Inovio Pharmaceuticals, Inc.
Q1 2015 Earnings Call Transcript

Published: 11 May 2015

[Operator:]

Greetings and welcome to the Inovio Pharmaceuticals Inc. First Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Bernie Hertel, Vice President of Investor Relations and Communications for Inovio Pharmaceuticals. Please go ahead, sir.

[Bernie Hertel:]

Thank you. Good morning, ladies and gentlemen. 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, as well as our capital resources. Please keep in mind that actual events or results may differ from the expectations discussed 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 on the call may not be indicative of results achievable in other trials and studies, and trials may not achieve the results desired, and they may not commence or be completed in the time periods anticipated. There may also be risks related to collaborative arrangements, including the timing and receipt of payments, the availability or potential availability of alternative therapies for the conditions targeted by the company or its collaborators, issues involving product liability, issues involving patents, the adequacy of our capital resources, the impact of government healthcare proposals, and other factors set forth in our Annual report on Form 10-K for the year 2014, our 10-Q for the quarter ended March 31, 2015, and other regulatory filings from time to time. Finally, there can be no assurance that any product in Inovio's pipeline will be successfully developed or manufactured, and 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 will be proven accurate. Now, Inovio's President and CEO, Dr. J.Joseph Kim.

[J. Joseph Kim:]

Thank you, Bernie. Good morning, everyone. In the first quarter of 2015, Inovio set in motion several key activities that could benefit not only our investors, but human health globally, based on Inovio's immunotherapy. Centered are these five Inovio initiatives launched just in the past few months. First, Inovio raised $87.4 million, primarily to fund our upcoming Phase III trial for VGX-3100, our therapy that demonstrated regression of a cervical pre-cancer and elimination of the HPV virus, the cause of the condition that quickly may lead to cervical cancer. Second, in partnership with Roche, we initiated a clinical trial to treat those infected with hepatitis-B virus, and received a $3 million milestone payment for reaching this important milestone. Third, in a small sample preliminary view, we revealed that our therapy for HPV-caused head-and-neck cancer generated robust cancer-killing T-cell immune responses. Fourth, we received a $60 million government grant to further develop our DNA-based HIV vaccine. Finally, in the first quarter of this year, Inovio was selected by the U.S. government to lead a $45 million program to produce and test a preventive Ebola vaccine and a DNA-based monoclonal antibody to treat those already infected. This is an impressive yet also seemingly diverse set of accomplishments. You might ask, how do they fit into Inovio's corporate strategy? Let me take a few moments to discuss this. Our vision is to develop and commercialize targeted DNA-based immunotherapy to fight cancers and infectious diseases. The progress we have seen with the advancement of immunotherapy focused on certain immune-modulating mechanisms has been exciting and clearly validates the important role and the potential of activating T cell. Despite the successes, many analysts have noticed that we have, though really, scraped – just scraped the surface. There's certainly one key stroke coming among all the capabilities that are being advanced. That is, the ability to safely activate antigen-specific killer T-cells in vivo or in the body in a manner that may function strongly as a monotherapy, or in combination with other immune-modulating mechanisms. To create some context, there are mechanisms that inhibit cancer cells' ability to neutralize the killer T-cells that are hunting them down. There are mechanisms that manufacture vast quantities of T-cells outside the body by risk-inducing, significant, detrimental inflammatory responses in the body. To be technical for a brief second, the most natural and powerful killer T-cell immune responses occur by having a significant antigen present visible through the NAC (5

[Peter D. Kies:]

Thank you, Joseph. Good morning, everyone. Total revenue was $5.2 million for the (21

[J. Joseph Kim:]

Thank you, Peter. Let me end with my point of view on the broader significance of our recent steps. First, we are pleased to have been able to share the first cancer data from our DNA-based immunotherapy technology. We believe we have a vital role to play in securing the unrealized potential to treat cancers better. Second, we are moving proactively. Along with creating new antigen-targeting immunotherapy, we are constantly seeking additional application and refinement of our core DNA plasmid and electroporation delivery platform. Our new DNA-based monoclonal antibodies are one example. We have notable disease targets and other immune-modulating mechanisms that we are pursuing with this application, and we look forward to reporting our progress in the future. Third, this secured over $130 million in government awards to support Inovio programs in the past six years alone. These monies are very helpful in minimizing dilution and advancing our core technology and products. Fourth, we have clearly shown our capabilities to secure and advance valuable collaborations and partnerships. Roche entrusted Inovio to secure the FDA approval of our IND and conduct the hepatitis B Phase I study. We now look forward to enrolling patients in this study rapidly. It's an important disease and huge commercial opportunity. These types of relationships do bring validation and valuable resources. We are fully committed to securing additional grants, collaborations, and partnerships, and look forward to further steps forward on this front. Finally, we have all the necessary resources to advance VGX-3100 into Phase III and are on track to move this lead programming to the clinic early next year. To close today, we have completed a solid first quarter for Inovio to kick off what I expect would be another year of successful execution on our strategies to commercialize DNA-based immunotherapies to treat cancer and challenging infectious diseases. Now, thank you very much, and I'm now ready for questions that you may have.

[Operator:]

Thank you. At this time, we'll be conducting a question-and-answer session. We invite analysts to ask questions at this time. Our first question comes from the line of Charles Duncan with Piper Jaffray. Please proceed with your question.

[Charles C. Duncan:]

Hey. Good morning, guys. And first of all, congrats on a good quarter of progress and thanks for taking the questions. Joe, my first question is regarding the VX-3100 (sic) [VGX-3100] (29

[J. Joseph Kim:]

Yes. Absolutely. All of these details will be finalized probably by early fall or late summer when we actually have the end of Phase II meeting with the FDA to formally discuss all these conditions, but we expect the size of our Phase III trials to be approximately 350 patients. There'll be one-to-one randomization, and there will be multiple endpoints to be looked at similar to our Phase II studies, the regression of CIN2/3 down to normal, full complete clearance, as well as the elimination of HPV virus from the cervical area, as well as perhaps even the rest of the body cavities as well where HPV virus can lurk. So, we expect to launch the study in early 2016. We are fully on track for that. And we expect the total study length to be about two and a half years. And it's – we're very excited to get this first Phase III trial for Inovio immunotherapy going as soon as possible.

[Charles C. Duncan:]

And, Joe, I realize that you still need to give that FDA (30

[J. Joseph Kim:]

Yeah, second thing first – second question first, yeah. I agree with you with the efficacy data hand, the enrollment will be much more accelerated than what we had experienced for Phase II where we went in without any efficacy data. So, obviously, we want to get it done as soon as possible. We like to project less and deliver more. As far as the FDA, we are going by the assumption that this will be the physician (32

[Charles C. Duncan:]

That's helpful, Joe. And last question for me, particularly with the HPV. I'm wondering if you could (32

[J. Joseph Kim:]

Yes, absolutely. So, head and neck – so we have pilot studies for head and neck, and the cervical cancer. Last month, we were able to analyze the first four patients, their immune responses data, and we were very pleased to see that three patients out of four first patients from the study generated a CD8 T-cell responses against HPV 67 antigen, similar to the level that were similar and robust as what we have seen in our 150-patient Phase II cervical pre-cancer study. So, that what this can add is we can translate our data from the pre-cancer patients to cancer patients, so we're quite excited about this. We're enrolling – we're still enrolling these patients, and we look forward to presenting a larger set of immune responses data. Safety data, thus far, have been excellent. So, we continue to show strong safety signal from our programs. And up to now, we have treated over 550 patients across different trials that we have ran, and we haven't seen any concerning safety signal. So, knock on wood, we're very excited about that as well. How are we going to roll into a larger IIb or Phase III study for head-and-neck is to evaluate what are the T-cell levels that we can generate. And then we'll go into more survival-based trials after learning what we can from this 20-patient pilot study. So, we're just on track as what we had wanted to be. We're exactly where we would like to be, so very excited about our head-and-neck INO-3112 program. Similarly with cervical cancer, so we have multiple shots on goal in cancer that we will be able to present to the market in the next several quarters.

[Charles C. Duncan:]

Thanks for the added color, Joe.

[J. Joseph Kim:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Brian Klein with Stifel. Please proceed with your question.

[Brian J. Klein:]

Great. Thank you very much. Just wondered if you could elaborate a little bit more on your efforts of combining your various vaccines with some of the checkpoint inhibitors, including ones that are now on the market and commercialized?

[J. Joseph Kim:]

Yeah. Thank you, Brian. We have ongoing pre-clinical evaluation of these programs. And I don't want to scoop our own publication that we're planning, but a combination of our DNA immunotherapies with checkpoint inhibitors that's on the market were similar versions of that for pre-clinical studies. We're able to adequately (36

[Brian J. Klein:]

Great. Thanks. And just one final question on the prostate cancer study you're planning on. Can you talk about the patient population you're planning to go after and what concomitant therapies the patients will be on?

[J. Joseph Kim:]

So, we haven't really talked about this in greater length, but it'll be healthier patients in biochemical relapse. They will have – they would have had received surgery or chemoradiation prior to this. They would have rising PSA levels and we'll be able to track that as a biomarker, as well as to generate the safety and T-cell immune responses in these patients overall rapidly. And our goal will be to go into a later-stage patients in the follow-up trial, where we will certainly measure the survival and overall benefits, anti-cancer effects.

[Brian J. Klein:]

Great. Thanks so much.

[J. Joseph Kim:]

Thank you, Brian.

[Operator:]

Thank you. Our next question comes from the line of Jonathan Aschoff with Brean Capital. Please proceed with your question.

[Jonathan M. Aschoff:]

Thanks. Hi Joe, I was looking for some clarity surrounding what'll be the most important topics at the end of Phase II meeting for VGX-3100. How much of it is nine-month efficacy? How much of it is 21-month efficacy? Because it's really hard to imagine that the safety differential from 9 months to 21 months matters, given that no patient received VGX-3100 for months before even a 9-month assessment. And water and naked DNA that encodes open reading frames for antigens already heavily present in the patient, it doesn't exactly strike me as a safety concern ever. So, what exactly is going to go on at that meeting?

[J. Joseph Kim:]

Yeah. So, thank you, Jonathan. The 21 months, that's the set of (40

[Jonathan M. Aschoff:]

Okay. Joe, what is known about the spontaneous remission rates for these patients? Is it either early on or never, or is it kind of constant, more or less, over time?

[J. Joseph Kim:]

I think it's more dynamic. So – and also, it's also a question of spontaneously, their base immune system can clear. That's why even clearance to normal in our placebo group was approximately 17% compared to over 40% for our treated group. So, what we're doing is we're improving upon the natural immune system's ability to clear in some of these women. We want to apply it to about half or even larger population by providing a non-surgical option. What's also complex is, in this placebo group or overall in nature, you're not just infected possibly one time. This is a sexually transmitted disease, and there could be repeat viral infections. We certainly have to prove it in the clinic. But once we can clear the virus, I believe we have generated a long-term memory T-cell responses that can clear the virus over longer time. I mean, this is not going to be a clinical claim until we prove that in the trial. But knowing what we know in T-cell immunology, we hold this to be true, not necessarily true in the spontaneous regression column. So, you know, there are multiple reasons why VGX-3100 as a first non-surgical alternative for women with these high-grade cervical pre-cancers is going to be very attractive for the patients and the physicians who are treating them. In fact, we've done a market research of almost 500 physicians across U.S. and top five countries in Europe, as well as almost 200 patients who have just recently experienced the CIN2/3 diagnosis and treatment. And, overall, (44

[Jonathan M. Aschoff:]

Okay. Lastly, what has been done on the manufacturing front since you've generated the Phase II data?

[J. Joseph Kim:]

Yeah. So, as I've stated before, in biological products, where you make your Phase III products has to be where you're going to eventually make your commercial products. So, all of our Phase I and Phase II products are made in our manufacturing affiliates' facility in Houston and VGXI facility. So, we had to search out and find the best contract manufacturer who can manufacture our products consistently commercially. And we have done so. And in the past several months, we have transferred the VGXI process over to this new manufacturing company. And that work is going as planned, and that's where we are making the Phase III critical products as well as to our planned commercial products once this product hits the market. Similarly, Jonathan, just I have to touch on this as well, all of our Phase I and Phase II studies are done with our pilot-scale prototype delivery devices. Since our Phase II preliminary data or top-line data was released last summer, we have designed and constructed a commercial-scale delivery device which looks nice but very easily used and very robust and can be mass-produced. And that work is going now. And we expect to have these units available for Phase III in time to launch the study in very early part of 2016.

[Jonathan M. Aschoff:]

All right. Thank you very much.

[J. Joseph Kim:]

Thanks, Jonathan.

[Operator:]

Thank you. Our next question comes from the line of Yi Chen with H.C. Wainwright. Please proceed with your question.

[Yi Chen:]

Hi. Thank you for taking my question. Joseph, can you give us any rough idea on when can we expect to see some initial results from the hTERT DNA immunotherapy in breast, lung, and pancreatic cancer? And also, when we see those results, is that going to be on those – all three types of cancer or just one type of those cancers? Thank you.

[J. Joseph Kim:]

Thank you, Yi. So hTERT INO-1400 study is enrolling now. We launched that late last year, early this year. And it's actually three studies in one. It's the same product, same procedure, but we're enrolling roughly equally 18 patients total in breast, 18 patients total in lung, and 18 patients in pancreatic cancer. So, we don't have a quota, but we're enrolling them as fastly as – as fast as the patients become eligible. And it's an open-label study. Our primarily – our primary objective is obviously safety. But also, we want to know, a same question as what we asked for the head and neck cancer patients, can we indeed generate the similar levels of high CD8-positive killer T-cell responses against, in this case, hTERT as the engine in these cancer patients? And it's an open-label study and we should begin to have some early data by the fourth quarter or by year-end this year. But the full set of data probably will be available by mid-2016. There are other measurements and other biomarkers for the following, but really, the bottom line is can we extend the excellent safety signals to these hTERT drugs? And so far, so good. And the second primary objective is can we generate the powerful killer T-cells against this new antigen, non-HPV antigen similarly to what we've seen in our cervical pre-cancer and head and neck cancer patients? And we'll all have to stay tuned for that. But I think our chances are good.

[Yi Chen:]

Thank you.

[J. Joseph Kim:]

Thanks.

[Operator:]

Thank you. Our next question comes from the line of Jason Kolbert with Maxim. Please proceed with your question.

[Jason Wesly McCarthy:]

Hi, Joseph. It's Jason McCarthy. Thanks for taking the question. Sounds like everything is going really well. And I wanted to go back to the oncology program and you were talking about checkpoints. But when you're talking beyond safety of activating T-cells and the (50

[J. Joseph Kim:]

Boy, Jason, I think you have bugged our rooms or you're extremely perceptive. And certainly, we can go about this in multiple ways. Number one, our goal was to answer it, yes, but let me go into more detail. Number one, we have our own active DNA vaccines or DNA immunotherapy against specific antigens of cancer. And we've shown that in head and neck cancer, we look forward to show that in hTERT and prostate and so on. So, that was our primary goal number one. Number two, we're also doing combination studies in animals, and we have good assurance that combining with checkpoint inhibitors, whether they're on the market now or soon to be in the next few quarters, could be a additive effect. It's the same brake-and – removing-the-brake-and-pressing-down-the-accelerator model. And number three – so, that's number two. That's an approach that we can follow. Again, we don't want to give away the cow (52

[Jason Wesly McCarthy:]

Great. Thank you very much.

[J. Joseph Kim:]

Thank you.

[Operator:]

Thank you. (54

[J. Joseph Kim:]

So, thank you all for who have listened today on time or read the transcripts. I'd like to express our true appreciation for all of our shareholders and supporters. Thank you very much.

[Operator:]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.