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Inovio Pharmaceuticals' (INO) CEO Joseph Kim on Q4 2015 Results - Earnings Call Transcript

Inovio Pharmaceuticals, Inc. (NASDAQ:INO)

Q4 2015 Earnings Conference Call


Bernie Hertel - Vice President, Investor Relations and Communications

Joseph Kim - President, Chief Executive Officer and Director

Peter Kies - Chief Financial Officer


Charles Duncan - Piper Jaffray

Thomas Shrader - Stifel Nicolaus

Jonathan Aschoff - Brean Capital, LLC

Jason McCarthy - Maxim Group

Yi Chen - H.C. Wainwright & Co., LLC


Greetings and welcome to the Inovio Fourth Quarter and Year-End 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session with analysts with research coverage on Inovio will follow the formal presentation. [Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bernie Hertel, Vice President, Investor Relations and Communications for Inovio. Thank you, Mr. Hertel. You may begin.

Bernie Hertel

Thank you. Good morning, ladies and gentlemen. Thank you for joining Inovio’s call today. Today’s call may contain certain forward-looking statements relating to our business, including our plans to develop DNA immunotherapies and electroporation-based delivery technologies, products and product candidates, as well as our capital resources. All of which involves certain assumptions, risks and uncertainties that are beyond our control and could cause actual results to differ materially from these statements.

Description of these risks can be found in the latest SEC disclosure documents and recent press release. These statements speak only as of today’s date and we undertake no duty to update or revise them.

Presenting today are Dr. J. Joseph Kim, Inovio’s President and CEO; and Peter Kies, our CFO. I will now pass the call over to Joseph.

Joseph Kim

Good morning, everyone. With our review of 2015 and a look ahead at 2016, you’ll see that we are executing on our strategies with multiple milestones coming to fruition this year. We think we are in an enviable position among development-stage biotech companies.

We have the cash, the products, the positive data, and the passion to deliver on our commitment to shareholders, regulators and patients with six major steps forward this year. While it is most pertinent to look ahead, we have had an outstanding year of accomplishing many things over the past 12 months.

Let me give you a brief review of 2015. Our highlights for the year were: a $735 million deal for our HPV related cancer product with MedImmune, AstraZeneca; our phase II HPV results were published in the Lancet; we advanced and substantially completed most of the major prep-work for our planned phase III study.

We also received more than $70 million in non-dilutive grants in the past 18 months, for a global HIV vaccine, Ebola vaccine, and vaccines and treatments for other diseases where our products have an advantage. For Ebola, we have already enrolled all 75 patients in the vaccines trial.

Our quick responses to outbreaks for MERS and Zika, the MERS trial has begun, we expect our Zika vaccine to be in people before end of the year. Our DNA-based monoclonal antibody application is advancing with great promise. Our dMAb as we call it, targeting dengue virus provided 100% protection against the lethal dengue virus challenge in laboratory animals. We reported the first data from our human study of HPV-related head and neck cancer showing robust antigen-specific CD8 killer T-cell responses.

And finally, we initiated clinical studies for prostate cancer, hepatitis B therapy with Roche, Ebola vaccine and MERS vaccine. What an active and successful year. And this morning, we announced another notable step in advancing our technology leadership. We are acquiring all assets from Bioject Medical Technologies, providing an Inovio with needle-less vaccine administration technology, that we will integrate with our new needle-less surface electroporation delivery technology.

We’re obtaining Bioject, which is a leader in non-invasive jet injection technology of $5.5 million in cash and stock for assets that include products and patents.

As a leader in next generation immunotherapy, we believe this integrated needle-free jet electroporation delivery approach is ideally suited to facilitate vaccination in large populations against ever-changing flu strains, RSV and emerging infectious diseases with unmet medical needs like Zika.

You can look at our press release with this morning or click on our website for more background on all of our 2015 activities. I will be pleased to also comment further on 2015’s activity and on this acquisition during the Q&A part of this call.

In 2016, Inovio will take six major steps forward. Those major advancements are initiating our Phase III HPV-related cervical dysplasia trial; number two, entering into a Phase II trial in cervical cancer for INO-3112 with MedImmune and EORTC; number three, launching our first combination studies in cancer with INO-3112 and MedImmune immuno-oncology molecules; number four, introducing a new cancer product to our pipeline; number five, reporting interim phase I cancer data from our prostate program and our hTERT study in breast, lung and pancreatic cancers; number six, recording vaccine results for our infectious disease pipelines, including Ebola, MERS and other viral threats.

Now, let’s start with our phase III trial for HPV-caused cervical pre-cancer.

Each year, in the United States and Europe, there are over 500,000 women newly diagnosed with late-stage pre-cancers caused by HPV-infection. Please remember, all cervical cancers arise from untreated late-stage dysplasia. With only surgery as a current treatment and nothing to eliminate the HPV that causes dysplasia, a major unmet need awaits Inovio’s products.

I am happy to report that all our preparations for phase III are coming together very well. One of the biggest steps scaling up DNA plasmid manufacturing with a commercial-scale CMO [ph] has gone according to plan. We have already manufactured our first GMP-grade production lot of VGX-3100. And we’re fully ready to produce more products commercially in our commercial scale facility.

Another key step was finalizing the industrial design and usability features of our newly-designed fully automatic and integrated CELLECTRA 5PSP device then scaling up manufacturing. Our optimized design for clinical use was completed. Manufacturing for phase III is also well-in-hand. These scaling our processes have also positioned Inovio for future commercial device production.

Our key remaining step is our end-of-phase-II meeting with the FDA. In this phase II face-to-face meeting, which is scheduled for early second quarter, we will, number one, review and discuss our phase II data; and number two, review the proposed trials design and endpoints for our phase III study. We will then incorporate the FDA comments and recommendations into our trial protocol. And we aim to initiate it in the third quarter.

We have also taken another important step to prepare for this phase III study. We’re pre-qualifying more than 100 clinical sites in more than 20 countries. We’ve selected a global CRO as our clinical partner. And lastly, we’re planning for commercialization. Our marketing team is conducting market pricing and payor research in preparation.

The second major key step involves our partner MedImmune. Together, we plan to advance INO-3112, our immunotherapy to attack HPV-caused cancers into a phase II study for cervical cancer. 3112 works by generating CD8 killer T cells that destroy tumor cells transformed by HPV16 or 18, which are responsible for more than 70% of HPV-caused cervical pre-cancers and cancers.

This study will involve the EORTC, a European organization that organizes major cancer studies in Europe. We will announce details of this study when it’s initiated. This event will trigger a significant phase II milestone payment from MedImmune to Inovio.

We expect our third key step in 2016 to also involve MedImmune. Medie and we will advance our INO-3112 vaccine into a human study of HPV-related cancers in combination with Medie’s immuno-oncology molecules.

Thought leaders have suggested that such combinations represent an important avenue to take patients’ response-rate beyond the 20% to 40%, typically achieved by checkpoint inhibitors used as monotherapy. We are talking about powerful one to punch.

MedImmune’s products and shutdown, in this case, cancers’ defensive shield to fend off T-cells, then our DNA immunotherapy can significantly raise the level of antigen-specific CD8 killer T-cells in the body they’re already enabled to pounce on the cancer cell. With the use of our cancer vaccine, rather than rely on just a handful of pre-existing soldiers, we can generate an army of T-Cells to perform the cancer-killing function.

Again details will be communicated when the study starts. This will be an important, very important step for Inovio’s immuno-oncology program. Stay tuned.

In the fourth step, we plan to introduce a new cancer indication for our pipeline. INO-5400 will be another fully defined product for late-stage cancer.

What we mean by fully defined is that it will be a multi-antigen cancer immunotherapy, plus a checkpoint inhibitor. This new assault on cancer will be the result of reviewing the 130 or so tumor types that have been characterized and narrowing that list down to four we will develop and targeting one we’ll take into the clinic this year.

We’re not ready to announce that indication yet for strategic reasons, but we plan to initiate this study by year-end. I will say that the target is a cancer with very rapid progression after diagnosis and no good treatment alternatives at this time. INO-5400 product will include our hTERT antigen as one of the antigens, as well as two other top antigens from our extensive screening that we’ve done in the last couple of years.

Moving on to our fifth major step is recruitment is progressing on both our prostate cancer trial and our hTERT trial in patients who have had breast, lung or pancreatic cancer. We expect to report interim data from these two important studies this year.

To our sixth major step, in 2016, you can expect to see various results from Inovio on challenging and fast moving emerging infectious diseases. For public health reasons, I could even say these results are essential.

Let me walk you through our infectious disease trial. With Roche as our partner, our hepatitis B phase I study for INO-1800 has opened more than 20 sites in the U.S. and in several countries in Asia-Pacific. For our HIV vaccine, PENNVAX-GP, the HIV vaccines trials network is currently running a study in healthy subjects.

PENNVAX-GP targets multiple-clades of HIV providing global coverage. This has been funded through a $25 million NIAID contract awarded to Inovio and its collaborators. Our enrollment is going extremely well in this 94-patient phase I study.

Last year, the NIAID awarded us and our collaborator an additional five-year $16 million grant to further the research on this vaccine. This work is ongoing.

Moving on to our Ebola program, which is funded through a $45 million DARPA grant, the phase I study assessing our DNA vaccine has completed enrollment of 75 healthy volunteers late last year. We will report on immunogenicity and safety data in the first-half of 2016.

The second element of this program is the advancement of our DNA based monoclonal antibody approach. These are - these so called dMAbs target a different immune mechanism and are highly complementary to our antigen generating products. They have potential value across all cancers and infectious diseases.

Our DARPA funded dMAb programs are achieving promising animal data and we expect to have multiple scientific publications highlighting our advancements in 2016. For MERS, we’re working with our Korean affiliate, GeneOne Life Sciences, to complete a phase-I trial at the Walter Reed Army hospital in Maryland. We already have positive data from three animal models and are well on our way to our goal of recruiting 75 participants in this human safety and immunogenicity trial.

There is much concern about Zika and Inovio is moving rapidly to develop a vaccine to combat this virus. In fact, Inovio is in the lead as the first company to manufacture a Zika vaccine, the first to have positive animal data. And we aim to be the first in humans with safety and immunogenicity trial to start by the year-end, if not, earlier.

You might ask why Inovio, why is Inovio ideally suited to respond to these emerging virus threats. There are three reasons. First, because our DNA vaccines are synthetic or man-made, you can design and develop them faster than vaccines developed using other technologies. Our manufacturing process uses well-prevalent fermentation technology with a low-hurdle in terms of costs and claims to manufacture initial of small batches for testing. But it is readily scalable to larger volumes to combat the outbreak.

Second, we can target multiple important antigens in a single shot. And our vaccine design is fundamentally...