Inovio third quarter total revenue decreases from $3.6 million to $1.3 million

Nov 15 2010

Inovio Pharmaceuticals, Inc. (NYSE AMEX:INO) today reported financial results for the quarter ended September 30, 2010.

“Prototype development and preclinical immunogenicity analysis of a novel minimally invasive electroporation device”

Total revenue was $1.3 million and $3.8 million for the three and nine months ended September 30, 2010, compared to $3.6 million and $6.5 million for the three and nine months ended September 30, 2009, respectively.

Total operating expenses for the three and nine months ended September 30, 2010, were $5.8 million and $17.7 million as compared to $7.2 million and $16.7 million for the three and nine months ended September 30, 2009.

The net loss attributable to common stockholders for the three and nine months ended September 30, 2010, was $1.4 million, or $0.01 per share, and $11.3 million, or $0.11 per share, as compared with a net loss attributable to common stockholders of $2.9 million, or $0.03 per share, and $17.1 million, or $0.26 per share, for the three and nine months ended September 30, 2009.

Revenue

Revenue from license fees and milestone revenue was $133,000 and $381,000 for the three and nine months ended September 30, 2010, as compared to $2.1 million and $4.6 million for the three and nine months ended September 30, 2009. The decreases in the respective periods were mainly due to no revenue being recognized under the terminated Wyeth collaboration and licensing agreement as a result of the cancellation of the agreement in July 2009.

During the three and nine months ended September 30, 2010, Inovio recorded grant and miscellaneous revenue of $1.1 million and $3.4 million, respectively, as compared to $1.5 million and $1.8 million for the three and nine months ended September 30, 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). The increase for the comparable nine month periods was primarily due to more revenue recognized from our contract with the NIAID during the first and second quarters of 2010.

Operating Expenses

Research and development expenses for the three and nine months ended September 30, 2010, were $3.0 million and $8.8 million as compared to $3.4 million and $5.6 million for the three and nine months ended September 30, 2009. The decrease in research and development expenses for the comparable three month periods was primarily due to lower costs related to work performed for the NIAID, lower costs related to our subsidiary, VGX Animal Health, as well as lower severance expenses. The increase in research and development expenses for the comparable nine month periods was primarily due to higher costs related to work performed for the NIAID and PATH Malaria Vaccine Initiative contracts, outside services and contract labor related to research and development projects, outside engineering professional services related to CELLECTRA® development, clinical trials, and greater employee headcount on average throughout the respective periods.

General and administrative expenses, which include business development expenses and amortization of intangible assets, for the three and nine months ended September 30, 2010, were $2.9 million and $9.0 million as compared to $3.8 million and $11.1 million for the three and nine months ended September 30, 2009. The decrease for the comparable three and nine month periods 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 $5.7 million decrease in net loss attributable to common stockholders for the nine months ended September 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 September 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 September 30, 2010, cash and cash equivalents plus short term investments in certificates of deposit were $23.5 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.

Inovio also issued 506,800 shares at an average price of $1.12 per share with net proceeds to the Company of $549,000. These shares were sold under an At-the-Market Equity Offering, the details of which were filed with the SEC under an 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 our planned working capital requirements through the end of first quarter 2012.

Corporate Update

Corporate Development

During the quarter, the 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 to further fund Inovio's universal SynCon(TM) flu vaccine development.

The company was acknowledged by the Philadelphia Business Journal as part of the Journal's inaugural Life Sciences Awards by their naming of Dr. Joseph Kim, President & CEO, as Life Sciences CEO of the Year and by also recognizing the company with awards as Best Local Research-Based Company and Best Incubator Graduate (VGX Pharmaceuticals, which merged with Inovio Biomedical in June 2009 began as a start-up vaccine development company in Philadelphia's University City Science Center Incubator.)

Preclinical Development

Subsequent to the quarter end, a peer-reviewed research article, "Prototype development and preclinical immunogenicity analysis of a novel minimally invasive electroporation device," describing the development of Inovio's new intradermal, minimally-invasive DNA vaccine delivery device was published in the prestigious journal Gene Therapy. This very low voltage device does not penetrate the skin and further enhances the previously established tolerability of Inovio's electroporation devices.

Clinical Development

During the quarter, 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 cervical cancers caused by human papillomavirus (HPV) types 16 and 18. This vaccine targets HPV E6 and E7 proteins and is delivered via in vivo electroporation. 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 CELLECTRA® 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. Inovio is planning to start a Phase II clinical study in the first quarter of 2011.

The Phase I clinical study assessing Inovio's PENNVAX^TM-B DNA vaccine delivered using its proprietary electroporation technology in a preventive setting fully completed enrollment of 48 healthy volunteers. The multi-center study is being conducted by Inovio's clinical collaborator, the HIV Vaccine Trials Network (HVTN), at several clinical sites under a protocol designated HVTN-080. Inovio expects to report interim data from this study in Q4 2010.

A new Phase I study, called RV262, began to evaluate a combination DNA prime/MVA vector boost regimen that was developed to protect against diverse subtypes of HIV-1 prevalent in North America, Europe, Africa, and South America. The National Institute of Allergy and Infectious Diseases (NIAID), part of the U.S. National Institutes of Health (NIH), is sponsoring the study, which will enroll 92 total participants and is designed to assess safety and immune responses. The study is being conducted by the U.S. Military HIV Research Program (MHRP) through its clinical research network in the US, East Africa and Thailand. This clinical trial was designed to test a unique prime-boost preventive HIV vaccination strategy aimed at global coverage. The prime is Inovio's plasmid DNA vaccine, PENNVAX^TM-G.

Source: Inovio Pharmaceuticals, Inc.