Inovio Pharmaceuticals Inc

NASDAQ:INO

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Inovio Second Quarter 2021 Financial Results Conference Call. [Operator Instructions]. This call is being recorded on Thursday, August 8, 2024. I would now like to turn the conference over to Thomas Hong, Manager of Investor Relations. Please go ahead.

[Thomas Hong, executive]

Good afternoon, and thank you for joining the Inovio Second Quarter 2024 Financial Results Conference Call. Joining me on today's call are Dr. Jacqui Shea, President and Chief Executive Officer; Dr. Michael Sumner, Chief Medical Officer; Peter Kies, Chief Financial Officer; and Steve Egge, Chief Commercial Officer. Today's call will review our corporate and financial information for the quarter ended June 30, 2024, as well as provide a general business update. Following prepared remarks, we will conduct a question-and-answer segment.



During the call, we'll be making forward-looking statements regarding future events and the future performance of the company. These events relate to our business plans to develop Inovio's DNA medicines platform, which include clinical and regulatory developments and timing of clinical data readouts and planned regulatory submissions, along with capital resources and strategic matters. All of these statements are based on the beliefs and expectations of management as of today. Actual events or results could differ materially. We refer you to the documents we file from time to time with the SEC, which, under the heading Risk Factors, identify important factors that could cause actual results to differ materially from those expressed by the company verbally as well as statements made within this afternoon's press release. This call is being webcast live, and a link can be found on our website, ir.inovio.com, and a replay will be made available shortly after this call has concluded. I will now turn the call over to Inovio's President and CEO, Dr. Jacqui Shea.

[Jacqueline Shea, executive]

Thank you, Thomas. Good afternoon, and thank you to everyone for joining today's call. To begin with today, I'd like to discuss the progress we've made thus far for 2024 based on the goals we set out at the beginning of this year. That includes advancing our lead INO-3107 development program, advancing other promising candidates in our pipeline; and finally, strengthening our business as a whole. Our primary focus has been working towards the potential commercialization of 3107 for the treatment of recurrent respiratory papillomatosis or RRP. We have made significant progress preparing our BLA package, and expect all non-device-related elements to be completed by year-end. A positive pre-BLA meeting with the FDA last week provided us with further confidence that we remain on the right track to submission. We've also made important regulatory progress in both the U.K. and Europe, and have continued to advance planning for our redosing trial. However, as announced earlier today, we have identified a manufacturing issue with a single-use disposable administration component of our device during the testing process required to support our BLA filing, and that will impact the timing of our BLA submission.



Every day matters to patients, and we're working to resolve this issue as quickly as possible. Our Chief Medical Officer and RRP program need Mike Sumner, will provide more details, but I want to emphasize that we're confident in our path forward, and remain focused on the opportunity to deliver not only what could be the first FDA-approved therapy for this devastating disease. But the first DNA medicine approved for use in the United States. What's more, Inovio has continued making progress on other key objectives for both the near and longer-term to deliver value to stakeholders. Elsewhere in our pipeline, we've submitted our Phase III trial design for INO-3112 in combination with lactose for the treatment of throat cancer to the European Medicines Agency for review. We're also planning to submit our Phase II trial for INO-4201 as an Ebola vaccine booster to the FDA later this month, and have advanced discussions with partners for the next trial for INO-5401 in glioblastoma, a deathly brain cancer.



At the same time, we continued to strengthen our business by prioritizing financial discipline and operational excellence. As Peter will discuss shortly, we closed the second quarter with $110 million in cash and short-term investments, with no debt on our balance sheet and raised approximately $33 million through an offering of common stock and prefunded warrants this past April. We estimate that our current cash will be sufficient to fund our operations into the third quarter of 2025. We also recently welcomed Steve Egge as our new Chief Commercial Officer, and I'm delighted to have him join our leadership team. Steve has broad therapeutic area experience, including an HPV-related diseases in cancer, vaccines and rare disease, and his career has spanned both biotech and large pharma. Steve recently launched a new women's health product at Myovant Sciences, which was later acquired by Sumitomo Pharma. He also spent 20 years at Merck, where he held a number of senior commercial leadership roles, including leading their HPV vaccines franchise and serving as Chief Marketing Officer for the vaccine division.



Over the course of his career, has overseen or contributed to more than a dozen commercial product launches. His broad commercial expertise will be invaluable as we work to advance 3107 or rather promising candidates. I'd like to invite Steve to share more about why he joined Inovio, and the potential he sees for 3107. Steve?

[Steve Egge, executive]

Thank you, Jackie, and hello, everyone. I'd like to start by saying how excited I am to be here and to be leading the very talented commercial team in Inovio, working to advance a lead candidate that I believe could transform the lives of people living with RRP, and potentially bring the first DNA medicine to patients in the United States. I spent my career getting innovative medicines to market for patients with significant unmet medical needs, and I believe 3107 offers a compelling product profile that could make it the preferred choice for the broadest number of RRP patients, health care providers and payers. 3107 demonstrated significant impact in our Phase I/II trial, where over 80% of patients across the disease severity continuum had a reduction in the number of surgeries compared to the previous year. It's important to note that our treatment regimen does not require surgeries during the dosing window to maintain minimal residual disease. 3107 also targets and has shown efficacy against both HPV 6 and 11, which caused RRP. 3107 has demonstrated the ability to generate antigen-specific T cells in patients that we believe leads to reduction in surgery by eliminating HPV infected cells thus preventing the papillomatosis from growing back.



As DNA medicines do not generate anti-vector immunity, we believe we will have the potential to re-dose 3107 if needed, to maintain or enhance clinical efficacy over time, which is likely to be important for a chronic and often lifelong viral disease. Administration with CELLECTRA, our proprietary electroporation device was well tolerated by patients and was considered easy to use by health care providers in 2 previous global Phase III trials. 3107 also offers other important attributes typical of our DNA medicines platform such as stability for up to 3 years at refrigerator temperature. We believe 3107 represents a significant opportunity for Inovio in the U.S., Europe and rest of the world. As you can see here, in addition to its compelling product profile, there is significant unmet global need for a treatment linked 3107. I'm pleased to report that we're making strong progress in key regions, including advancing our commercial preparations in the U.S. and making key regulatory progress in both Europe and the U.K. We are going to be focused going forward on keeping this momentum going over the next quarter and look forward to sharing more in the coming months. Now, I'll turn it over to Mike for some additional insights on 3107 and a broader pipeline update. Mike?

[Michael Sumner, executive]

Thanks, Steve. We are really excited to have you on board. Before I dive in, I think it's important to provide a brief reminder about why we are working so hard to bring 3107 to patients. This is a devastating disease. It takes a huge toll on patients' health, time and emotional well-being. Repeated surgery and the repeated risk to vocal cords that comes with it is the mainstay of treatment. Patients are desperate and have said time and again that a reduction of even 1 surgery a year would be life-changing. This is why we're working so hard to deliver on the promise of DNA medicine for the RRP community. As you've heard from Jacqui, we have continued to make meaningful progress towards delivering 3107 to patients. We expect to complete all non-device related elements of our BLA package by the end of the year. Last week, we held our pre-BLA meeting with the FDA, which I would characterize as being positive and supportive of our overall approach with the device, our submission strategy for the CMC sections and the clinical components of our package.



We are encouraged by the agency's level of engagement and have confidence that our approach and content for our BLA modules are on the right track. We also look forward to sharing important immunology data for 3107 at 3 conferences in the fourth quarter. The full voice, a leading conference for clinicians focused on vocal disorders, the 36th International Papillomavirus Conference, which is a platform designed for sharing cutting-edge international HPV research, and the International Society of Vaccines Annual Conference. While very pleased with this progress, we have unfortunately run into a manufacturing issue with a component of our CELLECTRA device. The single-use disposable administration component, otherwise known as the array. This is used to inject the DNA medicine and administer the electroporation. The issue stems from one of the plastic molded parts within this array and was identified during routine testing to support our BLA filing. This issue is not reflective of the broader safety and efficacy of our 5PSP device, or the array, which was used in 2 global Phase III studies.



Our device teams with the support of our external component manufacturers are working to rapidly address the issue, and then repeat the required testing for the array. The additional time needed for completing this work and testing has extended our anticipated time line for BLA submission to mid-2025. We will, of course, endeavor to complete this work on a faster time line, if possible, and we'll have more updates for you at our next quarterly report. Moving on to our efforts to bring 3107 to patients around the globe. We have made important progress as shown by our recent receipt of an advanced therapy medicinal product certification from the European Medicines Agency's Committee for Advanced Therapies. This is following a review of our CMC and nonclinical data. This certification confirms that the data reviewed complies with the standards that would be used to evaluate a European marketing authorization application, and indicates that our work to advance 3107 in Europe thus far is on the right track. 3107 was also recently designated an innovative medicine as part of the U.K.'s innovative licensing and access pathway.



The designation called an Innovation Passport is the first step on a development pathway that offers enhanced access to regulators and development tools that could accelerate the time line for achieving U.K. regulatory approval. This regulatory process builds on 3107 receiving orphan drug designation in Europe in 2023. We will continue our conversations with regulators in ex U.S. markets to frame the next steps for development of 3107. European regulators have previously indicated that a placebo-controlled study design, such as the one we will conduct for our U.S. confirmatory trial was their recommended pathway for potential licensure in the EU. This recommendation was one of the many reasons we selected a randomized placebo-controlled design for our confirmatory study in the U.S. The use of a placebo-controlled design enables us to include patients with only 2 surgeries in the prior year, and does not require a year-long observation period to establish a surgical baseline prior to commencement of treatment.



We believe this clinical design strategy is highly representative of the broad spectrum of RRP disease and will likely be critical to support expansion into global markets. On a related note, we also successfully completed an unscheduled external quality system audit at our Mesa Ridge manufacturing site, which is required to maintain the company's ISO certification and CE mark for our CELLECTRA device in the EU. The audit, which occurred without prior warning or preparation time, indicated that Inovio has a well-established high-functioning quality system. And the results provide further confidence that Inovio is on the right track in our preparations for global commercialization efforts. Turning now to one of our other promising late-stage candidates, INO-3112. Last quarter, we received feedback from the FDA on our Phase III trial to investigate 3112 as a potential treatment for HPV 16 and 18 related locoregionally advanced high-risk throw cancer, when used in combination with Loqtorzi and a PD-1 monoclonal antibody recently approved for the treatment of nasopharyngeal carcinoma. We have continued to make progress with our plans to conduct a multicenter study in North America and Europe, and have submitted the Phase III study package to European regulators. We believe this novel combination therapy has unique potential to meet the high unmet need within this rapidly growing patient group. The incidence of HPV-positive throw cancer is on the rise in high-income countries and has surpassed cervical cancer as the most common HPV-related cancer diagnosed in the United States.



Moving on to INO-4201 which is being studied as a heterologous boost to the FDA licensed Ebola vaccine. We plan to submit our Phase II and animal bridging study designs to the FDA for review later this month, and are preparing to submit our Phase IB trial data along with our collaborators to a peer review journal. As I highlighted last quarter, we recently generated some encouraging new antibody response data from that trial by utilizing the FANG assay, which is the commonly utilized assay, and indicated that 4201 elicits a strong antibody response, comparable to the Ervebo primary series vaccination. With that, I'll turn it over to Peter for a financial update for the quarter.

[Peter Kies, executive]

Thank you, Mike. Today, I'd like to provide an overview of Inovio's operational highlights and financial condition for the second quarter of 2024. As Jacqui noted at the start of the call, strengthening our financial position and business as a whole has been a critical part of our strategy to enable us to focus on our internal resources and our late-stage pipelines. I am pleased to report that we have again reduced our total operating spend dropping from $37.3 million in the second quarter of 2023 to $33.3 million in the second quarter of 2024, and almost 11% decrease. As noted last quarter, we paid the remaining balance of our convertible notes of $16.9 million and have no debt on the balance sheet. Inovio's net loss for the quarter was $32.2 million or $1.19 per share, basic and dilutive, compared to a net loss of $35.5 million or $1.61 per share basic and dilutive for the second quarter of 2023.



We finished the second quarter of 2024 with $110.4 million in cash, cash equivalents and short-term investments compared to $145.3 million as of December 31, 2023. We estimate our cash runway to extend into the third quarter of 2025. This projection includes an operational net cash burn estimate of approximately $28 million for the third quarter of 2024. These cash runway -- these cash runway projections do not include any further capital raise activities that Inovio may undertake. As a reminder, you can find our full financial statements in this afternoon's press release, as well as in our Form 10-Q filed with the SEC. And with that, I'll turn it back to Jacqui.

[Jacqueline Shea, executive]

Thanks, Peter. I'd now like to open up the call to answer any questions you might have. Operator?

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. One moment please for your first question. First question comes from the line of Gregory Renza with RBC Capital Markets.

[Anish Nikhanj, analyst]

It's Anish on for Greg. Just a few from us on 3107 in RRP and the manufacturing issues noted. Could you give us some more color on when along the time line, the noted manufacturing issues for the disposable administration component emerge and how it was detected. How is this reflected during your pre-BLA discussions? And lastly, if you could help us understand the steps to resolve the issue and potential challenges you anticipate along the way.

[Jacqueline Shea, executive]

Hi, Anish. Nice to talk with you. So, first of all, I'm happy to answer the questions about the recent manufacturing issue that's just come to light. And this has been a recent issue that we've literally just uncovered over the past week or couple of weeks as part of the BMV testing that's being conducted to support our BLA submission. So, it's a very recent issue. And I think what I can say is that this issue is related to a plastic molded part that forms the part of the single-use disposable array, which is the piece that's used to inject our DNA medicine and provide the electroporation. We are very confident that we'll be able to resolve this issue quickly. We're working with our external manufacturer; he manufactures this component with us. And we are bringing all of our available resources together to solve this issue as quickly as possible. In terms of our recent BLA, I'll let Mike -- recent pre-BLA meeting. I'll let Mike talk a bit more about that, Mike?

[Michael Sumner, executive]

Yes. Thank you, Jacqui. So, it wasn't part of our BLA into pre-BLA interaction with the agency. And to be honest, I mean, as Jacqui said, it arose fairly recently. But in the normal course of business, it would not have been part of the agenda for the pre-BLA. I mean, the pre-BLA meeting was very much for us to align on the bigger picture of the components we need to include, as I mentioned, in terms of sort of the overall device strategy, CMC, and how we present the clinical components, and we gained very good alignment from the agency with those. And really, this recent issue will be sort of an internal thing for us to appropriately fix the issue and document that we have fixed it adequately, and that will be part of our ongoing device verification.

[Jacqueline Shea, executive]

Yes. And just to follow-up on the part of your question about why we've only just detected it now. So, this issue occurs at a pretty low rate, and we picked it up as part of the VNB process that's really designed to test all of the elements of the devices part of the submission package that needs to go into the BLA. As we previously mentioned, we've used this device previously in 2 completed Phase III trials globally. And that was -- those were trials that involved patients in more than 30 countries. So, we have quite extensive experience with the device and this array component.

[Operator]

And your next question comes from the line of Roy Buchanan with Citizens JMP.

[Roy Buchanan, analyst]

Just a couple of follow-ups on the manufacturing. I just want to confirm that there's no expected impact to the timing or the conduct of a confirmatory trial. And it sounds like you maybe don't need to inform the FDA about this issue. Is that correct?

[Jacqueline Shea, executive]

Thanks, Roy, and nice to talk with you. So, in terms of timing of the confirmatory trial, we will need to resolve this issue before we can start dosing in the confirmatory trial. Mike, do you want to talk about the other element?

[Michael Sumner, executive]

Yes. So, I mean, at the moment, the array is not being utilized in clinical practice. And so, we will be resolving this as sort of part of our BLA filing aspects, and we will obviously be sharing all the aspects of what we've done and how we've sold this issue with the FDA as part of our BLA filing.

[Steve Egge, executive]

Okay. All right. Got it. All right. And then the immunological data that you're going to present at the 3 venues later this year. Is that -- is it going to be all the same data or potentially one of the presentation is going to be more impactful than the other?

[Michael Sumner, executive]

That's it? So, I think where we have really focused our immunological data is at IPVC, and that will be certainly very new data that we've presented before and really sort of confirm what we've spoken to in that we are seeing a difference in our immunological profile between responders and non-responders. And I think it also really talks to the mechanism of action of 3107. So, we're very excited to present that upcoming data.

[Steve Egge, executive]

Okay. Great. And then last one for me, and I'll jump back. The 3107 Phase III, have you discussed the design of that trial with the European regulators yet?

[Jacqueline Shea, executive]

Mike, do you want to?

[Michael Sumner, executive]

Yes. So, I mean, as part of our original submission, we did discuss clinical strategy, and we do have alignment on how to approach the clinical aspects of a future filing. And as you heard me talk to today, one of the most significant elements of that was the placebo-controlled nature of the study, which was really what guided us to do that as part of our U.S. confirmatory study, along with the fact we were very keen to include patients who only had 2 surgeries in the prior year as we had done with our Phase I/II study and believe that, that really enables more treat patients to hopefully access treatment in the future.

[Operator]

And your next question comes from the line of Jay Olson with Oppenheimer.

[Jay Olson, analyst]

Thank you for providing this update. We also had a couple of questions about the Array device for 3107. Will the manufacturing issue have any impact on the U.K. or European regulatory progress? And will it have any impact on operating expenses in the next few quarters? And then I had a follow-up.

[Jacqueline Shea, executive]

Yes. Great question Jay, and nice to hear from you. So, we're really focused on resolving this issue as quickly as possible. We're putting all of our available resources into moving it forward as quickly as possible. Part of the reason why it's going to take some time is we have to rectify the issue. And then we have to complete the testing that's required to support our BLA submission. And until we've we completed that work; we're not going to be in a position to start our confirmatory trial. So, in terms of the order of the different regulatory submissions, we're really focused on getting that confirmatory trial started in the U.S. first, and that's really what's gating our progress at the moment.



Yes. And moving on in terms of operating expense. Clearly, this is a recent issue. We're bringing the resources to bear that we need to bring to bear to solve it. I think we'll be able to provide a bit more update on operating expenses our next call in November.

[Jay Olson, analyst]

Okay. We'll look forward to that. And then with regards to the RRP redosing study, would you plan to conduct that redosing study as part of a confirmatory study? Or would that be a separate trial?

[Jacqueline Shea, executive]

Yes, that's a great question, Jay. And we've tried to be pretty clear on that in the past. We view this as a separate study, and we're not planning to conduct it as part of our confirmatory trial.

[Operator]

And your next question comes from the line of Sudan Loganathan with Stephens.



_

[Sudan Loganathan, analyst]

Hi, Inovio team. I have a few questions. First on the 3107, manufacturing of the array part. If you only are using one third-party manufacturer for this component, what would be the ramp-up time to probably get another one started as a backup for this array in case the issues cannot be resolved to yours or the agency standards with this -- with the third party that you're using currently? Just trying to get a feel for the sense of complexity of manufactures component.

[Jacqueline Shea, executive]

That's a great question, Sudan. From my perspective, this is a recent issue. So, I don't want to go into too much detail here. But from my perspective, we think that we have a pretty straightforward path to resolve this issue. I don't think at this stage, it's going to be necessary to get another manufacturer up and ready to manufacture this part. I think it's more a case of working through this issue with the existing manufacturer.

[Sudan Loganathan, analyst]

Got it. And my last one, just staying on 3107 opportunity OUS. Can you update us on the significance of the innovation path for granted from the U.K. and probably name some examples of some other notable drugs that may have also received this designation and the potential read-through this could have for 3107 launch in the U.S. markets. And just kind of based on this potential delay in the U.S. BLA filing, could there be the first launch of 3107 OUS markets as early as late next year or early 2026?

[Jacqueline Shea, executive]

Again, great questions. I'll hand you over to Mike to talk about the ILA pathway. This is a relatively new mechanism that's come out really after Brexit, to be honest. But I'll hand you over to Mike.

[Michael Sumner, executive]

Absolutely. So, I see this pathway sort of similar to breakthrough therapy designation where you get increased access to the regulators to discuss your regulatory pathway. They do hint to the fact that there might be a sort of accelerated approval possibly, but we need -- we have not actually had that face-to-face discussion with them yet. That is upcoming. And hopefully, we'll be able to provide greater clarity on that at our next earnings call. But we're very excited. It's a great honor, I think, for us. I mean, we were excited about breakthrough therapy designation. It's nice to have another regulatory body acknowledge the uniqueness and how special our clinical data is to this patient population. So, I think we just need to wait and give you a little more guidance on that at our next earnings call. But we'll certainly look into what other drugs have received the same designation and let you know. But I don't think any drug to date has actually been approved under this pathway. But we'll confirm that.

[Operator]

[Operator Instructions] Your next question comes from the line of Yi Chen with H.C. Wainwright.

[Yi Chen, analyst]

Just to confirm that currently, you plan to initiate both the confirmatory trial and the redosing trial towards mid-2025, correct?

[Michael Sumner, executive]

So, we have always said that the confirmatory -- the redosing study is going to be a post approval study. And the basis of that is, as you've seen from our Phase I/II study, we had very significant efficacy in that study. And so, to actually show enhancement on the already very good results, we're going to have to have a larger sample size. And so, we always felt that it would be easier to achieve that study once we have the product approved and, on the market, and there are a greater number of subjects that could actually be recruited into that study following receiving our primary series.

[Yi Chen, analyst]

Got it. So just confirmatory trial before the BLA submission. Is the redosing trial required for regulatory submission in Europe or U.K?

[Michael Sumner, executive]

No. This is just our desire to further enhance our efficacy in line with what the RRP foundation want for their patients, a significant reduction in surgeries, and every surgery matters to those patients. So, if we can enhance our efficacy with further dosing beyond, we're already seeing 81% of patients respond. We're seeing 72% of patients have greater than 50% reduction. So, you can now see why we need that larger population that we can only achieve post approval.

[Jacqueline Shea, executive]

I think when we publish our immunology data and are making those presentations at the upcoming conferences later on this year. I think you'll see from the immunology data that we're putting out there that we believe we have a good understanding of what are the immune responses that are driving that clinical benefit. So, as Mike says, really what we're looking to do here is to get the relatively small number of people who are not responders at this time into response. And also, importantly, for what is a chronic, potentially lifelong viral disease, make sure that we can maintain that protection and reduction for as long as is necessary. So, I think it's an important part of the life cycle management of 3107.

[Yi Chen, analyst]

Got it. And lastly, do you currently have an estimated time frame for regulatory submission in Europe and U.K.? Is it going to be before or post-FDA approval in the U.S?

[Michael Sumner, executive]

We haven't really guided to that at this moment in time.

[Operator]

And there are no further questions at this time. I would like to turn it back to Dr. Jacqui Shea for closing remarks.

[Jacqueline Shea, executive]

Thank you. I'd like to close today by reiterating that although we've met an unexpected challenge in our goal to submit our BLA for 3107 by the end of this year. I'm confident in our team's ability to rapidly resolve the issue, and we remain focused on the opportunity to deliver a potentially life-changing therapy for RRP. As I've highlighted previously, we believe that Inovio has the key drivers for success in place, and we will leverage them to continue making progress on both near- and long-term key objectives to deliver value to all stakeholders. And as always, the transformational potential of DNA medicine and the patients that could benefit from it continues to provide the inspiration to drive us forward. Have a good evening, everyone.

[Operator]

Thank you. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.