Inovio Pharmaceuticals Reports 2011 First Quarter Financial Results

May 11, 2011

BLUE BELL, Pa., May 11, 2011 /PRNewswire/ — Inovio Pharmaceuticals, Inc. (NYSE AMEX: INO) today reported financial results for the quarter ended March 31, 2011.

Total revenue for the quarter ended March 31, 2011, was $3.1 million, compared with $1.4 million for the same period in 2010. Total operating expenses for the quarter ended March 31, 2011, were $7.7 million, compared with $5.8 million for the same period in 2010. The net loss attributable to common stockholders for the quarter ended March 31, 2011, was $2.4 million, or $0.02 per share, compared with a net loss attributable to common stockholders of $2.3 million, or $0.02 per share for the same period in 2010.


The increase in revenue was primarily due to an increase in revenue from the company’s contract with the National Institute of Allergy and Infectious Diseases (“NIAID”) of $2.7 million for the quarter compared with $835,000 for the same period in 2010.

Operating Expenses

Research and development expenses for the quarter were $4.4 million, compared with $2.7 million for the same period in 2010. The increase was primarily due to higher clinical trial costs related to the initiation of the HPV Phase II study as well as higher costs related to work performed for the NIAID contract.

Net Loss Attributable to Common Stockholders

The $119,000 increase in net loss attributable to common stockholders for the quarter compared with the same period in 2010 resulted primarily from the increase in research and development as well as general and administrative expenses and the loss from the change in fair market value of our investment in VGX International as of March 31, 2011, offset by an increase in other income from the revaluation of registered common stock warrants.

Capital Resources

As of March 31, 2011, cash and cash equivalents plus short-term investments in certificates of deposit were $40.8 million, compared with $21.8 million as of December 31, 2010. This change primarily resulted from the January 2011 financing: 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. This increase was offset by the use of cash for research and development as well as general and administrative expenses.

During the three months ended March 31, 2011, Inovio issued an additional 1,028,905 shares at an average price of $1.35 per share with net proceeds to the Company of $1.4 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.

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.

Corporate Update

Inovio had a successful quarter, with important research and clinical advancements in multiple disease areas. Significantly, the company launched a Phase II clinical study for its proprietary cervical dysplasia DNA vaccine and is participating in two Phase II clinical studies initiated by partners. Raising new capital in the amount of $25.7M (gross) has provided the company with the resources to fund the company’s business plan through 2013.

Corporate Development

During the first quarter of 2011, Inovio announced the sale to OncoSec Medical Inc. of certain non-DNA vaccine technology and intellectual property relating to electroporation delivery of electrochemical and cytokine immune therapies for treating solid tumors. The terms of the agreement require OncoSec to make an upfront payment of $250,000 (paid) and additional payments amounting to $2.75M by March 24, 2013, and to pay a royalty based on commercial product sales.

Subsequent to the quarter, Inovio announced a three-way collaboration agreement with Transgene S.A. and ChronTech Pharma AB to evaluate a novel therapeutic prime-boost vaccination strategy against genotype 1 hepatitis C virus (HCV) in a phase I clinical study. Inovio will contribute its electroporation delivery technology to this collaboration. Clinical study costs will be shared equally by the collaborators.

Inovio received a U.S. Department of Defense Small Business Innovation Research Grant to test the feasibility of delivering DNA vaccines by intradermal electroporation simultaneously to two or more spatially distinct sites on the body.

Clinical Development

During the quarter, Inovio initiated a Phase II clinical trial for VGX-3100. The study will assess adult females with CIN 2/3 or CIN 3 cervical dysplasias, 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 CELLECTRA® 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. Inovio achieved best-in-class T cell immune responses in terms of strength and duration (measured to nine months).

Inovio’s collaborator the University of Southampton initiated an open-label, multi-center Phase 2 clinical trial (WIN Trial) to treat chronic myeloid leukemia and acute myeloid leukemia with a DNA vaccine coded for Wilms’ tumor gene 1 (WT1) delivered using Inovio’s new ELGEN 1000 automated vaccine delivery device. Prior clinical studies in humans using parts of the WT1 gene, notably as peptide vaccine candidates, demonstrated the production of modest levels of CD8+ T-cell responses and measurable clinical responses, although both effects were transient. This will be the first study to combine DNA vaccination with electroporation delivery of WT1 antigens with the goal of stimulating high and durable levels of immune responses, critical for improving clinical outcomes.

Another partner, ChronTech Pharma AB, initiated a Phase IIb clinical study of its ChronVac-C® DNA vaccine for hepatitis C virus (HCV) delivered by Inovio’s proprietary electroporation DNA vaccine delivery technology in combination with standard of care. In Phase I, ChronVac-C delivered using Inovio’s MedPulser® electroporation device 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). 83% of the participants (5 of 6) monitored for an extended period 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.

Preclinical DNA Vaccine and Electroporation Technology Development

During the first quarter, Inovio received recognition in multiple scientific journals for various advances in its research and development programs. Examples include:

  • Vaccine highlighted positive results from Inovio’s novel DNA vaccine targeting HIV clade C viruses. Clade C is the predominant HIV-1 strain infecting people in sub-Saharan Africa, India, and China.
  • 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.
  • Human Vaccines detailed potent immune responses in a preclinical study of Inovio’s SynCon(TM) DNA vaccine for prostate cancer targeting two antigens. While current prostate cancer therapies target single antigens, in this study Inovio tested the hypothesis in mice that a broader collection of antigens, administered with Inovio’s electroporation-based delivery technology, would improve the breadth and effectiveness of a prostate cancer immunotherapy.
  • Human Vaccines highlighted Inovio’s new generation of DNA vaccine electroporation delivery technology. Based on piezoelectricity, this new contactless delivery method is non-invasive and amenable to the design of devices that are low-cost, portable, and extremely easy to use, i.e. optimal for mass vaccinations.
  • Subsequent to the quarter, Current Opinion in Immunology published an article called “Electroporation Delivery of DNA Vaccines: Prospects for Success.” The article, co-authored by Dr. Niranjan Sardesai, Inovio’s Senior Vice President, Research & Development, and Dr. David Weiner, Chairman, Scientific Advisory Board, Inovio Pharmaceuticals, and Professor, Department of Pathology & Laboratory Medicine at the University of Pennsylvania, affirmed that DNA vaccines are nearing the threshold of a medical leap far beyond the power of traditional vaccines, which employ 60-year-old development concepts.

At the Vaccine World Summit, Inovio introduced results from a pig study showing that just a single vaccination with Inovio’s foot-and-mouth (FMD) vaccine comprising four of the most common FMD serotypes generated high titer, antigen-specific antibody responses for each serotype in the vaccinated animals. High levels of T-cell responses were also measured in the vaccinated animals. The FMD virus is one of the most infectious diseases affecting farm animals including cattle, swine, sheep and goats, and is a serious threat to global food safety.

Inovio’s Form 10-Q providing the complete 2011 first quarter financial report can be found at: http://ir.inovio.com/secfilings

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 the studies or trials may not be successful or achieve the results desired, 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, 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, our Form 10-Q for the three months ended March 31, 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.

Investors: Bernie Hertel, Inovio Pharmaceuticals, 858-410-3101
Media: Jeff Richardson, Richardson & Associates, 805-491-8313

                        Inovio Pharmaceuticals, Inc.
                                                   March 31,    December 31,
                                                          2011           2010
                                                          ----           ----
    Current assets:
    Cash and cash equivalents                      $37,182,386    $19,998,489
    Short-term investments-certificates of
     deposit                                         3,664,395      1,846,271
    Accounts receivable                                144,382         32,887
    Accounts receivable from affiliated entity          25,303         72,149
    Prepaid expenses and other current assets          345,362        273,975
    Prepaid expenses and other current assets
     from affiliated entity                          1,121,174        653,436
                                                     ---------        -------

    Total current assets                            42,483,002     22,877,207
    Fixed assets, net                                  304,256        276,795
    Intangible assets, net                          10,708,527     11,180,002
    Goodwill                                        10,113,371     10,113,371
    Investment in affiliated entity                 10,990,877     11,360,888
    Other assets                                       254,409        259,128
                                                       -------        -------

    Total assets                                   $74,854,442    $56,067,391
                                                   ===========    ===========

    Current liabilities:
    Accounts payable and accrued expenses           $2,667,670     $3,410,610
    Accounts payable and accrued expenses due
     to affiliated entity                              669,381      1,680,947
    Accrued clinical trial expenses                    440,542        178,328
    Common stock warrants                            9,766,430        370,926
    Deferred revenue                                   265,019        420,897
    Deferred revenue from affiliated entity            375,000        375,000
                                                       -------        -------

    Total current liabilities                       14,184,042      6,436,708
    Deferred revenue, net of current portion            67,767         72,780
    Deferred revenue from affiliated entity,
     net of current portion                          2,242,944      2,336,694
    Deferred rent, net of current portion               53,290         67,112
    Deferred tax liabilities                            53,186         53,186
                                                        ------         ------

    Total liabilities                               16,601,229      8,966,480
                                                    ----------      ---------

    Stockholders' equity:
    Inovio Pharmaceuticals, Inc. stockholders'
    Common stock                                       127,254        105,038
    Additional paid-in capital                     254,787,165    241,233,334
    Accumulated deficit                           (197,250,842) (194,838,229)
    Accumulated other comprehensive income               1,159          2,850
                                                         -----          -----

    Total Inovio Pharmaceuticals, Inc.
     stockholders' equity                           57,664,736     46,502,993
    Non-controlling interest                           588,477        597,918
                                                       -------        -------

    Total stockholders' equity                      58,253,213     47,100,911
                                                    ----------     ----------

    Total liabilities and stockholders' equity     $74,854,442    $56,067,391
                                                   ===========    ===========

                               INOVIO PHARMACEUTICALS, INC
                                                   Three Months Ended
                                                       March  31,
                                                      2011           2010
                                                      ----           ----
    License fee and milestone revenue              $26,368        $66,554
    License fee and milestone revenue from
     affiliated entity                              93,750          7,056
    Grant and miscellaneous revenue              2,985,147      1,299,779
                                                 ---------      ---------

    Total revenue                                3,105,265      1,373,389

    Operating expenses:
    Research and development                     4,421,799      2,730,595
    General and administrative                   3,319,232      3,050,158
                                                 ---------      ---------

    Total operating expenses                     7,741,031      5,780,753
                                                 ---------      ---------

    Loss from operations                        (4,635,766)    (4,407,364)

    Other income, net                            2,320,948      1,027,993
    Interest income, net                            12,775         34,561
    (Loss)/Gain from investment in affiliated
     entity                                       (370,011)     1,044,174
    Gain on sale of assets                         250,000              -
                                                   -------            ---

    Net loss                                    (2,422,054)    (2,300,636)

    Net loss attributable to non-controlling
     interest                                        9,441          6,950
                                                     -----          -----

    Net loss attributable to Inovio
     Pharmaceuticals, Inc.                     $(2,412,613)   $(2,293,686)
                                               ===========    ===========

    Loss per common share - basic and diluted:

    Net loss per share attributable to Inovio
     Pharmaceuticals, Inc. stockholders             $(0.02)        $(0.02)
                                                    ======         ======

    Weighted average number of common shares
     outstanding - basic and diluted           120,922,577    102,757,083

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SOURCE Inovio Pharmaceuticals, Inc.

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