BLUE BELL, PA – August 16, 2010 – Inovio Pharmaceuticals, Inc. (NYSE AMEX: INO) today reported financial results for the quarter ended June 30, 2010.
Total revenue was $1.1 million and $2.5 million for the three and six months ended June 30, 2010, compared to $2.5 million and $2.9 million for the three and six months ended June 30, 2009, respectively.
Total operating expenses for the three and six months ended June 30, 2010, were $6.1 million and $11.9 million as compared to $5.5 million and $9.4 million for the three and six months ended June 30, 2009.
The net loss attributable to common stockholders for the three and six months ended June 30, 2010, was $7.6 million, or $0.07 per share, and $9.9 million, or $0.10 per share, as compared with a net loss attributable to common stockholders of $10.7 million, or $0.19 per share, and $14.1 million, or $0.28 per share, for the three and six months ended June 30, 2009.
Revenue
Revenue from license fees and milestone revenue was $175,000 and $248,000 for the three and six months ended June 30, 2010, as compared to $2.3 million and $2.5 million for the three and six months ended June 30, 2009. The decrease in revenue under license fees and milestone revenue for the three and six month periods ended June 30, 2010, compared to the comparable periods in 2009, was mainly due to no revenue being recognized under the Wyeth collaboration and licensing agreement as a result of the cancellation of the agreement in July 2009.
During the three and six months ended June 30, 2010, Inovio recorded grant and miscellaneous revenue of $960,000 and $2.3 million, respectively, as compared to $114,000 and $216,000 for the three and six months ended June 30, 2009. The increase in grant and miscellaneous revenue was primarily due to revenue recognized from our contract with the National Institute of Allergy and Infectious Diseases (“NIAID”) of $945,000 and $1.8 million for the three and six months ended June 30, 2010, compared to $68,000 for both the three and six months ended June 30, 2009.
Operating Expenses
Research and development expenses for the three and six months ended June 30, 2010, were $3.1 million and $5.8 million as compared to $1.2 million and $2.1 million for the three and six months ended June 30, 2009. The increase in research and development expenses for the three and six months ended June 30, 2010, compared to the comparable periods in 2009, was primarily due to higher costs related to work performed for the NIAID and PATH Malaria Vaccine Initiative contracts, higher outside services and contract labor expenses related to research and development projects, higher outside engineering professional services related to CELLECTRA® development, higher clinical trial costs and higher personnel costs due to greater employee headcount on average throughout the respective periods.
General and administrative expenses, which include business development expenses and the amortization of intangible assets, for the three and six months ended June 30, 2010, were $3.0 million and $6.1 million as compared to $4.3 million and $7.3 million for the three and six months ended June 30, 2009. The decrease in general and administrative expenses for the three and six months ended June 30, 2010, compared to the comparable periods in 2009, was primarily due to a decrease in legal and other expenses associated with the merger and other corporate matters. The decrease was partially offset by higher amortization expense as a result of the intangible assets that were acquired from VGX Pharmaceuticals and higher personnel costs due to greater employee headcount on average throughout the respective periods.
Net Loss Attributable to Common Stockholders
The $4.2 million decrease in net loss attributable to common stockholders for the six months ended June 30, 2010, compared with the same period in 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 June 30, 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.
Capital Resources
As of June 30, 2010, cash and cash equivalents plus short term investments in certificates of deposit were $22.2 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. Based on management’s projections and analysis, the company believes that its cash and cash equivalents are sufficient to meet our planned working capital requirements through the end of 2011.
Corporate Update
Corporate Development
During the quarter, 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 (HCV). The grant will fund pre-clinical studies to test the safety and effect on the immune system of Inovio’s novel vaccines designed to treat persons who are chronically infected with hepatitis C virus and have not responded to currently available therapies. People with chronic HCV infection face an increased risk of developing hepatocellular cancer, a difficult-to-treat cancer with a poor prognosis.
The company was awarded “Best Early Stage Biotech” Vaccine Industry Excellence Award at the World Vaccine Congress.
The company changed its name from Inovio Biomedical to Inovio Pharmaceuticals, Inc. to better reflect its business focus.
Preclinical Development
During the quarter, the peer-reviewed journal Molecular Therapy published a paper highlighting that in a head-to-head comparison with a Merck adenovirus serotype 5 (Ad5) vaccine, considered to be the most immunogenic among viral vectors, an Inovio optimized SynConTM DNA vaccine delivered using its proprietary electroporation technology demonstrated numerous advantages in both magnitude and breadth of immune responses produced in non-human primates.
Clinical Development
During the quarter, Inovio announced it had completed enrollment of all subjects for its phase I trial of its therapeutic cervical cancer vaccine (VGX-3100) targeting the E6 and E7 proteins of human papillomavirus (HPV) types 16 and 18. In the first two dose cohorts, six of 12 vaccinated subjects (50%) developed significant antigen-specific CTL (killer T-cell) responses, with average CTL responses increasing in a dose-related fashion. Ten of the 12 patients (83%) developed strong antibody responses. The vaccine has been well tolerated with an acceptable safety profile in all subjects tested. Interim immunology and safety results from the third and final dose group are expected to be reported in September.
Inovio immunized the first subject in its U.S. Phase I clinical trial to evaluate its SynCon™ H5N1 (avian) influenza DNA vaccine, VGX-3400X. This study represents the first step in demonstrating Inovio’s novel universal influenza vaccine approach, which aims to overcome the constraints of current annual strain and subtype-specific influenza vaccines by developing a single vaccine to potentially protect against existing and newly emergent strains within multiple targeted subtypes, such as H5N1 and H1N1, posing risk to humans.
About Inovio Pharmaceuticals, Inc.
Inovio is developing a new generation of vaccines, called DNA vaccines, to treat and prevent cancers and infectious diseases. The company’s SynCon™ vaccines are designed to provide broad cross-strain protection against known as well as newly emergent strains of pathogens such as influenza. When delivered with Inovio’s proprietary electroporation delivery devices the vaccines have been shown to be safe and generate significant immune responses. Inovio’s clinical programs include HPV/cervical cancer (therapeutic), avian flu, and HIV vaccines (both preventive and therapeutic). Inovio is developing universal influenza vaccines in collaboration with scientists from the University of Pennsylvania and National Microbiology Laboratory of the Public Health Agency of Canada. Other partners and collaborators include Merck, ChronTech, University of Southampton, National Cancer Institute, HIV Vaccines Trial Network, 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, 2009, our Form 10-Q for the six months ended June 30, 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.
PHARMACEUTICALS, INC CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2010 December 31,2009
(Unaudited) ASSETS Current assets: Cash and cash equivalents................................................................................................................ $ 14,951,754 $ 30,296,215 Short-term investments—certificates of deposit............................................................................. 7,248,192 — Short-term investments—auction rate securities............................................................................ 2,494,513 10,397,530 Auction rate security rights.................................................................................................................. 5,487 3,145,156 Accounts receivable............................................................................................................................. 159,701 259,207 Accounts receivable from affiliated entity........................................................................................ 2,028,481 58,853 Prepaid expenses and other current assets.................................................................................... 427,752 409,845
Total current assets........................................................................................................................... 27,315,880 44,566,806 Fixed assets, net................................................................................................................................... 383,285 343,457 Intangible assets, net........................................................................................................................... 12,133,461 12,968,934 Goodwill.................................................................................................................................................. 10,113,371 10,113,371 Investment in affiliated entity.............................................................................................................. 10,047,218 12,330,802 Other assets........................................................................................................................................... 284,128 305,547
Total assets.......................................................................................................................................... $ 60,277,343 $ 80,628,917
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses....................................................................................... $ 2,479,269 $ 3,445,750 Accounts payable and accrued expenses due to affiliated entity............................................... 335,380 445,091 Accrued clinical trial expenses........................................................................................................... 342,926 299,261 Line of credit.......................................................................................................................................... 1,012,891 12,114,760 Common stock warrants..................................................................................................................... 1,048,626 2,774,850 Deferred revenue................................................................................................................................. 77,863 270,326 Deferred revenue from affiliated entity............................................................................................ 375,000 —
Total current liabilities........................................................................................................................ 5,671,955 19,350,038 Deferred revenue, net of current portion.......................................................................................... 86,693 82,594 Deferred revenue from affiliated entity, net of current portion.................................................... 2,524,194 — Deferred rent, net of current portion.................................................................................................. 41,879 11,338
Total liabilities....................................................................................................................................... 8,324,721 19,443,970
Inovio Pharmaceuticals, Inc. stockholders’ equity: Common stock...................................................................................................................................... 102,890 102,746 Additional paid-in capital..................................................................................................................... 238,256,744 237,577,970 Accumulated deficit.............................................................................................................................. (187,134,557) (177,224,433 ) Accumulated other comprehensive income................................................................................... 109,137 105,796
Total Inovio Pharmaceuticals, Inc. stockholders’ equity........................................................... 51,334,214 60,562,079 Non-controlling interest....................................................................................................................... 618,408 622,868
Total stockholders’ equity.................................................................................................................... 51,952,622 61,184,947
Total liabilities and stockholders’ equity....................................................................................... $ 60,277,343 $ 80,628,917
INOVIO PHARMACEUTICALS, INC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, Six Months Ended June 30, 2010 2009 2010 2009 Revenue: License fee and milestone revenue........................................... $ 174,691 $ 2,275,374 $ 248,301 $ 2,488,472 Revenue under collaborative research and development arrangements.............................................................................. — 102,317 — 156,775 Grant and miscellaneous revenue.............................................. 960,168 113,898 2,259,947 215,792 Total revenue.................................................................................. 1,134,859 2,491,589 2,508,248 2,861,039
Operating expenses: Research and development......................................................... 3,083,229 1,181,194 5,813,824 2,144,927 General and administrative.......................................................... 3,027,593 4,300,772 6,077,751 7,266,914
Total operating expenses............................................................ 6,110,822 5,481,966 11,891,575 9,411,841
Loss from operations................................................................... (4,975,963 ) (2,990,377 ) (9,383,327 ) (6,550,802 )
Other income (expense): Interest income/(expense), net..................................................... 13,594 (29,931) 48,155 3,717 Other income/(expense), net........................................................ 676,179 (267,678 ) 1,704,172 (205,396 ) Loss from investment in affiliated entity.................................... (3,327,758 ) (7,368,680) (2,283,584 ) (7,368,680)
Net loss............................................................................................ (7,613,948 ) (10,656,666 ) (9,914,584 ) (14,121,161 )
Net (gain)/loss attributable to non-controlling interest............. (2,490) 3,730 4,460 3,730
Net loss attributable to Inovio Pharmaceuticals, Inc........... $ (7,616,438 ) $ (10,652,936 ) $ (9,910,124 ) $ (14,117,431 )
Loss per common share — basic and diluted:
Net loss per share attributable to Inovio Pharmaceuticals, Inc. stockholders....................................................................... $ (0.07 ) $ (0.19 ) $ (0.10 ) $ (0.28 )
Weighted average number of common shares outstanding — basic and diluted........................................... 102,811,417 57,303,620 102,784,297 50,743,262
