BLUE BELL May 13, 2020 (Thomson StreetEvents) -- Edited Transcript of Inovio Pharmaceuticals Inc earnings conference call or presentation Monday, May 11, 2020 at 8:30:00pm GMT

Inovio Pharmaceuticals, Inc. - Director of IR

* J. Joseph Kim

Inovio Pharmaceuticals, Inc. - CEO, President & Director

* Kate E. Broderick

Inovio Pharmaceuticals, Inc. - SVP of Research & Development

* Peter D. Kies

Inovio Pharmaceuticals, Inc. - CFO

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

Good day, everybody, and welcome to the Inovio First Quarter 2020 Financial Results Conference Call. (Operator Instructions)

Please note today's event is being recorded.

I would now like to turn the conference over to Ben Matone, Senior Director of Investor Relations. Please proceed, sir.

Ben Matone, Inovio Pharmaceuticals, Inc. - Director of IR [2]

Thank you, operator, and thank you, everyone, for joining the Inovio First Quarter 2020 Earnings Call. With me today are Dr. J. Joseph Kim, President and CEO; Peter Kies, our Chief Financial Officer; Dr. Prakash Bhuyan, Vice President of Clinical Development and Head of Inovio's Clinical Programs to treat HPV-related precancers; and Dr. Kate Broderick, Senior Vice President of Research and Development and Project Lead for Inovio's infectious disease programs, who together will review our corporate, financial and development progress for the first quarter 2020. Dr. Jacqueline Shea, our Chief Operating Officer, is also with us and will be joining for the Q&A session following prepared remarks.

Today's call is being webcast live on our website, ir.inovio.com, and a replay of today's call will be made available shortly after the call is concluded. Following prepared remarks, we will conduct a question-and-answer segment which will be reserved for equity research analysts. During the course of this conference call, we will be making certain forward-looking statements regarding future events and the future performance of the company.

In particular, these events which relate to our business include plans to develop Inovio's integrated platform of DNA medicines, clinical and regulatory developments and timing of clinical data readouts, along with capital resources and strategic matters, as well as the impact of the COVID-19 pandemic on Inovio's business operations. All of these statements are based on the beliefs and expectations of management as of today. These statements involve certain assumptions, risks and uncertainties and could cause actual results to differ materially. We assume no obligation to revise or update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should read carefully the risks and uncertainties described in today's press release as well as the risk factors included in today's 10-Q filing with the SEC.

Thank you for your attention. And with that, I would now like to turn the call over to Joseph.

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J. Joseph Kim, Inovio Pharmaceuticals, Inc. - CEO, President & Director [3]

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Thank you, Ben. And good afternoon, everyone. Thank you for joining us on the call today. Inovio had a productive first quarter with developments across multiple clinical programs continuing to demonstrate the differentiating value and broad applicability of our DNA medicines platform. Please see the press release we just issued less than an hour ago for first quarter financial results and an extensive list of corporate highlights. I'm going to keep our remarks -- prepared remarks brief so that we have plenty of time to address your questions.

But before we delve into updates for each therapeutic program, I want to first provide an update on the impact of the COVID-19 pandemic on our programs in progress. First, recognizing the importance of patient safety and adhering to the global stay-at-home government orders during the COVID-19 pandemic, our clinical operations and development teams have gone to great lengths to ensure patients participating in our clinical programs continue to be able to receive our DNA medicines and vaccines within a safe environment.

I personally cannot thank them enough for their dedication and focus during these challenging times. While we do not anticipate -- while we do anticipate various impacts on every clinical trial as a result of the COVID-19 pandemic, as of today, our clinical catalysts for 2020 that we outlined at the beginning of this year remain on track.

Beyond 2020, it is still difficult to clearly project the exact impact the continuing COVID-19 pandemic will have on our clinical development programs. That said, we do anticipate that the enrollment rate for REVEAL 2, which has been at about 50% for the months of March and April during the pandemic lockdown will likely impact REVEAL 2 time line. Prakash will speak to this during his remarks on VGX-3100. But at this time, we are not changing guidance for our BLA anticipated timing and we will continue to work with the sites on REVEAL 2 accordingly to ensure both patient safety and data integrity.

Inovio remains on track and well positioned to have 2020 to be a transformative year for the company. We remain confident that this statement was true even in the midst of this global pandemic. Our team continues to be diligent and resourceful to ensure we are on track to deliver key data milestones in 2020, which include REVEAL 1 Phase III top line efficacy data from our lead asset, VGX-3100, in the fourth quarter. Overall survival at 12 months data or OS12 data from INO-5401 for our GBM therapy being presented at ASCO and abstracts available this afternoon, followed by OS18 data in the fourth quarter. And you'll hear more from Peter during his financial update, but Inovio remains well capitalized, having a strong balance sheet which is essential for properly executing our product development and business objectives and the continued global uncertainty related to COVID-19.

While our 200-plus employees are not working all physically side-by-side, our R&D and manufacturing teams in San Diego are in our facilities relentlessly driving the development of our immunotherapies and vaccines, including INO-4800, while practicing social distancing and taking all measures necessary to keep our team safe. Rest of our team is working remotely and seamlessly together in our shared mission to urgently develop our DNA vaccine that we believe will play a significant part in addressing this global health crisis. As we highlighted in today's press release, Inovio has validated the speed and versatility of our DNA medicines platform by rapidly entering the clinic with our novel DNA vaccine candidate, INO-4800 and the fight against COVID-19. Kate will elaborate more on this shortly, but I want to profess that our INO-4800 development effort has truly been a global and collaborative one. Since we began developing a COVID-19 vaccine in January, we have been forging and expanding collaborations with government entities and premier private funders, including the U.S. Department of Defense, CEPI and the Bill & Melinda Gates Foundation. Inovio is collaborating with leading labs around the world to test the vaccine and is working with a team of existing and new contract manufacturers to scale up the manufacturing capacities. These relationships have helped Inovio expedite vaccine development, access untapped resources and prepare to massively scale up our device and plasma manufacturing processes to potentially create hundreds of millions of INO-4800 doses to satisfy the urgent global demand for a safe and effective vaccine. We plan to update you in more detail in the coming months.

To speak more on our infectious disease experience and where we are with INO-4800, I would now like to turn the call over to Dr. Kate Broderick. Kate?

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Kate E. Broderick, Inovio Pharmaceuticals, Inc. - SVP of Research & Development [4]

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Thank you, Joseph, and good afternoon, everyone. It's a pleasure to be here today. As Joseph expressed during his opening remarks, our team has been exceptionally productive during these exceptionally challenging times. And I'm so honored to be working with such a brilliant and dedicated team. Our dedication alongside our infectious disease expertise and preexisting collaborations have allowed us to be in a position to rise to this emerging public health challenge, being one of the first and few companies to be initially called on to develop a vaccine. In fact, when we first embarked on this development back in January, the name COVID-19 didn't exist, and the virus, in fact, was not deemed a pandemic for another 5 to 6 weeks. And yet here we are, nearly 4 months later, and I'm very pleased to share with you our progress to date on our COVID-19 DNA vaccine and what you should expect to see over the next few months.

In 83 days, we went from a vaccine design to first human dosing. That is a remarkable speed. And last month, we completed the first of 2 doses in all 40 healthy volunteers in our Phase I clinical study with INO-4800 against COVID-19 disease. For this Phase I study, we enrolled at sites at the University of Pennsylvania and a clinic in Kansas City, Missouri. As of today, we are on track for all 40 volunteers to complete the second round of dosing by the last week of May. After which, we expect to have preliminary safety and immunogenicity data by late June in support of advancing rapidly to Phase II/III efficacy trial which is planned to potentially initiate in the July, August time frame and frontline health care workers in multiple major medical centers in the U.S.

Concurrently, we also expect our partners Advaccine and IVI to initiate 2 separate Phase I clinical trials of INO-4800 this summer in China and South Korea, respectively. Speaking of our previous MERS vaccine work, we will be presenting new positive data from our Phase I/IIa trial providing a great foundation for the current COVID-19 work at the American Society of Gene and Cell Therapy Conference this week. As already published in the conference abstract, for the study participants receiving the 0.6 mg of INO-4700 intradermally with the CELLECTRA device, 88% demonstrated 0 conversion after 2-dose regime at 0 and 8 weeks, while those receiving a 3-dose regime giving at 0, 4 and 12 weeks, 84% 0 converted after 2 doses and 100% after 3 doses as measured by a binding antibody assay against the full-length spike protein. Additionally, 92% of the vaccine recipients in both groups displayed the ability to neutralize the virus using a neutralization assay. Robust T cell responses were observed in 60% of the vaccine recipients after the 2-dose regime, and 84% of those in the 3-dose group. Interestingly, after a single dose of 0.6 mg of INO-4700, intradermal vaccination resulted in 74% binding antibody response rates and 48% neutralizing antibody response rate. We have designed our COVID-19 vaccine, INO-4800, using the same strategy as we did for INO-4700, including the selection of the full-length spike protein as the target and the use of intradermal CELLECTRA delivery device. We are both hopeful and optimistic that the ongoing Phase I clinical trial with INO-4800 who generate a similar level of clinical immune responses and safety data as we have just reported for INO-4700. Furthermore, this latest data demonstrated both the power of the intradermal delivery and the strength of our coronavirus experience. Furthermore, I'm really proud to say that while Inovio has been able to bring a new vaccine from construct design to Phase I clinical trials in record times, we were still able to confirm the robust immune responses of INO-4800 in multiple animal models that we typically test all our vaccine candidates in, including small animals, all the way up to nonhuman primates. In fact, our preclinical data has been accepted for a peer-reviewed publication in Nature Communications, demonstrating robust T and antibody responses, including neutralization antibody responses in several animal models with INO-4800 vaccination. Over the next couple of months, we will also expect to attain and report data from several animal challenge studies being conducted collaboratively at some of the world's leading laboratories.

Leveraging these preclinical results and continued work with our animal challenge studies, along with our expected Phase I data in June, we anticipate having the necessary immune response and safety data to support our plan to move into a large, randomized Phase II/III efficacy study.

And finally, another important advantage of Inovio's platform technology I wanted to state here is that our DNA vaccines do not require the challenging deep frozen cold chain storage. In fact, our vaccines are stable at room temperature for at least 1 year. And for 5 years at 2 to 8 degrees Celsius, which, of course, is normal refrigeration temperature.

In comparison, most messenger RNA and viral vector vaccines are not temperature stable and are often have to be maintained in a freezer cold chain as low as minus 80 degrees Celsius. This is an important differentiator and key advantage of Inovio DNA vaccines.

And with that, I'll now turn it back over to you, Joseph. Thank you.

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J. Joseph Kim, Inovio Pharmaceuticals, Inc. - CEO, President & Director [5]

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Thank you, Kate. Appreciate that update, really amazing work. Again, I can't thank you and the team enough for all the dedication and hard work that you have been doing in the midst of this pandemic. To reiterate, we are aiming to be in a Phase II/III efficacy study by the July, August time frame, where we will be targeting health care workers on the front line. We estimate the high side of the study size to be around 2,000 health care workers and our capable regulatory and clinical operations teams are confident that we could fully enroll this number of participants in about 1 month. Again, the actual size of the study will largely depend on the infection rate at that time. In addition to our plan to determine the true efficacy of our vaccine in a large well designed, randomized Phase II/III study we're also planning to pursue the Emergency Use Authorization path to achieve emergency approval of INO-4800. We plan to utilize immunogenicity and safety data from our Phase I trial as well as from an early subset of Phase II/III participants, along with our anticipated preclinical efficacy data from our ongoing animal challenge studies to form our EUA submission being planned for potentially fourth quarter of this year.

Now let's move our update to our mid- and late-stage clinical programs. In fact, in less than 48 hours from now, the overall survival at 12 months data for our INO-5401 immunotherapy in 52 newly diagnosed GBM patient study will be available to the public as our abstract has been accepted for presentation at ASCO. Abstracts will be available this Wednesday at 5:00 p.m., followed by a virtual presentation at the end of this month. We had previously presented very exciting progression-free survival at 6 months in this study last winter. So naturally, I know you are all really excited to see this early promising data fully translate to the OS12 data. You will not have to wait too long for this data.

Before I turn the call over to Prakash for an update on VGX-3100, I want to provide a brief update on INO-3107, which targets the rare orphan HPV-associated disease, RRP, or recurrent respiratory papillomatosis. Given the progressive nature of this rare, debilitating and potentially life-threatening disease, patients are eager for an alternative treatment so they can avoid repeated invasive surgery.

As we stated in our last call, the FDA accepted Inovio's IND application to evaluate INO-3107 in a Phase I/II trial for the treatment of RRP. We expect to enroll approximately 63 patients in this Phase I/II trial to evaluate the efficacy, safety, tolerability and immunogenicity of INO-3107 in patients with high-risk HPV-6 and/or 11 associated RRP and who have needed at least 2 surgeries annually for the last 3 years or to remove the papilloma tumors. While the COVID-19 pandemic has thrown a curveball at this trial, we anticipate to begin dosing patients this summer.

So we have so much to look forward to the summer on top of our progress in INO-4800. Now I'd like to turn over the call to Dr. Prakash Bhuyan, M.D., Ph. D, who will provide an update on multiple targets and studies we have ongoing for VGX-3100. Prakash?

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Prakash Bhuyan, [6]

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Thank you, Joseph, and hello, everyone. As you know, our lead asset is VGX-3100, which targets HPV-associated diseases. Despite the negative impact of COVID-19 upon our clinical programs, we still plan to report top line efficacy data from REVEAL 1, which is our pivotal Phase III trial for HPV-related high-grade cervical dysplasia patients and that will be in the fourth quarter of this year. For REVEAL 2, recruitment is still underway at our sites around the world, and the COVID-19 pandemic has certainly had an impact upon our patient recruitment since March. We are hopeful in getting back to the pre-pandemic rates as soon as possible as various countries and regions begin to open back up.

As a reminder, REVEAL 2 has the same design and target patient enrollment of 198 subjects as in REVEAL 1. The main difference is the safety follow-up time of 1 month for REVEAL 2 versus 1 year for REVEAL 1.

Turning now to our positive interim data that we reported in March at ASCCP. We continue to validate the broader applicability of VGX-3100 and our HPV platform in general. So specifically, in our Phase II trial in anal dysplasia, we've reported that of the 20 patients with data available, 50% showed clearance of their HPV-16/18 positive precancerous lesions and 75% of the subjects showed a reduction in the HPV-16/18 positive precancerous lesion number just 6 months after the first dose. We do believe these data are extremely encouraging. Not only do they build upon the previously reported efficacy in our cervical dysplasia Phase IIb trial. But as further context to this, only 1 in 5 people with HPV-16 associated precancerous dysplasia would be expected to exhibit spontaneous resolution at 1 year.

Without adequate treatment, precancerous anal dysplasia would typically progress to anal cancer. Having a DNA medicine that can clear these lesions without the burden of repetitive, multiple and painful surgical or invasive treatments would change the standard of care and provide patients with a true meaningful benefit. Demonstrating VGX-3100's broad applicability, we also reported encouraging Phase II initial data in our vulvar dysplasia trial, where 12 of the 22 subjects completed their primary endpoint evaluation at 6 months following the treatment with VGX-3100.

The results were shared at ASCCP in March and demonstrated that 80% of treated women had an overall decrease in the lesion area 6 months after treatment. Two trial subjects completely resolved their HPV-16 vulvar dysplasia. And to put this into context, spontaneous regression for these patients is expected to be very low, about 2% to 5% and typically takes 1 to 2 years.

So taken together, these data build the case for VGX-3100's broader potential to treat HPV-caused precancers and further proof-of-concept for our DNA medicine approach. We look forward to providing full study results for both the vulvar and anal precancers dysplasia trial later this year.

And with that, I'll turn it back over to you, Joseph.

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J. Joseph Kim, Inovio Pharmaceuticals, Inc. - CEO, President & Director [7]

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Great. Thank you, Prakash. Running a large global Phase III study is challenging enough. And working in the wake of a pandemic is unprecedented, you and your team have been truly rockstar through all this, showing your tireless dedication to work on providing a therapeutic alternative to surgery and improve the quality of life for these patients. Thank you again.

Now I will ask our CFO, Peter Kies, to provide a financial update. Peter?

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Peter D. Kies, Inovio Pharmaceuticals, Inc. - CFO [8]

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Thanks, Joseph, and good afternoon, everyone.

First, I will provide a summary of our capital resources for the first quarter of 2020. The company ended with 20 -- with $270 million in cash, cash equivalents and short-term investments as of March 31, 2020. To this cash position, we added an additional $121.7 million through the ATM in April. Given the uncertainties associated with the macro impact that the pandemic may have on the global economy, we have been both prudent and proactive in maintaining a strong financial position, providing Inovio with multiyears worth of cash runway.

As both Kate and Joseph mentioned during their prepared remarks, the company anticipates to continue to receive external funding to support Inovio's advancement of INO-4800.

Turning now to revenue and net income, or net loss in our case. We reported total revenue of $1.3 million for the 3 months ended March 31, 2020. Inovio's net loss for the quarter ended March 31, 2020, was $32.5 million or $0.26 per share basic and dilutive. Lastly, R&D expenses for the 3 months ended March 31, 2020, were $19.1 million compared to $24.4 million for the same period in 2019. The decrease in R&D expenses was primarily related to a decrease in employee compensation expenses due to lower employee head count accompanied by a decrease in clinical trial expense timing, and there was an increase in our contra R&D expense recorded from grant revenues. A complete summary of our financial statements for the first quarter of 2020 can be found in today's press release and in our Form 10-K filed with the SEC. This can also be accessed on our website under Investor Relations financial reports.

With that, I'll turn it back to you, Joseph. Thanks.

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J. Joseph Kim, Inovio Pharmaceuticals, Inc. - CEO, President & Director [9]

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Thank you, Peter. Before we turn to the analyst Q&A, I'd like to list all of the events we expect before our next earnings report in August. Here are the list: we expect to report on 12 months overall survival efficacy data from INO-5401 in GBM to be presented at ASCO in late May: Second, preliminary safety and immune responses data from our U.S. Phase I trial for COVID-19 vaccine INO-4800 in 40 healthy volunteers; next, data from our COVID-19 animal challenge studies; fourth, additional external funding to support INO-4800 development; fifth, either started or be poised to start our large, randomized Phase II/III efficacy trial upon regulatory approval; sixth, start of additional clinical trial for INO-4800 in China and in South Korea; seventh, start of patient dosing for Phase I/II clinical trial of INO-3107 to treat RRP, a lot of milestones to look forward to.

Now I look forward to taking your questions. Operator, please open the line for the analysts.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

Our first question today will come from Stephen Willey with Stifel.

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Stephen Douglas Willey, Stifel, Nicolaus & Company, Incorporated, Research Division - Director [2]

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I think, Joseph, you mentioned in your comments a couple of times regarding your ability to secure external funding. I believe there was a CEPI grant handed out to a competitive program here after market hours today. And that's obviously an organization that you have a pre-existing relationship with. They gave you, I think, $60 million for the MERS vaccine. So I'm not sure what you can say about the funding process itself, but I guess, anything you can say just with respect to active dialogues you may be having, whether this involves some kind of formal application process and to what extent the need to scale a device is potentially viewed as a rate-limiting step here by some of these agencies.

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J. Joseph Kim, Inovio Pharmaceuticals, Inc. - CEO, President & Director [3]

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Well, thanks, Steve. Great question. And I guess, a great thing for Novavax and CEPI. As I stated before, there are extensive amount of fundings available for promising vaccine candidates as we all have seen BARDA contracts to both J&J and Moderna and now CEPI funding to Novavax. There's probably at least $15 billion to $20 billion in total funding available in both BARDA and CEPI, and the Bill & Melinda Gates Foundation, each have said they will each support up to 5 or 6 for CEPI and BARDA's case. And both CEPI and BMGF both have stated that they will support up to 8 different candidates in rapid scale up. So I think there are -- congratulations to Novavax, and Moderna and J&J have already received theirs. So I think the potential of additional funding for Inovio, I think, is great. I do think there will be a total of 10 to 12 viable candidate vaccines, which will be heavily invested by these various funding agencies.

So as we make progress, I think the potential of Inovio's receiving these external funding, as we mentioned in our prepared remarks, is very good. Lastly, touching on your question about the devices. We received already funding from Bill & Melinda Gates Foundation earlier this year to help accelerate our commercial vaccine device, and we're on good track for doing that. So I don't believe the devices and arrays are going to be a rate limiter for us to both scale up and also receive this external funding.

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Stephen Douglas Willey, Stifel, Nicolaus & Company, Incorporated, Research Division - Director [4]

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Okay. That's helpful color. And you talked about the desire to pursue an Emergency Use Authorization path and I think maybe even referenced the submission here before the end of this year. Can you maybe just talk a little bit about how that process logistically works? And I believe the EUA is under the auspice of HHS, not FDA. So what kind of submission actually needs to be made? Is that analogous to, I guess, an NDA filing? Or how is that different, I guess, when you're submitting something to an agency that's outside of FDA?

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J. Joseph Kim, Inovio Pharmaceuticals, Inc. - CEO, President & Director [5]

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Yes. I mean certainly, the secretary of HHS has the authority to provide EUA authorization. But of course, the FDA reports through the HHS. So as we have seen numerously in therapeutics and diagnostics case, there's been dozens of EUAs provided for those 2 areas. For vaccines, there hasn't been any, ever. So the clarity on how and when those may occur, is something that we and our team, our regulatory team, our clinical team are working through. But here's what [Spence] communicated to us and others publicly. One is the vaccine has to demonstrate some level of safety and immune responses and especially if you can tie those immune responses to any challenge model data, if they're relevant. So I think we would be at Inovio to be in position with our Phase I primary data readouts in June with multiple animal challenge studies, including nonhuman primates, ferrets and mice to be reported in the next couple of months that we will be in a great position to collect those data, evaluate and prepare a proper submission to the FDA for an EUA. So I think the exact mechanism and the process will be clarified in the next couple of months, but we should be in a great position to apply for that.

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Operator [6]

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Edited Transcript of INO earnings conference call or presentation 11-May-20 8:30pm GMT - Yahoo Finance