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March 15, 2012 at 16:20 PM EDT
Inovio Pharmaceuticals Reports 2011 Fourth Quarter and Year-End Financial Results

BLUE BELL, Pa., March 15, 2012 /PRNewswire/ -- Inovio Pharmaceuticals, Inc. (NYSE AMEX: INO) today reported financial results for the fourth quarter and year ended December 31, 2011.

Total revenue was $1.6 million and $9.8 million for the quarter and year ended December 31, 2011, compared to $2.4 million and $6.1 million for the same periods in 2010.

Total operating expenses for the quarter and year ended December 31, 2011, were $7.4 million and $31.4 million as compared to $7.6 million and $25.4 million for the same periods in 2010.

The net loss attributable to common stockholders for the quarter and year ended December 31, 2011, was $5.5 million, or $0.04 per share, and $15.3 million, or $0.12 per share, as compared with a net loss attributable to common stockholders of $6.3 million, or $0.06 per share, and $17.6 million, or $0.17 per share, for the quarter and year ended December 31, 2010.

Revenue

Revenue from license fees and milestone revenue was $133,000 and $568,000 for the quarter and year ended December 31, 2011, compared to $146,000 and $527,000 for the quarter and year ended December 31, 2010.

Grant and miscellaneous revenue was $1.5 million and $9.2 million for the quarter and year ended December 31, 2011, compared to $2.2 million and $5.6 million for the same periods in 2010. The decrease for the comparable three-month periods was primarily due to a one-time $733,000 grant awarded in October 2010 under The Patient Protection and Affordable Care Act of 2010 ("PPACA"). The increase for the comparable annual period was primarily due to more revenue recognized from our contract with the National Institute of Allergy and Infectious Diseases ("NIAID"). This contract revenue amounted to $7.8 million for the year ended December 31, 2011, as compared with $4.1 million for the same period in 2010. This NIAID HIV Vaccine Design and Development contract, which exceeds $23.0 million over five years (plus two additional option years), is facilitating Inovio's development of a universal, preventive HIV synthetic vaccine, PENNVAX™-GP, focused on providing coverage against a broad set of global HIV sub-types.

Operating Expenses

Research and development expenses for the quarter and year ended December 31, 2011, were $4.2 million and $20.0 million as compared to $4.5 million and $13.3 million for the same periods in 2010. The increase for the annual period was primarily due to higher clinical trial costs related to multiple clinical studies, including the initiation of the Phase II study of Inovio's cervical dysplasia/cancer synthetic vaccine, VGX-3100, higher compensation and related expenses, and higher outside services for various ongoing research efforts.

General and administrative expenses for the quarter and year ended December 31, 2011, were $3.3 million and $12.0 million, compared to $3.1 million and $12.1 million for the quarter and year ended December 31, 2010.

Net Loss Attributable to Common Stockholders

The $2.4 million decrease in net loss attributable to common stockholders for the year ended December 31, 2011 compared with the year ended 2010 resulted primarily from the increase in grant revenue and increase in income related to the change in fair value of common stock warrants. This was offset by the increase in research and development expenses and the increase in loss related to the change in fair market value of our investment in VGX International as of December 31, 2011.

Capital Resources

As of December 31, 2011, cash and cash equivalents and short investments in certificates of deposit, mutual funds, and municipal bonds were $30.3 million, compared with $21.8 million as of December 31, 2010. This increase primarily resulted from the January 2011 and December 2011 financings, from which the Company received net proceeds of approximately $23.0 million and $3.7 million, respectively. The increase in capital was partially offset by expenditures related to research and development.

In December 2011, the Company completed an underwritten public offering relating to the sale and issuance of 7,699,712 units to certain institutional investors, consisting of 7,699,712 shares of common stock and warrants to purchase an aggregate of up to 5,774,784 additional shares of common stock. These units include the partial exercise of the underwriter's overallotment option of 962,465 additional units at the public offering price. The units, priced at $0.5195 per unit, consisted of one share of common stock and 0.75 of a warrant to purchase one share of common stock at a purchase price of $0.65. The Company received net proceeds from the transaction of approximately $3.7 million after deducting the underwriter's discounts and other offering expenses payable by the Company.

In January 2011, the Company entered into an investor purchase agreement with a single investor relating to the issuance and sale of units consisting of one share of common stock and a warrant to purchase 0.50 of a share of common stock for a total of 21,130,400 shares of common stock and warrants to purchase a total of 10,565,200 shares of common stock. The purchase price for the share and warrant unit was $1.15 per unit, with a warrant exercise price of $1.40 per share. The aggregate purchase price was $24.3 million, net proceeds to the Company of approximately $23.0 million after deducting the placement agent's fee and estimated offering expenses payable by the Company.

Based on management's projections and analysis, the Company believes that its cash and cash equivalents plus short term investments are sufficient to meet its planned working capital requirements into the third quarter of 2013.

The number of shares of common stock issued and outstanding was 134,968,394 as of February 21, 2012.

Corporate Update

Clinical Development

In 2011 Inovio reported multiple sets of clinical data providing important evidence of the immune stimulating capabilities of its novel synthetic vaccine platform:

  • While Inovio previously reported best-in-class T-cell immune responses in its phase I study of VGX-3100, Inovio's SynCon® therapeutic vaccine for cervical dysplasia and cancer caused by HPV, with 91% (10 of 11 subjects) in the highest dose group developing strong responses, the company also reported long-term durability of up to two years (at the latest time measured) in 7 of 8 (87%) evaluated patients following a fourth vaccination. Inovio is enrolling patients for its phase II clinical trial assessing the vaccine in women with CIN 2/3 or CIN 3 cervical dysplasias, the stages of abnormal cells preceding cervical cancer. The company expects to enroll 148 patients in 25 study centers in the U.S., South Korea, South Africa, Australia, and Canada. Data is expected in the second half of 2013.
  • Best-in-class immune T-cell responses were also observed in the final data from a phase I clinical study of Inovio's PENNVAX™-B, its product for the prevention of the HIV sub-type prevalent in the US and Europe. The investigators in this study concluded that PENNVAX™-B + IL-12 plasmid delivered via electroporation led to frequencies and magnitudes of cellular immune responses equal to or greater than those reported from current vector-based HIV vaccines such as adenovirus or traditional DNA vaccination without electroporation. T-cells are considered vital to treating diseases such as HIV and cancers. Inovio is planning for additional clinical studies of this HIV synthetic vaccine.
  • Inovio reported significant antibody responses from multiple studies. In its study of VGX-3100, 15 of 18 vaccinated subjects (83%) developed antibody responses to at least one antigen with most subjects developing responses to two or more antigens. In its phase I study of VGX-3400X, its vaccine candidate against H5N1 (avian) influenza, the vaccine generated high levels of antigen-specific binding antibodies in 27 of 28 evaluated subjects (96%).
  • In a second component of the study, 10 of 20 subjects (50%) exhibited a four-fold or greater rise in geometric mean titers (GMT) in the HAI assay (ranging from 1:20 to 1:80 HAI titers) against the Clade 1 A/Vietnam/1203/04 strain. Significantly, a four-fold or greater rise in GMT titers against five other H5N1 virus strains was also noted in 10-25% of the vaccinated subjects, demonstrating the potential to provide universal protection against unmatched, changing pathogen strains. A four-fold rise in HAI titers, compared to pre-vaccination, is considered an important indicator of immune activation. An HAI titer of 1:20 is generally regarded as a positive vaccine response; 1:40 or higher is generally associated with protection against influenza in humans. Additional data from this study is expected around the end of the first quarter and interim data from Inovio's second phase I influenza study, for INO-3510, a SynCon® vaccine for H1N1 and H5N1 influenza, is expected in the second quarter.

In other ongoing clinical studies:

  • The University of Southampton, an Inovio collaborator, is enrolling patients in its phase II clinical trial of its DNA vaccine to treat chronic myeloid leukemia and acute myeloid leukemia using Inovio's electroporation delivery system. Interim data is expected in the second half of 2012.
  • ChronTech Pharma AB is enrolling patients in its phase II clinical study of its ChronVac-C® DNA vaccine for hepatitis C virus (HCV) delivered with Inovio's proprietary electroporation DNA vaccine delivery technology in combination with standard of care. Interim data is expected in the second half of 2012.

In reported results to date, these vaccines delivered using electroporation were found to be generally safe and well tolerated at all dose levels. Reported adverse events and injection site reactions were mild to moderate and required no treatment.

Preclinical Development

Inovio reported that its INO-5150 SynCon® therapeutic vaccine for prostate cancer showed sustained, strong, antigen-specific T-cell responses in monkeys. The level of T-cell responses was similar to those observed in a previous monkey study of Inovio's VGX-3100 cervical dysplasia/cancer vaccine, which is now in phase II. The multi-antigen INO-5150 was designed to help the body's immune system overcome its "self-tolerance" of cancerous cells. Inovio plans to start a phase I clinical trial mid-year 2012.

Inovio announced compelling immune responses in a study in sheep of its multi-subtype synthetic vaccine for foot-and-mouth (FMD) disease. Strong protective neutralizing antibodies were also previously observed in pigs vaccinated with the same vaccine. Inovio's synthetic DNA vaccine cannot cause the disease, unlike today's FMD vaccines, providing a safe approach to potentially protect against FMD and reduce its serious impact on global food supply and commerce. Under the CRADA mentioned under Corporate Development, Inovio and DHS scientists are assessing the potency of the vaccine candidates in neutralizing the infectivity of the virus and their efficacy in live virus challenge experiments.

Subsequent to year end, Inovio announced that synthetic vaccines for influenza Type A H3N2 and Type B achieved protective antibody responses in immunized animals against multiple unmatched strains from the years 2000 through 2012, with HAI titers exceeding the 1:40 level considered to be protective in humans. These two subtypes represent the additional subtypes that Inovio intends to combine with its H1N1 SynCon® construct to create a universal vaccine intended to provide broad protection against existing and changing seasonal and pandemic influenza strains.

Corporate Development

In 2011 Inovio expanded its existing license agreement with the University of Pennsylvania, adding exclusive worldwide licenses for technology and intellectual property for novel synthetic vaccines against prostate cancer, CMV (cytomegalovirus), malaria, hepatitis B, RSV (respiratory syncytial virus), and MRSA (methicillin-resistant staphylococcus aureus) as well as a new optimized IL-12 cytokine gene adjuvant.

Inovio entered into a Cooperative Research and Development Agreement (CRADA) with the United States Department of Homeland Security Science and Technology Directorate Plum Island Animal Disease Center to evaluate the efficacy of its synthetic vaccines for foot & mouth disease in animal models.

Inovio also established a product development agreement with its affiliate, VGX International Inc., to co-develop Inovio's SynCon® therapeutic vaccines for hepatitis B and C infections. VGX will receive marketing rights for these vaccines in Asia, excluding Japan, and in return will fully fund IND-enabling and initial phase I and II clinical studies.

The company expanded its scientific advisory board with the appointment of two prominent leaders in the fields of vaccines and cancer immunotherapeutics: Dr. Thomas S. Edgington, Emeritus Professor of the Scripps Research Institute; and Dr. Philip D. Greenberg, Professor of Medicine (Oncology) and Immunology, Department of Medicine, University of Washington. Subsequent to the year end, the company also added Dr. Anthony Ford-Hutchinson, who has over 30 years' experience in vaccine development and commercialization and was formerly at Merck and Co.

Subsequent to year end, Niranjan Y. Sardesai, Ph.D., was promoted to Chief Operating Officer from Senior Vice President Research and Development. Dr. Sardesai is now responsible for corporate and business development in addition to overseeing research and development

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, 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.

CONTACTS:


Investors:

Bernie Hertel, Inovio Pharmaceuticals, 858-410-3101

Media:

Jeff Richardson, Richardson & Associates, 805-491-8313



Inovio Pharmaceuticals, Inc.

CONSOLIDATED BALANCE SHEETS



December 31,


2011

2010

ASSETS



Current assets:



Cash and cash equivalents

$17,350,116

$19,998,489

Short-term investments

12,863,420

1,846,271

Accounts receivable

467,909

32,887

Accounts receivable from affiliated entity

38,406

72,149

Prepaid expenses and other current assets

746,049

273,975

Prepaid expenses and other current assets from affiliated entity

441,186

653,436

Total current assets

31,907,086

22,877,207

Restricted cash

100,059

Fixed assets, net

295,785

276,795

Intangible assets, net

9,310,485

11,180,002

Goodwill

10,113,371

10,113,371

Investment in affiliated entity

9,071,513

11,360,888

Common stock warrants

100,000

Other assets

208,262

259,128

Total assets

$61,106,561

$56,067,391

LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:



Accounts payable and accrued expenses

$4,318,942

$3,410,610

Accounts payable and accrued expenses due to affiliated entity

20,344

1,680,947

Accrued clinical trial expenses

1,059,372

178,328

Common stock warrants

5,176,319

370,926

Deferred revenue

79,502

420,897

Deferred revenue from affiliated entity

388,542

375,000

Total current liabilities

11,043,021

6,436,708

Deferred revenue, net of current portion

80,450

72,780

Deferred revenue from affiliated entity, net of current portion

1,961,694

2,336,694

Deferred rent

80,875

67,112

Deferred tax liabilities

78,859

53,186

Total liabilities

13,244,899

8,966,480

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, 2011 and December 31, 2010, respectively

Common stock—par value $0.001; Authorized shares: 300,000,000, issued and
outstanding: 134,968,394 and 105,038,192 at December 31, 2011 and December 31, 2010, respectively

134,968

105,038

Additional paid-in capital

257,235,707

241,233,334

Accumulated deficit

(210,091,174)

(194,838,229)

Accumulated other comprehensive income

35,393

2,850

Total Inovio Pharmaceuticals, Inc. stockholders' equity

47,314,894

46,502,993

Non-controlling interest

546,768

597,918

Total stockholders' equity

47,861,662

47,100,911

Total liabilities and stockholders' equity

$61,106,561

$56,067,391




Inovio Pharmaceuticals, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS



For the Years ended December 31,


2011

2010

2009

Revenues:




License fee and milestone revenue

$156,397

$213,916

$4,929,309

License fee and milestone revenue from affiliated entity

411,459

313,306

18,222

Revenue under collaborative research and development arrangements

125,996

Grants and miscellaneous revenue

9,227,401

5,549,583

4,005,719

Miscellaneous revenue from affiliated entity

67,900

40,865

Total revenues

9,795,257

6,144,705

9,120,111

Operating expenses:




Research and development

20,032,001

13,256,606

9,408,457

General and administrative

11,988,796

12,108,261

13,669,409

Gain on sale of assets

(587,000)

Total operating expenses

31,433,797

25,364,867

23,077,866

Loss from operations

(21,638,540)

(19,220,162)

(13,957,755)

Other income (expense):




Interest and other income, net

34,285

147,406

30,329

Change in fair value of common stock warrants

8,690,658

2,403,924

(1,286,884)

Loss from investment in affiliated entity

(2,390,498)

(969,914)

(9,244,614)

Net loss

(15,304,095)

(17,638,746)

(24,458,924)

Net loss attributable to non-controlling interest

51,150

24,950

47,439

Net loss attributable to Inovio Pharmaceuticals, Inc.

$(15,252,945)

$(17,613,796)

$(24,411,485)

Loss per common share—basic and diluted:




Net loss per share attributable to Inovio Pharmaceuticals, Inc. stockholders

$(0.12)

$(0.17)

$(0.33)

Weighted average number of common shares outstanding—basic and diluted

126,239,336

103,201,880

74,714,138




SOURCE Inovio Pharmaceuticals, Inc.

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