attributable to non-controlling interest 24,950 47,439 - ------ ------ --- Net loss attributable to Inovio Pharmaceuticals, Inc. $(17,613,796) $(24,411,485) $(12,965,622) ============ ============ ============ Loss per common share-basic and diluted: Net loss per share attributable to Inovio Pharmaceuticals, Inc. stockholders $(0.17) $(0.33) $(0.30) ====== ====== ====== Weighted average number of common shares outstanding-basic and diluted 103,201,880 74,714,138 43,914,004 =========== ========== ==========
SOURCE Inovio Pharmaceuticals, Inc.