Inovio Biomedical Corporation (NYSE AMEX: INO) ("Inovio") today reported financial results for the quarter and year ended December 31, 2009.
Total revenue was $2.6 million and $9.1 million for the quarter and year ended December 31, 2009, respectively, compared to $327,000 and $2.1 million for the quarter and year ended December 31, 2008, respectively.
Total operating expenses for the quarter and year ended December 31, 2009, were $6.4 million and $23.1 million, respectively, as compared to $3.8 million and $15.8 million, respectively, for the quarter and year ended December 31, 2008.
The net loss attributable to common stockholders for the quarter and year ended December 31, 2009, was $7.3 million, or $0.07 per share and $24.4 million, or $0.33 per share, respectively, as compared with a net loss attributable to common stockholders of $3.6 million, or $0.08 per share and $13.0 million, or $0.30 per share, respectively, for the quarter and year ended December 31, 2008.
Revenue from license fees and milestone payments was $298,000 and $4.9 million for the quarter and year ended December 31, 2009, respectively, as compared to $180,000 and $791,000 for the same periods in 2008. The increase in revenue under license fees and milestone payments was primarily due to the acceleration of $4.1 million of deferred revenues recognized as a result of the cancellation of the Wyeth collaboration and licensing agreement in July 2009.
During the quarter and year ended December 31, 2009, we recorded revenue under collaborative research and development arrangements of $(64,000) and $126,000, respectively, as compared to $(81,000) and $1.1 million for the quarter and year ended December 31, 2008, respectively. This decrease in revenue was due to a decrease in Merck collaborative research billings of $506,000 as well as no billings to Wyeth in 2009 from our collaborative agreement.
During the quarter and year ended December 31, 2009, grant and miscellaneous revenue increased to $2.4 million and $4.1 million, compared to $228,000 for the same periods in 2008. The increases were primarily due to revenue from our contracts with the National Institute of Allergy and Infectious Diseases ("NIAID") and the PATH Malaria Vaccine Initiative ("MVI") of $3.0 million and $440,000, respectively, since June 1, 2009, and higher revenue of $373,000 recognized from the Department of Defense ("U.S. Army") grant. The NIAID contract provides for a total potential value of $23.5 million to fund research and development for HIV DNA-based vaccines delivered via our proprietary electroporation system ($21.3 million over five years starting September 2008, with two one-year options valued at $1.2 million and $1.1 million). PATH is an international nonprofit organization funded by private donors. We have a research program and agreement with the PATH MVI to evaluate in a preclinical feasibility study our SynCon™ DNA vaccine development platform to target antigens from malaria-causing Plasmodium species. The agreement with MVI was for $685,000 and ran through February 2010. The U.S. Army grant of $933,000, running through May 2010, is funding research and development of DNA-based vaccines, delivered via our proprietary electroporation system, against bio-warfare and bioterror attacks.
Research and development expenses for the quarter and year ended December 31, 2009, were $3.9 million and $9.4 million, respectively, compared to $1.2 million and $5.8 million for the same periods in 2008. The increases primarily related to work performed for the NIAID contract.
General and administrative expenses, including business development expenses and amortization of intangible assets, for the quarter and year ended December 31, 2009, were $2.6 million and $13.7 million, respectively, as compared to $2.6 million and $10.0 million for the quarter and year ended December 31, 2008, respectively. The increase in general and administrative expenses for the year was primarily due to fees associated with the merger of Inovio Biomedical Corporation and VGX Pharmaceuticals, and other corporate matters. Upon closing of the Merger, we also incurred costs that would have not been incurred in the prior year, such as Merger related compensation to key employees, higher amortization expense as a result of the intangible assets that were acquired from VGX, and higher employee stock based compensation due to the accelerated vesting of all Inovio stock options.
Net Loss Attributable to Common Stockholders
The $11.4 million increase in net loss attributable to common stockholders for the year ended December 31, 2009, compared with the same period in 2008, resulted primarily due to merger-related expenses, the increase in expense for the revaluation of registered common stock warrants, and the loss due to the change in the fair market value for our investment in VGX International as of December 31, 2009.
Inovio ended the year with cash and cash equivalents of $30.3 million and working capital of $25.2 million as compared to $14.1 million in cash and cash equivalents and $554,000 working capital as of December 31, 2008.
The increase in working capital for the year ended December 31, 2009, was primarily due to a financing we completed in the third fiscal quarter of 2009. On July 29, 2009, we entered into a securities purchase agreement with certain institutional investors relating to the sale and issuance of (a) 11,111,110 shares of common stock and (b) warrants to purchase a total of 2,777,776 shares of common stock with an exercise price of $3.50 per share, for an aggregate purchase price of approximately $30.0 million. The warrants were exercisable beginning six months after issuance and will expire six months from the date they are first exercisable. The shares of common stock and warrants were sold in units priced at $2.70, with each unit consisting of one share of common stock and a warrant to purchase 0.25 of a share of common stock. The offering closed on July 31, 2009, with net proceeds to Inovio of approximately $28.4 million.
Working capital also increased due to Auction Rate Securities ("ARS") and related ARS Rights being reclassified from long-term assets to current assets due to the time frame in which they can be readily convertible to cash. We believe that our cash and cash equivalents are sufficient to meet our planned working capital requirements through the second half of 2011.
The number of shares of Common Stock issued and outstanding was 102,765,682 as of March 4, 2010.
A pivotal event of 2010 was the completion of Inovio's merger with VGX Pharmaceuticals of Blue Bell, Pennsylvania, which was approved by stockholders on June 1, 2009. As referenced in press releases and prior filings with the Securities and Exchange Commission, the combined company has an integrated DNA vaccine design, development and delivery technology platform, as well as a pipeline of proprietary vaccines and partnerships that are advancing research projects and clinical trials using Inovio's proprietary electroporation delivery technology.
The company has operating locations in San Diego, CA, and Blue Bell, PA, and is focused on advancing its clinical and IND-stage programs, research and preclinical development of DNA vaccines, and ongoing research and development of innovative electroporation delivery processes and devices.
The company announced in June that Stanley A. Plotkin, MD joined the company's scientific advisory board. Dr. Plotkin has developed the rubella vaccine now used worldwide and worked extensively on the development and application of other vaccines including polio, rabies, varicella, rotavirus and cytomegalovirus. He is Emeritus Professor, Wistar Institute and the University of Pennsylvania, and a consultant to Sanofi Pasteur. In December, Inovio appointed Iacob Mathiesen, Ph.D., to its scientific advisory board. Dr. Mathiesen is an international expert in the field of electroporation delivery of biopharmaceuticals including DNA vaccines and was previously managing director of Inovio's Norwegian subsidiary, Inovio AS.
In October, Inovio's board of directors elected David J. Williams, former chairman and CEO of Sanofi Pasteur, the vaccine business of Sanofi-Aventis Group, and Keith H. Wells, a senior member of the Biologics Consulting Group and former director of vaccine development for The Salk Institute, to the board.
Subsequent to the year end, Mark L. Bagarazzi, M.D., was appointed chief medical officer to lead clinical development and regulatory activities for Inovio's next-generation vaccines for the treatment and prevention of influenza, HIV, other infectious diseases and cancers. Dr. Bagarazzi joined Inovio from Merck & Co., where he was director of worldwide regulatory affairs for vaccines and biologics.
In June 2009, Inovio granted an option to develop intravascular catheters using its proprietary electroporation technology to Cardigant Medical, Inc.; announced a collaboration with the National Microbiology Laboratory of the Public Health Agency of Canada and the University of Pennsylvania to further evaluate Inovio DNA vaccine candidates against swine influenza A (H1N1) virus; and established a research collaboration agreement with the National Institutes of Health's Vaccine Research Center (VRC) to develop vaccine candidates targeting the 2009 H1N1 swine flu strains.
Subsequent to year end, in January 2010 Inovio expanded its existing license agreement with the University of Pennsylvania, adding exclusive worldwide licenses for technology and intellectual property for novel DNA vaccines against pandemic influenza, Chikungunya, and foot-and-mouth disease. The amendment also encompasses new chemokine and cytokine molecular adjuvant technologies. The technology was developed in the University of Pennsylvania laboratory of Professor David B. Weiner, a pioneer in the field of DNA vaccines, and chairman of Inovio's scientific advisory board.
VGX-3100 Therapeutic Cervical Cancer DNA Vaccine
In October we reported significant antigen-specific antibody and T-cell immune responses from the dose group of this phase I clinical study. Subsequent to year end, in February 2010 we reported higher dose-related immune responses from the second, intermediate dose group of this study. We expect to report the third and final dose group in Q3 2010.
VGX-3400 Avian Influenza (H5N1) DNA Vaccine
Subsequent to year end, in March 2010 our affiliate, VGX International, obtained Korean approval to initiate a phase I clinical study of this vaccine candidate in Korea. Inovio expects to obtain FDA approval to initiate a US phase I clinical trial in Q2 2010. These studies will focus on safety and immunogenicity (levels of vaccine-induced immune responses). In previously reported animal studies, this vaccine provided 100% protection of non-human primates against the H5N1 avian influenza virus, including multiple unmatched avian influenza strains.
Universal Influenza DNA Vaccine
During 2010, Inovio reported multiple sets of data relating to the testing of its H1N1 vaccine, which represents one component of its universal influenza vaccine concept (which Inovio expects to comprise H1, H2, H3 and H5 sub-types). Inovio's SynConTM influenza vaccines are designed to provide broad cross-strain protection against existing and newly emergent, unmatched seasonal and pandemic-potential influenza strains.
Inovio reported pre-clinical results from multiple studies, including protection of 100% of ferrets, considered to be the animal model most representative of influenza in humans, against 2009 "swine flu" strains. Titer levels achieved were above the protection threshold considered to be protective against influenza infection in humans.
PENNVAXTM HIV DNA Vaccines
In October, the HIV Vaccine Trials Network (HVTN) initiated a phase I clinical study in a preventive setting of Inovio's PENNVAX™-B DNA vaccine delivered using its proprietary electroporation technology. The multi-center study is enrolling healthy volunteers to assess safety and immune responses.
A second IND is now open, allowing testing of PENNVAX™-B in a therapeutic setting. This Phase I trial (HIV-001) is being conducted in collaboration with the University of Pennsylvania and targets HIV-positive individuals. The electroporation-delivered PENNVAX™-B arm of this trial will start in early 2010.
In 2010, Inovio plans to initiate a new prophylactic HIV Phase I trial (RV262) in collaboration with the US Army. The study will test PENNVAX™-G delivered with electroporation in conjunction with a modified vaccinia Ankara- Chiang Mai double recombinant boost.
The company continues to advance its pre-clinical work on PENNVAX™-GP (against HIV clades A, C, and D, the prevalent strains in Africa and Asia) as a preventive HIV vaccine. This work is funded by a contract from the NIH's National Institute of Allergy and Infectious Diseases with a total potential value of about $23.5 million.
hTERT Cancer Vaccine
Merck continues to enroll patients in its phase I clinical study of an hTERT DNA vaccine using Inovio's electroporation delivery technology against breast, lung, and prostate cancers.
Research & Development
In July the company announced that its first SynCon™ dengue virus DNA vaccine induced neutralizing antibody responses against all four distinct serotypes of dengue viruses that are transmitted to humans by mosquitoes. Currently there is no commercially available vaccine or antiviral drug against dengue virus infections.
Ongoing investments are being made to further advance and optimize the company's electroporation delivery technology. Subsequent to year end, Inovio unveiled a new clinical-grade, miniaturized electroporation device designed to be an easy-to-use, portable delivery product for DNA vaccines. This new skin electroporation technology has been used to deliver DNA vaccines in several preclinical animal models and generated strong, protective antibody responses, which are required to provide immunity against targeted diseases. The company also announced a new hand-held, cordless electroporation device design. Inovio believes these devices may be used to inoculate large populations against infectious diseases such as influenza, dengue and malaria.
Inovio Biomedical Corporation