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Inovio Pharmaceuticals, Inc. : Inovio Pharmaceuticals Reports 2012 Fourth Quarter and Year End Financial Results

03/18/2013 | 05:00pm US/Eastern
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BLUE BELL, Pa., March 18, 2013 /PRNewswire/ -- Inovio Pharmaceuticals, Inc. (NYSE AMEX: INO) today reported financial results for the fourth quarter and year ended December 31, 2012.

Total revenue was $1.1 million and $4.1 million for the quarter and year ended December 31, 2012, compared to $1.6 million and $9.8 million for the same periods in 2011.

Total operating expenses for the quarter and year and ended December 31, 2012, were $7.4 million and $27.6 million as compared to $7.4 million and $31.4 million for the same periods in 2011.

The net loss attributable to common stockholders for the quarter and year ended December 31, 2012, was $659,000, or $0.00 per share, and $19.7 million, or $0.14 per share, as compared with a net loss attributable to common stockholders of $5.5 million, or $0.04 per share, and $15.3 million, or $0.12 per share, for the quarter and year ended December 31, 2011.

Dr. J. Joseph Kim, Inovio's President and CEO, said, "In 2012 our DNA vaccines achieved two vital breakthroughs in human studies: best-in-class therapeutic immune responses displayed the desired killing effect against a targeted disease; broadly targeted universal vaccines generated protective immune responses against multiple unmatched strains of a pathogen. These were scientific firsts. Our current funding will carry us through additional important milestones, including efficacy data from our cervical dysplasia phase II study in Q1 2014."

Revenue

The decrease in revenue for the comparable periods was primarily due to timing of work performed under the company's contract with the National Institute of Allergy and Infectious Diseases (NIAID). This contract revenue amounted to $671,000 and $2.8 million for the quarter and year ended December 31, 2012, versus $1.4 million and $7.8 million for the same periods in 2011. This NIAID contract, which provides up to $25.3 million of funding over seven years, is facilitating Inovio's development of a universal, preventive HIV DNA vaccine, PENNVAX(®)-GP.

Operating Expenses

Research and development expenses for the quarter and year ended December 31, 2012, were $4.4 million and $18.0 million as compared to $4.2 million and $20.0 million for the same periods in 2011. General and administrative expenses for the quarter and year ended December 31, 2012, were $2.9 million and $10.8 million, compared to $3.3 million and $12.0 million for the quarter and year ended December 31, 2011.

Net Loss Attributable to Common Stockholders

The $4.4 million increase in net loss attributable to common stockholders for the year ended December 31, 2012, compared with the year ended 2011 resulted primarily from a significant (non-cash) change in fair value of common stock warrants, based on a required quarterly mark to market adjustment to reflect changes in the Company's stock price, the change in fair market value of our investment in VGX International, and a decrease in grant revenue.

Capital Resources

During the year ended December 31, 2012, the Company sold 9,344,611 shares of common stock under its ATM common stock sales agreement for net proceeds of $5.3 million.

As of December 31, 2012, cash and cash equivalents plus short-term investments in certificates of deposit, mutual funds, and municipal bonds were $13.8 million compared with $30.3 million as of December 31, 2011.

Subsequent to year end, the Company sold 8,222,966 shares of common stock under its ATM common stock sales agreement for net proceeds of $5.6 million.

On March 7, 2013, we closed an underwritten offering of 27,377,266 shares of our common stock and warrants to purchase an aggregate of up to 13,688,633 shares of common stock. The shares and warrants were sold in units at a price of $0.55 per unit, with each unit consisting of one share of common stock and a warrant to purchase 0.50 shares of common stock at an exercise price of $0.7936 per share. The warrants have a term of five and one-half years. The net proceeds, after deducting the underwriters' discounts and other estimated offering expenses, and assuming no exercise of the warrants, were approximately $14.0 million.

Based on management's projections and analysis, the Company believes that current cash and cash equivalents plus short-term investments are sufficient to meet its planned working capital requirements through 2014.

Inovio's balance sheet and statement of operations are provided below. Form 10-K providing the complete 2012 annual financial report can be found at: http://ir.inovio.com/secfilings.

Corporate Update

Clinical Development

Inovio's mission is to revolutionize vaccines by achieving critical capabilities: using synthetic non-replicating vaccines to not only prevent but treat cancers and infectious diseases, including enabling universal protection against multiple unmatched pathogen strains. In 2012, we reported important scientific and clinical breakthroughs on these fronts.

With respect to the treatment potential of our novel synthetic vaccines, we reported significant antigen-specific T-cell responses from our HIV-001 phase I study, which enrolled 12 adult HIV-positive volunteers to assess our PENNVAX®-B vaccine delivered with electroporation. These results affirmed best-in-class immune responses reported in 2011 from Inovio's HVTN-080 48-patient phase I study of PENNVAX-B in healthy volunteers.

We also reported that our SynCon® vaccine against cervical dysplasias/cancers (VGX-3100) achieved an industry first when T-cell immune responses induced by this vaccine, which have been previously reported as being best-in-class, were shown to generate a strong killing effect against cells targeted by this vaccine. Based on our advanced patient enrollment, we expect unblinded data from this 148-patient Phase II clinical trial in 1Q 2014.

With respect to the universal prevention capability of our vaccine platform, we reported that in a 60-patient phase I study our H1N1 influenza vaccine generated protective immune responses against the nine key H1N1 flu strains of the past 100 years, including the 1918 pandemic flu strain. None of these viruses were matched to the vaccine. These results added to previously reported results in which our H5N1 (avian) influenza vaccine construct generated significant immune responses against six different unmatched strains of H5N1 in a 17-patient phase I study. Together these results represent an industry first and an important step toward universal preventive and/or therapeutic capabilities against mutating pathogens as well as for cancers.

In 4Q, we reported interim results (two of three arms) of a 50-patient phase I trial showing that a single dose of our H1N1 universal SynCon® flu vaccine followed by a dose of a seasonal flu vaccine generated protective immune responses in 40% of trial subjects compared with a 20% response rate in elderly patients who received the seasonal flu vaccine alone.

We reported preliminary results of a phase II clinical trial, conducted by our collaborator University of Southampton, to treat leukemia with a DNA vaccine delivered with our proprietary electroporation delivery system. The data showed robust vaccine-specific antibody responses in all vaccinated subjects evaluated to date. T-cell immune responses, including "killer T-cells," were detected.

We expect to report in 1Q 2013 interim data of a phase II clinical trial, conducted by our collaborator ChronTech Pharma AB, treating hepatitis C virus with a DNA vaccine delivered with our proprietary electroporation delivery system in conjunction with a drug regimen.

Preclinical Development

Inovio announced that synthetic vaccines for influenza Type A H3N2 and Type B achieved protective levels of antibody responses in immunized animals against multiple unmatched strains from the years 2000 through 2012. Inovio intends to combine these two subtypes with its H1N1 SynCon® construct to create a universal vaccine intended to provide broad protection against existing and changing seasonal and pandemic influenza strains.

We reported that our synthetic hepatitis B therapeutic vaccine generated strong T cell responses that eliminated targeted liver cells in mice. These data were published in the peer-reviewed journal, Cancer Gene Therapy.

Our testing of multiple synthetic vaccine constructs for cytomegalovirus (CMV) induced robust T cells in mice. CMV is the most common viral infection in organ transplant recipients, is associated with cerebral palsy, brain tumors, numerous inflammatory diseases and cancers, and is implicated in hypertension. These data were published in the peer-reviewed journal, Human Vaccines & Immunotherapeutics.

Inovio scientists and collaborators demonstrated in animal models that optimized electroporation (EP) parameters of our new minimally invasive skin (intradermal) EP delivery devices using decreased current could generate stronger antibody and T cell responses to HIV and flu vaccine antigens in both guinea pigs and monkeys. These newly published optimized conditions, which enhance this delivery system as an attractive method for mass vaccination, appeared in the peer-reviewed journal, Human Gene Therapy.

Corporate Development

Inovio continues to advance discussions with large pharmaceutical companies with the goal of securing strategic partnerships to advance the development of SynCon® vaccines.

In 2012 Inovio expanded its existing license agreement with the University of Pennsylvania with worldwide rights to technology and intellectual property for novel synthetic vaccines against C. difficile (intestinal infections), Wilms' tumor gene (leukemia and various solid tumor types), and Ebola virus and the family of Filovirus such as Marburg (which could potentially be used in bioterror attacks).

Inovio received U.S. patents covering its synthetic consensus influenza H1 and cervical dysplasia/cancer SynCon® DNA vaccine constructs, adding to its patent estate of more than 400 worldwide granted and pending patents.

We were awarded a U.S. Department of Defense Small Business Innovation Research Grant to advance a low-cost, non-invasive surface electroporation delivery device and test its utility in combination with Inovio synthetic vaccines against viruses with bioterrorism potential.

Our VGX Animal Health subsidiary reported advancements for its growth hormone releasing hormone (GHRH) treatment focused on enhancing health and food production efficiency of farm animals. Previously approved in Australia, the Company was granted marketing approval in New Zealand for its high-dose plasmid therapy. The Company also reported that its new low-dose version of this therapy, LifeTide® SW 1.0, resulted in more live pigs per litter and higher birth and weaning weights.

About Inovio Pharmaceuticals, Inc.

Inovio is revolutionizing vaccines to prevent and treat today's cancers and challenging infectious diseases. Its SynCon® vaccines are designed to provide universal cross-strain protection against known as well as newly emergent unmatched strains of pathogens such as influenza. These synthetic vaccines, in combination with Inovio's proprietary electroporation delivery, have been shown in humans to generate best-in-class immune responses with a favorable safety profile. Inovio's clinical programs include Phase II studies for cervical dysplasia, leukemia and hepatitis C virus and Phase I studies for influenza and HIV. Partners and collaborators include the University of Pennsylvania, Merck, ChronTech, National Cancer Institute, U.S. Military HIV Research Program, NIH, HIV Vaccines Trial Network, University of Southampton, US Dept. of Homeland Security 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 pre-clinical studies and clinical trials may not commence or be completed in the time periods anticipated, 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, 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, 2012, 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.


                                                                                              Inovio Pharmaceuticals, Inc.

                                                                                               CONSOLIDATED BALANCE SHEETS


                                                                                                                                           December 31,
                                                                                                                                           ------------

                                                                                                                                    2012                         2011
                                                                                                                                    ----                         ----

                                                                        ASSETS

    Current assets:

    Cash and cash equivalents                                                                                                             $5,646,021                  $17,350,116

    Short-term investments                                                                                                     8,034,001                   12,863,420

    Accounts receivable                                                                                                          830,433                      467,909

    Accounts receivable from affiliated entity                                                                                    36,234                       38,406

    Prepaid expenses and other current assets                                                                                    471,328                      746,049

    Prepaid expenses and other current assets from affiliated entity                                                             887,167                      441,186

    Deferred tax asset                                                                                                            62,728                            -
                                                                                                                                  ------                          ---

    Total current assets                                                                                                      15,967,912                   31,907,086

    Restricted cash                                                                                                              100,410                      100,059

    Fixed assets, net                                                                                                            363,021                      295,785

    Investment in affiliated entity                                                                                           10,703,332                    9,071,513

    Intangible assets, net                                                                                                     7,489,315                    9,310,485

    Goodwill                                                                                                                  10,113,371                   10,113,371

    Common stock warrants                                                                                                        267,200                      100,000

    Other assets                                                                                                                 134,193                      208,262
                                                                                                                                 -------                      -------

    Total assets                                                                                                                         $45,138,754                  $61,106,561
                                                                                                                                         ===========                  ===========

                                                         LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

    Accounts payable and accrued expenses                                                                                                 $3,181,574                   $4,318,942

    Accounts payable and accrued expenses due to affiliated entity                                                               187,275                       20,344

    Accrued clinical trial expenses                                                                                            1,405,896                    1,059,372

    Common stock warrants                                                                                                      2,859,899                    5,176,319

    Deferred revenue                                                                                                             353,391                       79,502

    Deferred revenue from affiliated entity                                                                                      388,542                      388,542
                                                                                                                                 -------                      -------

    Total current liabilities                                                                                                  8,376,577                   11,043,021

    Deferred revenue, net of current portion                                                                                      88,609                       80,450

    Deferred revenue from affiliated entity, net of current portion                                                            1,586,694                    1,961,694

    Deferred rent                                                                                                                 65,076                       80,875

    Deferred tax liabilities                                                                                                     164,393                       78,859
                                                                                                                                 -------                       ------

    Total liabilities                                                                                                         10,281,349                   13,244,899
                                                                                                                              ----------                   ----------

    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, 2012 and

    December 31, 2011, respectively

    Common stock-par value $0.001; Authorized shares: 300,000,000,                                                               144,313                      134,968

    issued and outstanding: 144,313,005 at December 31, 2012 and

    134,968,394 at December 31, 2011

    Additional paid-in capital                                                                                               263,897,116                  257,235,707

    Accumulated deficit                                                                                                    (229,760,129)                (210,091,174)

    Accumulated other comprehensive income                                                                                        73,362                       35,393
                                                                                                                                  ------                       ------

    Total Inovio Pharmaceuticals, Inc. stockholders' equity                                                                   34,354,662                   47,314,894

    Non-controlling interest                                                                                                     502,743                      546,768
                                                                                                                                 -------                      -------

    Total stockholders' equity                                                                                                34,857,405                   47,861,662
                                                                                                                              ----------                   ----------

    Total liabilities and stockholders' equity                                                                                           $45,138,754                  $61,106,561
                                                                                                                                         ===========                  ===========

                                                                 Inovio Pharmaceuticals, Inc.

                                                             CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                     For the Years ended December 31,
                                                                                                     --------------------------------

                                                                                         2012                                  2011           2010
                                                                                         ----                                  ----           ----

    Revenues:

    License fee and milestone revenue                                                                $82,536                              $156,397                   $213,916

    License fee and milestone revenue from affiliated entity                          425,000                               411,459                     313,306

    Revenue under collaborative research and development                              152,467                                     -                          -

    arrangements with affiliated entity

    Grants and miscellaneous revenue                                                3,458,649                             9,227,401                   5,549,583

    Miscellaneous revenue from affiliated entity                                            -                                     -                      67,900
                                                                                          ---                                   ---                      ------

    Total revenues                                                                  4,118,652                             9,795,257                   6,144,705
                                                                                    ---------                             ---------                   ---------

    Operating expenses:

    Research and development                                                       17,984,825                            20,032,001                  13,256,606

    General and administrative                                                     10,778,359                            11,988,796                  12,108,261

    Gain on sale of assets                                                         (1,151,000)                             (587,000)                         -
                                                                                   ----------                              --------                        ---

    Total operating expenses                                                       27,612,184                            31,433,797                  25,364,867
                                                                                   ----------                            ----------                  ----------

    Loss from operations                                                         (23,493,532)                          (21,638,540)                 (19,220,162)

    Other income (expense):

    Interest and other income, net                                                    166,113                                34,285                     147,406

    Change in fair value of common stock warrants                                   1,982,620                             8,690,658                   2,403,924

    Gain (Loss) on investment in affiliated entity                                  1,631,819                            (2,390,498)                   (969,914)
                                                                                    ---------                            ----------                    --------

    Net loss                                                                     (19,712,980)                          (15,304,095)                 (17,638,746)

    Net loss attributable to non-controlling interest                                  44,025                                51,150                      24,950
                                                                                       ------                                ------                      ------

    Net loss attributable to Inovio Pharmaceuticals, Inc.                                       $(19,668,955)                         $(15,252,945)              $(17,613,796)
                                                                                                ============                          ============               ============

    Loss per common share-basic and diluted:

    Net loss per share attributable to Inovio                                                         $(0.14)                               $(0.12)                    $(0.17)

    Pharmaceuticals, Inc. stockholders


    Weighted average number of common                                             136,509,247                           126,239,336                 103,201,880

    shares outstanding-basic and diluted

CONTACTS:
Investors: Bernie Hertel, Inovio Pharmaceuticals, 858-410-3101
Media: Jeff Richardson, Inovio Pharmaceuticals, 267-440-4211

(Logo: http://photos.prnewswire.com/prnh/20120131/LA44118LOGO)

SOURCE Inovio Pharmaceuticals, Inc.

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