Inovio Pharmaceuticals (INO) Q1 2022 Earnings Call Transcript

Inovio Pharmaceuticals (INO -3.64%)
Q1 2022 Earnings Call
May 10, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Inovio Pharmaceuticals first quarter 2022 financial results conference call. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ben Matone, senior director of investor relations. Please go ahead.

Ben Matone -- Senior Director of Investor Relations

Thank you, operator. Good afternoon, and thank you for joining the Inovio first quarter 2022 earnings conference call. Joining me on today's call are Dr. Jackie Shah, president and CEO; Mr.

Peter Kies, chief financial officer; Dr. Laurent Humeau, chief scientific officer; Mark Twyman, chief commercial officer; Dr. David Liebowitz, senior vice president of clinical development for infectious diseases; and Dr. Jeffrey Skolnik, senior vice president of clinical development for oncology and HPV therapeutics.

For today's call, we will review our corporate and financial information for the quarter ended March 31, 2022, as well as provide an update on our efforts across our DNA medicines platform. Following prepared remarks, we will conduct a question-and-answer segment reserved for equity research analysts. During the call, we will 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 integrated platform DNA medicines, which include clinical and regulatory developments and timing of clinical data readouts, 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 on our website, ir.anovio.com, and a replay will be made available shortly after this call is concluded.

I will now turn the call over to Inovio's president and CEO, Dr. Jackie Shea. 

Jackie Shea -- President and Chief Executive Officer

Thank you, Ben, and good afternoon, everyone. Thank you to everyone joining the call today. I'd like to begin today's call by expressing my gratitude to the board for entrusting me to lead Inovio into its next chapter. While we have many challenges to face, I believe strongly in the potential of our DNA medicine technology and its ability to significantly and positively affect human health.

We are committed to fulfilling the potential of our DNA medicines platform where we seek to make the greatest impact on health globally. This has served as the foundation for all our efforts to date and it continues to guide and underpin our work going forward. I would also like to thank Dr. Joseph Kim for his many contributions to Inovio as its co-founder.

Joseph is a true entrepreneur and has been a pioneer in the field of immunotherapies and vaccines. Now turning to today's financial and program update. Let's begin with our COVID-19 vaccine. As the COVID-19 pandemic evolves toward the endemic phase, the need for booster vaccines to protect against severe illness and death represents a growing and strategic opportunity.

In light of this, we now believe that Inovio can have the greatest impacts and serve the most pressing public health needs by focusing on COVID vaccine on our heterologous booster strategy. And this is where a different vaccine is used to boost a primary vaccination. Towards that goal, we are advancing our efforts to evaluate INO-4800 as a booster in noninferiority clinical trials compared to currently authorized COVID-19 vaccines. Inovio is continuing discussions with regulators in select countries regarding potential regulatory pathways for licensure.

Importantly, these efforts are in addition to the heterologous boost trials conducted by our partner, Advaccine, the preliminary data for which we will review in a moment. As we shift to prioritize our heterologous boost strategy, we will discontinue our global phase 3 INNOVATE trial. This decision reflects emerging global data that indicates a lower instance of severe COVID-19 cases caused by the Omicron variant [Inaudible], which would necessitate a subsequent increase in trial size and costs for Innovate to obtain an efficacy readout against severe disease. We believe this shift places Inovio's COVID-19 vaccine in the strongest strategic position to contribute to public health initiatives for COVID-19 going forward.

It also allows us more flexibility in continuing to develop our DNA medicines platform. We will also provide an update today about a recent meeting that we had with the FDA regarding VGX-3100, our HPV vaccine against HPV-16 and 18 associated cervical high-grade squamous intraepithelial lesions or HSIL. As you know, we are close to completing the REVEAL2 phase 3 study with this therapy and have been evaluating the use of a biomarker to identify those women who will be most likely to benefit from VGX-3100. The FDA has indicated that we will need at least one, if not two additional trials to obtain a marketing authorization for the product candidates.

My colleague, Jeffrey Skolnik, will be describing this development in more detail later in our call today. But first, I'm pleased to introduce Dr. David Liebowitz, Inovio's SVP of clinical development for infectious diseases and our COVID-19 clinical lead, to provide additional commentary on our COVID-19 program. Dave?

Dave Liebowitz -- Senior Vice President, Clinical Development

Thank you very much, Jackie, and greetings, everyone. We believe the increased global awareness about the significance of vaccine-induced T-cell responses and durability of protection for effective booster vaccines works to the advantage of one of INO-4800's key strengths, its ability to generate CD8+ T cell responses. We are pleased to share encouraging preliminary data from our partner, add vaccines, 267 participant heterologous boost trial, which we believe supports our decision to pursue the heterologous boost pathway. Advaccine's heterologous boost clinical trial assessment of immune responses from a two-dose primary series of an inactivated COVID-19 vaccine followed by a boost with INO-4800 after three or fix months.

Interim immunogenicity data showed that using INO-4800 as a booster after six months resulted in a 6.3-fold increase in T cell immune response. In a separate Advaccine study where three doses of an inactivated COVID-19 vaccine were assessed, the cellular response increased by 1.7 fold. Further, the highest booster effect of INO-4800 was observed with a two milligram dose of INO-4800 delivered six months after a primary series with an inactivated vaccine. Following INO-4800 vaccination, the preservation of cross-reactive T cell responses remains a consistent observation against multiple SARS coronavirus two variants of concern, including omicron without a significant loss in the response magnitude.

T cells that can recognize SARS coronavirus 2 may play a role in reducing disease severity. Therefore, INO-4800 has the potential to play an important role in reducing incidence of severe COVID-19 cases, which could reduce hospitalizations as the virus continues to mutate and new variants arise. This heterologous boost study further supports the advantages of our DNA medicines platform, including our ability to elicit T cell responses, potential for readministration, temperature, stability and favorable safety profile. Building on our productive collaboration for the clinical development of INO-4800 over the past year and a half, we are planning to expand our partnership with Advaccine with an expanded focus on heterologous boosting and new constructs covering future variants.

This arrangement will enable Inovio and Advaccine to leverage Advaccines multiple manufacturing sites in China and access opportunities globally. I'll now turn the call over to Inovio's SVP of clinical development, Dr. Jeffrey Skolnik, for an update on our HPV and oncology programs. Jeffrey?

Jeffrey Skolnik -- Vice President, Clinical Development

Thank you, Dave. We'll now talk about Inovio's HPV-associated disease programs. We recently met with representatives from the U.S. FDA regarding our late-stage clinical trials for VGX-3100 against HPV-16 and 18 associated cervical high-grade squamous intraepithelial lesions or HSIL.

And during this meeting, the FDA advised us that our regulatory strategy to use REVEAL2, which is the second of two phase 3 trials for VGX-3100 to evaluate efficacy in biomarker-selected population would not provide sufficient evidence to support approval of a potential marketing application for VGX-3100 in that biomarker population. The FDA recommended that using REVEAL2 as an exploratory study to evaluate a biomarker-selected population and then to conduct one or two additional prospective, well-controlled trials in the biomarker-selected population would be more likely to provide sufficient evidence to support approval of a marketing application. To better assess potential efficacy in that biomarker selected population, we plan to amend the fully enrolled REVEAL2 to revise the primary analysis population from the all-comers to the biomarker positive population. Both the biomarker-positive population and the all-comers population will be analyzed with respect to efficacy.

We will continue our REVEAL2 trial to completion and will assess the path forward for the VGX-3100 program following analysis of the REVEAL2 results. Given the likelihood of at least one additional trial, we no longer expect to submit a BLA in 2023 for VGX-3100. We maintain full conviction in our DNA medicines and in our development programs in HPV diseases. Given our prior evidence of our DNA medicines platform, specifically VGX-3100 to both regress lesions caused by HPV-16 and 18 and to clear HPV-16/18 virus from those lesions.

With respect to INO-3107, our DNA immunotherapy candidate to treat recurrent respiratory papillomatosis or RRP, a rare and orphan disease, we've completed enrollment in our open-label multicenter phase 1/2 clinical trial of 32 participants with HPV-6 or 11 associated RRP. This yet incurable disease is characterized by the growth of small tumors or papillomas in the respiratory tract caused by HPV and can lead to life-threatening airway obstructions. These papillomas often recur, requiring repeat interventions. Our trial includes adults with HPV-6 or 11 RRP who have required at least two interventions in the past year to remove disease.

Trial participants will first undergo removal of their papillomas and will then receive up to four doses of INO-3107 once every three weeks. The efficacy endpoint will be a reduction in the frequency of cervical interventions following the first dose of INO-3107 relative to the frequency prior to clinical study therapy. We expect preliminary efficacy, safety and immunogenicity data from a portion of trial participants in the second half of this year. And based on these results, we will then determine next steps for clinical development.

Regarding Inovio's immuno-oncology programs, we are very excited that our novel trial of DNA medicines, INO-5401 and INO-9012 in combination with Regeneron's PD-1 inhibitor, Libtayo, the treatment of newly diagnosed glioblastoma or GBM, was selected for an oral presentation at next month's ASCO annual meeting. The full text of the abstract providing overall survival, safety and immunogenicity data will be available on the ASCO meeting website beginning May 26. And now I'd like to turn the call over to Peter Kies, our chief financial officer, for our first quarter financial summary. Peter?

Peter Kies -- Chief Financial Officer

Thank you, Jeffrey, and good afternoon, everyone. We finished the first quarter with $360.4 million in cash, cash equivalents and short-term investments, compared to $401.3 million as of December 31, 2021. As of March 31, 2022, Inovio had 226.5 million common shares outstanding and 247.8 million common shares outstanding on a fully diluted basis. Total revenue was $199,000 for the first three months ended March 31, 2022, compared to $371,000 for the same period in 2021.

Total operating expenses were $71.9 million for the first quarter in 2022 versus $52.9 million for the first quarter in 2021. Our net loss for the quarter was $79.1 million or $0.36 per share basic and dilutive. That compares to a net loss of $54.4 million or $0.27 per share basic and dilutive for the same period in 2021. Anovio's research and development expenses were $56 million for the first three months of this year, compared to $39 million for the same period in 2021.

The year-over-year increase in R&D expenses was primarily related to a higher drug manufacturing and clinical trial expenses related to INO-4800 and higher employee compensation. This increase reflects a $6.3 million contra-R&D expense recorded from grant agreements. These increases were offset by lower engineering services and expense equipment related to our Selectra 3PSP device array automation project, among other variances. General and administrative expenses were $16 million for the quarter, compared to $13.9 million for the same period in 2021.

The year-over-year increase in G&A expenses was mainly related to an increase in employee compensation and insurance expenses, among other variances. As a reminder, you can find our financial statements in this afternoon's press release, as well as in the company's Form 10-K, Form 10-Q filed with the SEC. And with that, I'll turn it back over to Jackie. Thank you.

Jackie Shea -- President and Chief Executive Officer

Thank you, Peter. Going forward, our commitment is to efficiently allocate our resources to our key programs in our pipeline, to put Inovio in the best position to benefit patients, global health and our stakeholders. For COVID-19, we are prioritizing our resources on a heterologous booster vaccine strategy where our DNA vaccine platform, we believe, has advantages that can really make a difference. For HPV, we are committed to delivering immunotherapies to address HPV diseases with an alternative to surgery by focusing on the biomarker-positive population in REVEAL2.

Beyond the programs we've discussed on this call, we're also very excited about the upcoming milestones and data we have coming out later this year in our vaccines pipeline, including INO-4500 Lassa fever, INO-4700 for MERS and INO-4201 as a booster against Ebola. We look forward to providing you with further updates on our pipeline in the coming months as our assets progress. With that, let's open the call for questions. Operator?

Questions & Answers:

Operator

[Operator instructions] The first question comes from Geoff Meacham of Bank of America. Please go ahead.

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

Good morning. This is [Inaudible] calling in for Geoff Meacham. Thanks for taking my questions. So my first one is about the VGX-3100 given the change of primary end point, how is the trial powered given that change? And if you have already any color about how many patients have -- are actually the biomarker-selective population versus overall population? And then just second one is CEO transition.

Could you provide any additional color about maybe the plan for CEO transition? Thank you.

Jackie Shea -- President and Chief Executive Officer

Thank you very much for the questions. I think for the first question, I'll hand over to my colleague, Jeffrey Skolnik, that one, and then I'll take the question about the CEO transition. Jeffrey?

Jeffrey Skolnik -- Vice President, Clinical Development

Thank you, Jackie. Thanks, [Inaudible], for the questions. So with respect to your first question regarding the power of the biomarker, again, our focus is really on identifying the population in whom VGX-3100 has the greatest potential to demonstrate efficacy. And as we've shared previously, we continue to move forward with the development of that biomarker.

As it relates to the population within the study, while we haven't yet shared the percentage of patients that would be biomarker positive, what we can say is that we fully anticipate that the study is appropriately powered given the efficacy that we expect to see in the biomarker-positive population. Again, that's specifically why we're really interrogating that particular question in the biomarker-positive population for VGX-3100 for cervical disease. So the short answer is yes. The study is powered appropriately.

Jackie?

Jackie Shea -- President and Chief Executive Officer

Thank you, Jeffrey. So with regards to the CEO transition, first of all, I'd like to say that I'm really honored to be entrusted by the board to lead Inovio into its next charter. And I would also like to thank Dr. Joseph Kim, our co-founder, for his many contributions to Inovio over the years to date.

Organizations grow and evolve continually. Here at Inovio, we remain focused on the road ahead as we seek to improve the lives of patients globally and support global public health. Our talented and dedicated teams continue to advance our efforts forward. Thank you.

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

Thank you very much.

Operator

The next question comes from Hartaj Singh from Oppenheimer. Please go ahead.

Hartaj Singh -- Oppenheimer and Company -- Analyst

Great. Thank you for a couple of questions. Just I want to say my regards to Joseph, in my interaction, and I think he always tried his best. I know sometimes things don't work out, but really wishing him the best and the team.

And Jackie, congratulations to you. One quick question I would just have is what is -- for the pathway to the heterologous booster market, that market is sort of broadening and deepening as more people get their vaccines. What is be a potential path forward? I mean, would you just need to run a booster trial and that would be it? Would you need a safety database, how long would you have to run it? Just any color there? And then I just got a couple of quick follow-ups.

Jackie Shea -- President and Chief Executive Officer

Yeah, sure, Hartaj. And it's very nice to talk with you. So with regards to the questions around the heterologous booster pathway, this is a regulatory pathway that's been evolving rapidly over the past few months. And Inovo is in discussion with a number of regulatory authorities about the path forward.

So I'll pass it over to Dave to see if he can add any further color there. But I would say this is an evolving landscape at the moment and things are moving quickly. Dave?

Dave Liebowitz -- Senior Vice President, Clinical Development

Yeah. Thank you, Jackie. And thank you for your question. Yeah, as Jackie said, we are continuing discussions with regulators in our target countries on regulatory pathways for licensure.

We obviously can't comment on behalf of the regulators, but we are seeing more and more arguments for heterologous boosting. We do understand that we will need a safety database. And as part of those discussions with the regulators, we're determining the size of that database that will be required.

Hartaj Singh -- Oppenheimer and Company -- Analyst

Great. Thank you for the answers. Just two quick questions. What's the status of your manufacturing relation with Thermo Fisher? I believe that they had dedicated and were thinking about dedicating an entire facility in California, either to manufacturing [Inaudible]? And then secondly, if you can just kind of give us an indication, what are the parameters for the burn, how far could you go out with some of the projects you're undertaking, some of the projects you're shifting around? And thanks for the questions, guys.

Jackie Shea -- President and Chief Executive Officer

OK. Thank you. I'll take the first question and then Peter maybe could handle the runway question. Yes, with regard to Thermo Fisher is a key partner for us in our manufacturing consortium.

And we continue to work very closely with them to scale up our manufacturing processes. And they're going to remain key to our plans going forward. Peter, do you want to talk about the cash situation here?

Peter Kies -- Chief Financial Officer

Yeah. Thanks. Hi, Hartaj, this is Peter. So Hartaj, we do anticipate definitely a reduction in our monthly burn.

Right now, we're evaluating the impact of just continuing to innovate and we're also reprioritizing our resources across our pipeline programs. So we will provide updates when we have more information to disclose and that should be a little bit later this summer.

Hartaj Singh -- Oppenheimer and Company -- Analyst

Yup. Understood, Peter. Thank you, Jacqueline. Thank you, Peter, and regards to you.

Peter Kies -- Chief Financial Officer

Thank you.

Jackie Shea -- President and Chief Executive Officer

Thank you.

Operator

[Operator instructions] The next question comes from Roger Song from Jefferies. Please go ahead.

Roger Song -- Jefferies -- Analyst

Great. Thank you for taking the question. Maybe just as a follow-up for the heterologous COVID program. It seems you have pretty good this kind of cellular response after the activated vaccine as a booster.

Just curious, do you have any humoral data -- response data there? And I think -- and also I understand your heavy discussion with different regulators, is that possible this cellular response will be the primary endpoint for the heterologous study? Or like other vaccines so far, they need to be approved based on the humoral response data? Thank you.

Jackie Shea -- President and Chief Executive Officer

Thank you. So with regards to the heterologous booster strategy, I think I'm going to ask Dave to comment here on the end point, the real advantage of our DNA medicines program and our DNA platform generally in the heterologous space. We think we're generating really unique T cell responses, which can be incredibly useful. With regards to the antibody data from the Advaccine studies, we hope to make that available later on over the summer and we'll be publishing that data.

I'll pass it over to Dave to comment on the end point piece.

Dave Liebowitz -- Senior Vice President, Clinical Development

Thank you, Jackie. And thank you for the question. Yeah. So it's a very good question.

We do know that the scientific community is becoming increasingly aware of the critical role that T cells play in the prevention of severe COVID. And over time, we believe that this will be a key consideration in regulatory decision-making. But you are correct. Right now, the pathway forward for heterologous boost appears to be non-inferiority of the humoral immune response.

And as I said, we're in discussions with regulators, which will include a discussion around end points.

Roger Song -- Jefferies -- Analyst

Got it. Yeah. So thanks for the comment. And then just a very quick one for 5401, the GBM program.

What will be the next step for this program and when will we can see some additional clinical on that program? Thank you.

Jackie Shea -- President and Chief Executive Officer

Thank you, Roger. So I'm going to hand that question over to my colleague, Jeffrey. I would just say we are very excited to be having that presentation at ASCO. So I think that will be the next opportunity to talk about that data.

But Jeffrey?

Jeffrey Skolnik -- Vice President, Clinical Development

Yeah. Thanks, Roger, for the question. Thank you, Jackie. I would just echo what Jackie has just shared, which is that certainly, we're extremely pleased to have the opportunity to present an oral presentation this year at ASCO regarding the newly diagnosed GBM data.

And essentially following that presentation, we are going to continue to take a look at the totality of the GBM space and 5401 and really think about what our next step should be within the GBM landscape. So I would say just stay tuned.

Roger Song -- Jefferies -- Analyst

All right. Great. Thanks. That's it from us.

Thank you.

Jackie Shea -- President and Chief Executive Officer

Thank you, Roger.

Operator

The next question comes from Yi Chen from H.C. Wainwright. Please go ahead.

Yi Chen -- H.C. Wainwright -- Analyst

Thank you for taking my questions. First question is, could you please give us more insights, the basis -- I mean, the reason, the basis based on which the FDA provided a recent opinion regarding the REVEAL2 trial? Was it the REVEAL1 data? Or was there something else?

Jackie Shea -- President and Chief Executive Officer

Thank you, Yi. That's a great question. So this really came from an interaction with the FDA and interaction that we requested. So Jeffrey, can you provide some further context?

Jeffrey Skolnik -- Vice President, Clinical Development

Sure. So thank you for the question. Certainly, with respect to the opportunity to speak with FDA, as Jackie just suggested, this was a meaning that we essentially wanted to hold with FDA specifically, again, as we talked about before, to really find a pathway forward for VGX-3100 in those women with cervical dysplasia for whom VGX-3100 had the greatest potential for efficacy. And so in terms of the path forward, while again, we certainly would not speak for regulatory agencies, what they shared with us was essentially consistent with the pathway forward in a biomarker-selected population.

So ultimately, what we're really aiming to do is to identify that population in women for whom 3100 is most likely to be efficacious and that's really where our conversations with FDA have centered.

Yi Chen -- H.C. Wainwright -- Analyst

Got it. And could you tell us what are the countries in which you are going to pursue the COVID heterologous booster strategy?

Jackie Shea -- President and Chief Executive Officer

So what I can say here is that we're currently in discussions with regulators in a number of countries. And we hope to be making announcements about which countries we'll be pursuing our heterologous boost approaches in the coming months. But I think it's a little early to comment on that yet. Thank you.

Yi Chen -- H.C. Wainwright -- Analyst

Got it. And my last question is, will Inovio consider adding additional candidates into the pipeline?

Jackie Shea -- President and Chief Executive Officer

That's a great question. So we are really confident in our DNA medicines technology. We can do a lot of different things. We can -- we have a strong pipeline in HPV.

We have our IO candidates and we have our IV vaccine candidates. We also have some early stage products in dMAbs and bispecifics. However, I think what's really important to us is moving our key programs forward and really focusing our efforts and resources on moving those programs forward. We have a number of key data points coming up over the coming year and early into next year.

And we're going to really be looking at the data and focusing on what we think is the best path forward and the best way to bring our DNA medicines to the patients who need them. So I would say it's a question of looking at the data and really focusing on the best opportunities for patients and for our stakeholders.

Yi Chen -- H.C. Wainwright -- Analyst

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Jackie Shea, president and CEO, for closing remarks.

Jackie Shea -- President and Chief Executive Officer

Thank you very much, and thank you all for the questions and to those who joined us today. As I stated, Inovio remains focused on DNA medicines technology and our innovative pipeline to save lives and improve global health. We have several catalysts later this year and early next year with important data readouts for REVEAL2, RRP, MERS, Lassa and Ebola. I look forward to updating you on our program development and speaking with you again on the company's next earnings call in August.

Have a good evening, everyone. Goodbye.

Operator

[Operator signoff]

Duration: 35 minutes

Call participants:

Ben Matone -- Senior Director of Investor Relations

Jackie Shea -- President and Chief Executive Officer

Dave Liebowitz -- Senior Vice President, Clinical Development

Jeffrey Skolnik -- Vice President, Clinical Development

Peter Kies -- Chief Financial Officer

Unknown speaker -- Bank of America Merrill Lynch -- Analyst

Hartaj Singh -- Oppenheimer and Company -- Analyst

Roger Song -- Jefferies -- Analyst

Yi Chen -- H.C. Wainwright -- Analyst

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