VGX-3100 for Anal HSIL - In a Phase 2 open-label trial, VGX-3100 showed a 50% clearance rate of HPV-16/18+ lesions in HIV-negative participants with anal HSIL at Week 36[1], compared to an estimated spontaneous rate of less than 27%[1] - 46% of participants showed no evidence of HPV-16/18 virus at Week 36[1] - INOVIO is considering Phase 3 trial designs for VGX-3100 aligned with the evolving treatment paradigm for Anal HSIL[5] INO-3112 for HPV-Related Cancer - In a Phase 1b/2a trial, the overall response rate (ORR) for INO-3112 in combination with durvalumab in HPV-positive head and neck squamous cell carcinoma (HNSCC) participants was 27.6% (4 CR, 4 PR) in 29 evaluable patients[8] - Treatment with INO-3112 resulted in infiltration of CD8+ immune cells into head and neck tumors[8, 23] INO-5401 for Glioblastoma - In a Phase 1/2 trial, INO-5401 + INO-9012 combined with Libtayo® showed a median overall survival (OS) of 17.9 months in unmethylated newly diagnosed glioblastoma (GBM) patients, compared to a historical 14.6-16 months[15] - Methylated newly diagnosed GBM patients treated with INO-5401 + INO-9012 combined with Libtayo® showed a median OS of 32.5 months, compared to a historical 23.2-25 months[15] INO-4201 for Ebola - In a Phase 1b trial, INO-4201, as a booster in participants previously vaccinated with Ervebo®, boosted humoral responses in 100% (36 of 36) of treated participants[21] Financial Status - INOVIO had $194.9 million in cash, cash equivalents, and short-term investments as of June 30, 2023[30]

Part I. Financial Information This section presents the company's financial statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents INOVIO Pharmaceuticals, Inc.'s unaudited condensed consolidated financial statements for the quarter ended September 30, 2023, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the company's accounting policies, liquidity, and specific financial items [Condensed Consolidated Balance Sheets](index=5&type=section&id=a%29%20Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (Unaudited) | Metric | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :----------------------------------- | :----------------------- | :------------- | | **ASSETS** | | | | Cash and cash equivalents | $18,804,602 | $46,329,359 | | Short-term investments | $148,668,866 | $206,669,397 | | Total current assets | $174,767,197 | $315,242,680 | | Total assets | $193,097,198 | $348,533,302 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $43,711,026 | $96,868,074 | | Total liabilities | $54,937,485 | $126,170,546 | | Total stockholders' equity | $138,159,713 | $222,362,756 | - Total assets decreased from **$348.5 million** at December 31, 2022, to **$193.1 million** at September 30, 2023, primarily driven by reductions in cash and cash equivalents, short-term investments, and prepaid expenses[9](index=9&type=chunk) - Total liabilities decreased from **$126.2 million** at December 31, 2022, to **$54.9 million** at September 30, 2023, largely due to a significant reduction in accounts payable and accrued expenses, including the settlement of accrued litigation[9](index=9&type=chunk)[60](index=60&type=chunk)[64](index=64&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=b%29%20Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue from collaborative arrangements | $388,446 | $9,154,133 | $729,359 | $10,137,602 | | Research and development expenses | $15,503,032 | $33,087,130 | $69,423,513 | $145,530,626 | | General and administrative expenses | $9,925,055 | $11,824,047 | $37,338,763 | $76,234,341 | | Impairment of goodwill | $10,513,371 | $— | $10,513,371 | $— | | Total operating expenses | $35,941,458 | $44,911,177 | $117,275,647 | $221,764,967 | | Loss from operations | $(35,553,012) | $(35,757,044) | $(116,546,288) | $(211,627,365) | | Net loss | $(33,929,864) | $(37,783,896) | $(110,113,714) | $(225,354,926) | | Net loss per share (Basic and diluted) | $(0.13) | $(0.15) | $(0.42) | $(0.96) | - Revenue from collaborative arrangements significantly decreased by **95.7%** for the three months ended September 30, 2023, and by **92.8%** for the nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to the satisfaction of performance obligations under the DoD Procurement Contract in 2022[12](index=12&type=chunk)[173](index=173&type=chunk) - Research and development expenses decreased by **53.2%** for the three months and **52.3%** for the nine months ended September 30, 2023, year-over-year, mainly due to the discontinuation of the INO-4800 program and reductions in force[12](index=12&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) - The company recognized a goodwill impairment charge of **$10.5 million** for both the three and nine months ended September 30, 2023, due to a sustained decline in stock price and market capitalization[12](index=12&type=chunk)[62](index=62&type=chunk)[180](index=180&type=chunk) - Net loss per share improved from **$(0.15)** to **$(0.13)** for the three months and from **$(0.96)** to **$(0.42)** for the nine months ended September 30, 2023, compared to the same periods in 2022[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=c%29%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the company's net loss and other comprehensive income/loss components, leading to total comprehensive loss Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(33,929,864) | $(37,783,896) | $(110,113,714) | $(225,354,926) | | Other comprehensive loss: | | | | | | Foreign currency translation | $(2,109) | $(16,563) | $(4,403) | $(37,903) | | Unrealized loss on short-term investments, net of tax | $(57,703) | $(218,985) | $(47,930) | $(565,073) | | Comprehensive loss | $(33,989,676) | $(38,019,444) | $(110,166,047) | $(225,957,902) | - Total comprehensive loss for the three months ended September 30, 2023, was **$(34.0) million**, an improvement from **$(38.0) million** in the prior year. For the nine months, it improved from **$(226.0) million** in 2022 to **$(110.2) million** in 2023[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=d%29%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) This section details changes in stockholders' equity, including net loss, stock issuances, and stock-based compensation - Total stockholders' equity decreased from **$222.4 million** at December 31, 2022, to **$138.2 million** at September 30, 2023, primarily due to net losses incurred during the period, partially offset by common stock issuances[18](index=18&type=chunk) - Issuance of common stock for legal settlement contributed **$14.0 million** to equity during the nine months ended September 30, 2023[18](index=18&type=chunk)[64](index=64&type=chunk)[105](index=105&type=chunk) - Net proceeds from common stock issuance for cash (ATM Equity Offering) amounted to **$3.6 million** for the nine months ended September 30, 2023[18](index=18&type=chunk)[75](index=75&type=chunk)[193](index=193&type=chunk) - Stock-based compensation added **$8.8 million** to additional paid-in capital for the nine months ended September 30, 2023[18](index=18&type=chunk)[85](index=85&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=e%29%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(98,089,766) | $(179,875,389) | | Net cash provided by investing activities | $67,412,596 | $55,585,048 | | Net cash provided by financing activities | $3,156,816 | $75,172,705 | | Decrease in cash and cash equivalents | $(27,524,757) | $(49,155,539) | | Cash and cash equivalents, end of period | $18,804,602 | $21,988,239 | - Net cash used in operating activities decreased by **45.5%** to **$98.1 million** for the nine months ended September 30, 2023, compared to **$179.9 million** in the prior year, primarily due to working capital changes and decreased operating expenses[23](index=23&type=chunk)[190](index=190&type=chunk) - Net cash provided by investing activities increased to **$67.4 million** for the nine months ended September 30, 2023, from **$55.6 million** in the prior year, mainly due to timing differences in short-term investment purchases, sales, and maturities[23](index=23&type=chunk)[191](index=191&type=chunk) - Net cash provided by financing activities significantly decreased to **$3.2 million** for the nine months ended September 30, 2023, from **$75.2 million** in the prior year, primarily due to lower net proceeds from common stock sales under the ATM Equity Offering Sales Agreement[23](index=23&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=f%29%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements [1. Organization and Operations](index=13&type=section&id=1.%20Organization%20and%20Operations) This note describes INOVIO's business, DNA medicine focus, product candidates, and key collaborations - INOVIO Pharmaceuticals, Inc. is a biotechnology company focused on developing and commercializing DNA medicines for HPV, cancer, and infectious diseases[26](index=26&type=chunk)[163](index=163&type=chunk) - The company's DNA medicine candidates generate immune responses (CD4+, CD8+, memory T-cells) using precisely designed plasmids delivered by its proprietary smart device, CELLECTRA[27](index=27&type=chunk)[164](index=164&type=chunk) - INO-3107, a candidate for recurrent respiratory papillomatosis (RRP), showed a statistically significant reduction in surgical interventions in Phase 1/2 trials, supporting its potential role in HPV-related diseases[28](index=28&type=chunk)[165](index=165&type=chunk) - INOVIO is also developing DNA medicines for HPV-related precancers and cancers (vulvar, anal dysplasia, head & neck cancer), glioblastoma multiforme (GBM), and an Ebola vaccine booster[29](index=29&type=chunk)[167](index=167&type=chunk) - The company collaborates with various partners including Advaccine, ApolloBio, AstraZeneca, Bill & Melinda Gates Foundation, CEPI, DoD, and academic institutions[30](index=30&type=chunk)[168](index=168&type=chunk) [2. Basis of Presentation, Liquidity and Risks and Uncertainties](index=13&type=section&id=2.%20Basis%20of%20Presentation%2C%20Liquidity%20and%20Risks%20and%20Uncertainties) This note outlines financial statement presentation, liquidity assessment, and key risks and uncertainties - The company reported a net loss of **$33.9 million** for the three months and **$110.1 million** for the nine months ended September 30, 2023, with an accumulated deficit of **$1.6 billion**[35](index=35&type=chunk) - Working capital was **$131.1 million** as of September 30, 2023. Cash, cash equivalents, and short-term investments of **$167.5 million** are sufficient for at least 12 months of planned operations[35](index=35&type=chunk) - Additional capital will be required for future R&D, potentially through strategic alliances, licensing, grants, or debt/equity financings, with a risk of dilution or adverse terms[36](index=36&type=chunk) - The company's ability to continue operations depends on obtaining additional capital and achieving profitability, with no guarantee of positive cash flow[37](index=37&type=chunk) [3. Critical Accounting Policies](index=14&type=section&id=3.%20Critical%20Accounting%20Policies) This note details significant accounting policies and estimates, including revenue recognition and impairment assessments - Collaboration agreements are assessed under ASC Topic 808 or Topic 606, with revenue recognized from license fees, product supply, milestone payments, and royalties[39](index=39&type=chunk)[40](index=40&type=chunk) - Milestone payments are included in transaction price if probable of being reached and a significant revenue reversal would not occur, with re-evaluation each reporting period[44](index=44&type=chunk) - Research and development expenses, particularly clinical trial accruals, rely on estimates of total costs based on participant enrollment and study completion, subject to revision[46](index=46&type=chunk) - Goodwill and long-lived assets are reviewed for impairment annually or more frequently if triggering events occur, using qualitative and quantitative assessments[47](index=47&type=chunk)[48](index=48&type=chunk) [4. Short-term Investments and Fair Value Measurements](index=16&type=section&id=4.%20Short-term%20Investments%20and%20Fair%20Value%20Measurements) This note provides information on short-term investments and fair value measurements, including unrealized gains and losses Available-for-Sale Securities as of September 30, 2023 | Type | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | | :----------------------------- | :----------- | :--------------------- | :---------------------- | :---------------- | | Mutual funds | $65,340,680 | $— | $(5,451,695) | $59,888,985 | | U.S. treasury securities | $84,892,403 | $5,888 | $(3,041) | $84,895,250 | | Certificates of deposit | $2,978,576 | $12,202 | $(305) | $2,990,473 | | U.S. agency mortgage-backed securities | $1,364,516 | $— | $(470,358) | $894,158 | | **Total** | **$154,576,175** | **$18,090** | **$(5,925,399)** | **$148,668,866** | - Net unrealized loss on available-for-sale equity securities was **$(219,000)** for the three months and a gain of **$3.9 million** for the nine months ended September 30, 2023, compared to losses of **$(1.8) million** and **$(10.6) million**, respectively, in 2022[54](index=54&type=chunk)[185](index=185&type=chunk) - Unrealized losses of **$5.9 million** on available-for-sale debt securities as of September 30, 2023, were primarily due to changes in interest rates, not credit risks, and no allowance for credit losses was recorded[55](index=55&type=chunk) [5. Certain Balance Sheet Items](index=18&type=section&id=5.%20Certain%20Balance%20Sheet%20Items) This note provides detailed breakdowns of specific balance sheet accounts like prepaid expenses and accrued liabilities Prepaid and Other Current Assets | Item | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Insurance recovery | $— | $30,000,000 | | Prepaid manufacturing expenses | $21,918 | $1,401,028 | | Other prepaid expenses | $5,092,955 | $18,729,453 | | **Total** | **$5,114,873** | **$50,130,481** | Accounts Payable and Accrued Expenses | Item | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Trade accounts payable | $3,192,053 | $19,862,487 | | Accrued compensation | $10,214,707 | $12,574,921 | | Accrued litigation settlement | $— | $44,000,000 | | Other accrued expenses | $2,146,982 | $3,249,477 | | **Total** | **$15,553,742** | **$79,686,885** | - The significant decrease in prepaid and other current assets and accounts payable and accrued expenses is largely due to the settlement of class action securities litigation, which involved a **$30.0 million** cash payment by insurance carriers and **$14.0 million** in common stock issuance[60](index=60&type=chunk)[64](index=64&type=chunk)[105](index=105&type=chunk) [6. Goodwill and Intangible Assets](index=18&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets) This note discusses goodwill and intangible assets, including impairment charges recognized - A non-cash, pre-tax goodwill impairment charge of **$10.5 million** was recognized during the three months ended September 30, 2023, fully impairing goodwill, due to a sustained decline in stock price and market capitalization[61](index=61&type=chunk)[62](index=62&type=chunk)[180](index=180&type=chunk) - Long-lived assets (property, equipment, leasehold improvements, right-of-use assets) were tested for impairment and concluded not to be impaired[63](index=63&type=chunk) - An impairment charge of **$2.0 million** was recorded for remaining intangible assets from Bioject Medical Technologies during Q2 2023, as there are no current plans to develop or utilize this technology[64](index=64&type=chunk)[65](index=65&type=chunk) [7. Convertible Debt](index=19&type=section&id=7.%20Convertible%20Debt) This note details convertible senior notes, including carrying amount, interest expense, and accounting treatment - The company has **$78.5 million** aggregate principal amount of **6.50%** convertible senior notes due March 1, 2024[67](index=67&type=chunk)[68](index=68&type=chunk) - As of September 30, 2023, the net carrying amount of the Notes was **$16.5 million**, with **$16.9 million** in future minimum payments due in 2024[72](index=72&type=chunk)[73](index=73&type=chunk) - Interest expense related to the Notes was **$313,000** for the three months and **$940,000** for the nine months ended September 30, 2023 and 2022[72](index=72&type=chunk) - The company adopted ASU 2020-06 on January 1, 2022, simplifying accounting for convertible instruments, resulting in a net reduction to accumulated deficit of **$1.8 million** and an increase to convertible senior notes of **$1.5 million**[71](index=71&type=chunk) [8. Stockholders' Equity](index=20&type=section&id=8.%20Stockholders%27%20Equity) This note provides information on common stock, stock issuances, and equity incentive plans - As of September 30, 2023, **269,731,481** shares of common stock were outstanding, compared to **253,091,319** shares at December 31, 2022[74](index=74&type=chunk) - During the nine months ended September 30, 2023, the company sold **6,718,168** shares of common stock under its ATM Equity Offering Sales Agreement for net proceeds of **$3.6 million**[75](index=75&type=chunk)[193](index=193&type=chunk) - **9,121,000** shares of common stock were issued in Q1 2023 as part of a securities class action settlement[75](index=75&type=chunk)[105](index=105&type=chunk)[195](index=195&type=chunk) - The 2023 Omnibus Incentive Plan was approved, allowing for the issuance of up to **14,000,000** shares plus returns from the 2016 Plan, with **15,072,020** shares available for future grant as of September 30, 2023[77](index=77&type=chunk)[78](index=78&type=chunk) [9. Net Loss Per Share](index=21&type=section&id=9.%20Net%20Loss%20Per%20Share) This note explains basic and diluted net loss per share calculation, identifying anti-dilutive securities - Basic and diluted net loss per share were the same for the three and nine months ended September 30, 2023 and 2022, as potential dilutive shares (stock options, RSUs, convertible notes) were anti-dilutive[82](index=82&type=chunk) Potential Shares Excluded from Diluted Net Loss Per Share Calculation (Anti-Dilutive Effect) | Item | Three and Nine Months Ended Sep 30, 2023 | Three and Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Options to purchase common stock | 14,519,877 | 13,381,977 | | Service-based restricted stock units | 3,329,281 | 2,643,840 | | Performance-based restricted stock units | — | 111,941 | | Convertible preferred stock | 3,309 | 3,309 | | Convertible notes | 3,049,980 | 3,049,980 | | **Total** | **20,902,447** | **19,191,047** | [10. Stock-Based Compensation](index=22&type=section&id=10.%20Stock-Based%20Compensation) This note details stock-based compensation expense for employees and directors, and unrecognized compensation Employee and Director Stock-Based Compensation Expense | Period | Total Expense | R&D Expenses | G&A Expenses | | :--------------------------------------- | :------------ | :----------- | :----------- | | Three Months Ended Sep 30, 2023 | $1.9 million | $846,000 | $1.1 million | | Nine Months Ended Sep 30, 2023 | $8.3 million | $3.5 million | $4.8 million | | Three Months Ended Sep 30, 2022 | $3.0 million | $1.4 million | $1.6 million | | Nine Months Ended Sep 30, 2022 | $19.0 million | $7.3 million | $11.7 million | - Total employee and director stock-based compensation expense decreased significantly year-over-year, primarily due to a lower weighted average grant date fair value for awards granted in 2023[85](index=85&type=chunk)[181](index=181&type=chunk) - Unrecognized compensation expense for unvested stock options was **$5.9 million** (weighted-average period of **1.4 years**) and for unvested service-based RSUs was **$4.6 million** (weighted-average period of **1.6 years**) as of September 30, 2023[86](index=86&type=chunk)[88](index=88&type=chunk) [11. Related Party Transactions](index=22&type=section&id=11.%20Related%20Party%20Transactions) This note discloses related party transactions, including revenue and expense recognition from collaborative agreements - The company recognized no revenue from Plumbline Life Sciences (PLS) for the three and nine months ended September 30, 2023, compared to **$7,000** and **$22,000**, respectively, in 2022[90](index=90&type=chunk) - Deferred grant funding recognized from The Wistar Institute (Wistar) as contra-research and development expense was **$316,000** and **$705,000** for the three and nine months ended September 30, 2023, a decrease from **$824,000** and **$6.3 million** in 2022[96](index=96&type=chunk) - Research and development expenses recorded from Wistar were **$407,000** and **$1.3 million** for the three and nine months ended September 30, 2023, respectively[97](index=97&type=chunk) [12. Commitments and Contingencies](index=23&type=section&id=12.%20Commitments%20and%20Contingencies) This note outlines operating lease liabilities, legal settlements, and ongoing litigation Operating Lease Liabilities Maturities as of September 30, 2023 | Year | Amount | | :------------------ | :----------- | | Remainder of 2023 | $956,000 | | 2024 | $3,050,000 | | 2025 | $3,063,000 | | 2026 | $3,139,000 | | 2027 | $2,526,000 | | Thereafter | $4,223,000 | | **Total remaining lease payments** | **$16,957,000** | | Less: present value adjustment | $(3,645,000) | | **Total operating lease liabilities** | **$13,312,000** | - The company settled a shareholder class action complaint in January 2023 for **$30.0 million** in cash (paid by insurance) and **$14.0 million** in common stock[105](index=105&type=chunk)[213](index=213&type=chunk) - A shareholder derivative litigation was preliminarily approved for settlement in June 2023, with the company paying **$1.2 million** for plaintiffs' counsel fees and implementing corporate governance reforms[112](index=112&type=chunk)[219](index=219&type=chunk) - The company is involved in ongoing litigation with VGXI, Inc. and GeneOne Life Science, Inc. regarding alleged breaches of supply and license agreements, respectively, with trial dates not yet set[113](index=113&type=chunk)[116](index=116&type=chunk)[220](index=220&type=chunk)[224](index=224&type=chunk) [13. Collaborative Agreements](index=26&type=section&id=13.%20Collaborative%20Agreements) This note provides details on key collaborative agreements, including terms, development, and financial impacts - Under the Advaccine Agreement, INOVIO granted exclusive rights to Advaccine for INO-4800 development and commercialization in Greater China and 33 other Asian countries, with potential milestones up to **$200.0 million** and high single-digit royalties[120](index=120&type=chunk)[122](index=122&type=chunk) - INOVIO discontinued internally funded efforts for INO-4800 as a COVID-19 heterologous booster vaccine in Q4 2022, but Advaccine continues its development[121](index=121&type=chunk)[253](index=253&type=chunk) - Reimbursements from Advaccine recorded as contra-research and development expense were **$1.2 million** for the three months and **$3.6 million** for the nine months ended September 30, 2023[129](index=129&type=chunk)[179](index=179&type=chunk) - The company received **$238,000** and **$243,000** in revenue from the ApolloBio Agreement for the three and nine months ended September 30, 2023, respectively, for VGX-3100 development[133](index=133&type=chunk) - Development of Lassa fever and MERS vaccine candidates with CEPI was discontinued in November 2022. Funding received from CEPI for these programs decreased significantly in 2023[135](index=135&type=chunk)[136](index=136&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Funding from the DoD for CELLECTRA 3PSP device and INO-4800 development, totaling **$54.5 million**, saw no amounts recorded in 2023, compared to **$6.1 million** in contra-R&D expense in 2022[139](index=139&type=chunk)[179](index=179&type=chunk) [14. Income Taxes](index=29&type=section&id=14.%20Income%20Taxes) This note discusses the company's income tax provision, deferred tax assets, and valuation allowance - No income tax provision or benefit was recorded for the nine months ended September 30, 2023 and 2022, due to a history of net operating losses and a full valuation allowance against net deferred tax assets[141](index=141&type=chunk) [15. Geneos Therapeutics, Inc.](index=29&type=section&id=15.%20Geneos%20Therapeutics%2C%20Inc%2E) This note describes INOVIO's investment in Geneos Therapeutics, Inc., and its accounting treatment - INOVIO formed Geneos in 2016 for personalized cancer therapies. After several financing rounds, INOVIO's ownership decreased, leading to deconsolidation in June 2020[142](index=142&type=chunk)[145](index=145&type=chunk) - INOVIO now accounts for its common stock investment in Geneos using the equity method and preferred stock investments as equity securities, with no further investment made since March 31, 2022[147](index=147&type=chunk)[155](index=155&type=chunk) - The company's share of net losses of Geneos reduced its investment to **$0** as of March 31, 2022, and it will not record further losses as it has no obligation to fund Geneos[155](index=155&type=chunk) [16. Subsequent Events](index=30&type=section&id=16.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period but before financial statement issuance - From October 1, 2023, through the financial statement date, the company sold **3,254,943** shares of common stock under the 2021 Sales Agreement for net proceeds of **$1.6 million** at a weighted average price of **$0.51** per share[158](index=158&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=32&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes INOVIO's financial condition, operational results, and liquidity, including key trends and future outlook [Overview](index=32&type=section&id=Overview) This section provides an overview of INOVIO's business, its DNA medicine development, and financial position - INOVIO is a biotechnology company developing DNA medicines for HPV, cancer, and infectious diseases, utilizing its CELLECTRA smart device to deliver plasmids that generate immune responses[163](index=163&type=chunk)[164](index=164&type=chunk) - INO-3107 for recurrent respiratory papillomatosis (RRP) showed statistically significant reduction in surgical interventions in Phase 1/2 trials, and the FDA indicated this data could support a Biologic License Application (BLA) for accelerated approval, eliminating the need for a previously planned Phase 3 trial[165](index=165&type=chunk)[166](index=166&type=chunk) - The company has an accumulated deficit of **$1.6 billion** as of September 30, 2023, and expects to incur substantial operating losses in the future as all DNA medicine candidates are in the research and development phase[169](index=169&type=chunk)[170](index=170&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) This section highlights key recent events impacting the company's operations and financial performance - In Q3 2023, INOVIO undertook a corporate reorganization, including a **30%** reduction in its full-time employees (**58 employees**), incurring a one-time charge of **$2.1 million** primarily for severance payments[171](index=171&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the company's critical accounting policies and estimates, noting any significant changes - There have been no significant changes to critical accounting estimates since December 31, 2022, with details provided in Note 3 to the Condensed Consolidated Financial Statements[172](index=172&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on revenue and expense trends for the reporting periods Revenue from Collaborative Arrangements and Other Contracts | Period | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Three Months Ended Sep 30 | $388,000 | $9.2 million | $(8.8 million) | (95.7%) | | Nine Months Ended Sep 30 | $729,000 | $10.1 million | $(9.4 million) | (92.8%) | - The decrease in revenue was primarily due to the satisfaction of all performance obligations under the Procurement Contract with the DoD during 2022[173](index=173&type=chunk) Research and Development Expenses | Period | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Three Months Ended Sep 30 | $15.5 million | $33.1 million | $(17.6 million) | (53%) | | Nine Months Ended Sep 30 | $69.4 million | $145.5 million | $(76.1 million) | (52%) | - Key drivers for the decrease in R&D expenses include lower drug manufacturing and clinical study expenses for INO-4800 (discontinued in Q4 2022), reduced employee and consultant compensation due to workforce reductions, and lower expenses for VGX-3100 and CELLECTRA 3PSP device development[177](index=177&type=chunk) General and Administrative Expenses | Period | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :--------- | | Three Months Ended Sep 30 | $9.9 million | $11.8 million | $(1.9 million) | (16.1%) | | Nine Months Ended Sep 30 | $37.3 million | $76.2 million | $(38.9 million) | (51.0%) | - Decreases in G&A expenses were driven by lower legal expenses related to settled litigation, reduced employee compensation (including stock-based compensation), and lower outside services for INO-4800 and VGX-3100. The nine-month decrease also reflects a **$44.0 million** reduction related to the class action securities litigation settlement (net of insurance recoveries) and **$6.9 million** in severance expenses for the former CEO in 2022[180](index=180&type=chunk)[183](index=183&type=chunk) - Interest income increased due to higher interest rates, while interest expense remained consistent. Gain on investment in affiliated entities (PLS) improved from a loss in 2022 to a gain in 2023[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations and fund future operations, including cash position and funding requirements - As of September 30, 2023, cash, cash equivalents, and short-term investments totaled **$167.5 million**, with working capital of **$131.1 million**, down from **$253.0 million** and **$218.4 million**, respectively, at December 31, 2022[189](index=189&type=chunk) - Net cash used in operating activities decreased to **$98.1 million** for the nine months ended September 30, 2023, from **$179.9 million** in 2022, primarily due to working capital changes and decreased operating expenses[190](index=190&type=chunk) - Net cash provided by financing activities significantly decreased to **$3.2 million** in 2023 from **$75.2 million** in 2022, mainly due to lower proceeds from common stock sales under the ATM Equity Offering Sales Agreement[192](index=192&type=chunk)[193](index=193&type=chunk) - The company believes current cash and short-term investments are sufficient for planned working capital requirements for at least the next twelve months and expects its cash runway to extend into Q2 2025, considering expense reductions and changes to the INO-3107 development plan[196](index=196&type=chunk)[197](index=197&type=chunk) - The company has a **$2.9 million** minimum purchase obligation under supply agreements and expects to satisfy the **$16.4 million** obligation for its Senior Convertible Notes maturing March 1, 2024, from existing cash[198](index=198&type=chunk)[199](index=199&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section outlines INOVIO's exposure to market risks, including interest rate, foreign currency, and inflation risks. It details how changes in interest rates have impacted the company's investment portfolio and addresses the limited foreign currency exposure and the minimal effect of inflation on its business - Primary market risk exposure is interest rate sensitivity, with a **$5.9 million** unrealized loss in the investment portfolio as of September 30, 2023, due to increased prevailing interest rates[201](index=201&type=chunk) - The company has limited exposure to foreign currency risk, primarily from cash and equity investments denominated in South Korean Won, and does not use derivative instruments for hedging[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - Inflation has not had a material effect on the company's business, financial condition, or results of operations during the nine months ended September 30, 2023[206](index=206&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=38&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of INOVIO's disclosure controls and procedures as of September 30, 2023, at a reasonable assurance level, and states that there have been no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2023, at the reasonable assurance level[209](index=209&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[210](index=210&type=chunk) Part II. Other Information This section details legal proceedings, risk factors, and exhibits, offering crucial non-financial context [ITEM 1. LEGAL PROCEEDINGS](index=39&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section details INOVIO's legal proceedings, including settlements and ongoing disputes with manufacturers - A shareholder class action complaint was settled in January 2023, with INOVIO paying **$30.0 million** in cash (covered by insurance) and issuing **$14.0 million** in common stock[213](index=213&type=chunk) - Multiple shareholder derivative complaints were consolidated and a settlement was preliminarily approved in June 2023, leading to a **$1.2 million** payment for plaintiffs' counsel fees and implementation of corporate governance reforms[214](index=214&type=chunk)[219](index=219&type=chunk) - INOVIO is actively litigating against VGXI, Inc. for alleged material breach of a supply agreement, with VGXI filing counterclaims for breach of contract, trade secret misappropriation, and unjust enrichment[220](index=220&type=chunk)[222](index=222&type=chunk) - The company is also in litigation with GeneOne Life Science, Inc. over an alleged breach of the CELLECTRA Device License Agreement, with INOVIO filing counterclaims[224](index=224&type=chunk) [ITEM 1A. RISK FACTORS](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines significant risks to INOVIO's business, financial condition, and stock price, including financial, product development, and operational challenges [Risks Related to Our Financial Position and Need for Additional Capital](index=40&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) This section details risks associated with the company's financial stability, historical losses, and need for additional funding - The company has incurred significant losses since inception (**$1.6 billion** accumulated deficit as of Sep 30, 2023) and expects to continue incurring net losses, with no guarantee of profitability[227](index=227&type=chunk) - Success is dependent on developing DNA medicines and proprietary smart device technology, as there are limited revenue sources and no approved products for sale[228](index=228&type=chunk)[229](index=229&type=chunk) - Substantial additional capital is needed for R&D, clinical testing, and commercialization, which may be difficult or costly to obtain, potentially leading to dilution or adverse terms[231](index=231&type=chunk)[232](index=232&type=chunk) - Failure to secure adequate funding could force delays, scope reductions, or cessation of clinical/preclinical programs[233](index=233&type=chunk) [Risks Related to Product Development, Manufacturing and Regulatory Approval](index=41&type=section&id=Risks%20Related%20to%20Product%20Development%2C%20Manufacturing%20and%20Regulatory%20Approval) This section addresses risks inherent in the development, manufacturing, and regulatory approval processes for DNA medicine candidates - Failure to obtain FDA approval for product candidates would prevent commercialization in the U.S., significantly impairing revenue generation[234](index=234&type=chunk)[237](index=237&type=chunk) - Pursuing accelerated approval for INO-3107 or other candidates does not guarantee faster development or approval and does not increase the likelihood of marketing approval[238](index=238&type=chunk)[240](index=240&type=chunk) - Clinical trials are lengthy, expensive, and uncertain, with results from earlier stages not always predictive of future outcomes, and potential for delays or termination due to various factors[244](index=244&type=chunk)[247](index=247&type=chunk)[249](index=249&type=chunk) - No DNA medicine candidates have been approved for sale, and there's no guarantee of developing commercially successful products due to potential ineffectiveness, safety concerns, manufacturing difficulties, or competition[250](index=250&type=chunk) - The company discontinued internally funded efforts for INO-4800 as a COVID-19 heterologous booster vaccine in Q4 2022, and its collaborator Advaccine's pursuit of Emergency Use Authorization (EUA) in Asia is not guaranteed[253](index=253&type=chunk)[254](index=254&type=chunk) - Negative public perception of DNA medicines' efficacy, safety, or tolerability could adversely affect business, development, and regulatory approvals[256](index=256&type=chunk) - Reliance on contract manufacturers for smart devices and DNA medicine candidates poses risks of production difficulties, delays, non-compliance with regulations (cGMP), and supply interruptions[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - Dependence on single-source suppliers for components and materials creates risks of supply disruptions, price increases, and delays, which could harm the business[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Even with regulatory approval, products may face future development and regulatory difficulties, including restrictions on use, ongoing post-approval studies, and strict promotional claims regulations[267](index=267&type=chunk) - Developing investigational DNA medicines using new endpoints or methodologies for rare diseases (e.g., INO-3107 for RRP) may lead to longer, costlier, or less effective trials, and regulatory authorities may not consider endpoints clinically meaningful[270](index=270&type=chunk)[271](index=271&type=chunk) - Obtaining and maintaining Orphan Drug Designation for DNA medicine candidates is uncertain, and exclusivity benefits may be limited or lost[272](index=272&type=chunk)[273](index=273&type=chunk) - Breakthrough therapy or fast track designations do not guarantee faster development, review, or approval, nor do they increase the likelihood of marketing approval[274](index=274&type=chunk)[275](index=275&type=chunk) [Risks Related to Reliance on Third Parties](index=46&type=section&id=Risks%20Related%20to%20Reliance%20on%20Third%20Parties) This section outlines risks associated with dependence on external collaborators, partners, and CROs for product development and funding - Loss of or inability to secure collaborators/partners, or inadequate resource allocation by existing partners, could hinder product development and profitability[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - Agreements with government agencies are subject to termination and uncertain future funding, which could negatively impact pipeline development and require alternative funding[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - Reliance on third-party CROs to conduct clinical trials carries risks of non-compliance with GCPs, delays, or termination, which could impede regulatory approval and commercialization[283](index=283&type=chunk)[284](index=284&type=chunk) - Indemnification provisions in contracts could lead to substantial liabilities if obligations exceed insurance coverage or if indemnifying parties fail to perform[285](index=285&type=chunk)[286](index=286&type=chunk) [Risks Related to Commercialization of Our DNA Medicine Candidates](index=50&type=section&id=Risks%20Related%20to%20Commercialization%20of%20Our%20DNA%20Medicine%20Candidates) This section details challenges and uncertainties in successfully bringing DNA medicine candidates to market - The company has a small marketing organization and no sales organization; failure to establish these capabilities or partner with third parties could prevent product revenue generation[287](index=287&type=chunk)[288](index=288&type=chunk) - Commercial success depends on broad market acceptance by the medical community and patients, influenced by factors like safety, efficacy, convenience, pricing, and third-party payor coverage[289](index=289&type=chunk)[290](index=290&type=chunk) - Uncertainty regarding coverage and reimbursement policies by third-party payors (government, private insurers) could hinder or prevent commercial success if rates are inadequate or coverage is denied[291](index=291&type=chunk)[292](index=292&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) [Risks Related to Employee and Operational Matters](index=52&type=section&id=Risks%20Related%20to%20Employee%20and%20Operational%20Matters) This section covers risks related to human resources, litigation, competition, IT systems, product liability, and regulatory compliance - Corporate restructuring and cost reduction efforts (including a **30%** headcount reduction in Q3 2023) may not achieve anticipated results, leading to unintended consequences like increased attrition, reduced morale, and potential employment litigation[297](index=297&type=chunk)[298](index=298&type=chunk) - The company is subject to ongoing litigation (e.g., VGXI, GeneOne) and may face additional lawsuits, which could result in substantial damages, costly legal expenses, diversion of management attention, and harm to business and reputation[299](index=299&type=chunk)[300](index=300&type=chunk) - Dependence on key personnel and the ability to attract/retain qualified staff is critical; loss of key personnel could negatively affect product development and commercialization[301](index=301&type=chunk) - Health epidemics (e.g., COVID-19) could adversely affect clinical trial operations, supply chains, and overall business, leading to delays and increased costs[302](index=302&type=chunk)[303](index=303&type=chunk) - Intense and increasing competition from larger pharmaceutical and biotechnology companies, including those with disruptive technologies, could impede the ability to develop and commercialize DNA medicines[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - Failure to successfully acquire, develop, and market additional product candidates or approved products would impair growth, as the process is lengthy, complex, and competitive[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - Changes in funding for the FDA and other government agencies could delay product development and commercialization, negatively impacting the business[312](index=312&type=chunk)[313](index=313&type=chunk) - Reliance on information technology systems and infrastructure exposes the company to cybersecurity breaches and data leakage, which could negatively impact operations, lead to financial/reputational harm, and increase compliance costs[314](index=314&type=chunk)[315](index=315&type=chunk) - Potential product liability exposure from clinical trials and product sales could lead to substantial liabilities, even with insurance coverage, and harm business reputation[316](index=316&type=chunk)[317](index=317&type=chunk) - Healthcare reform measures (e.g., ACA, IRA) could hinder commercial success by impacting pricing, reimbursement, and market access for products[318](index=318&type=chunk)[320](index=320&type=chunk)[321](index=321&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk) - Failure to comply with applicable healthcare regulations (fraud, abuse, transparency, privacy) could result in substantial penalties, adversely affecting business operations and financial condition[326](index=326&type=chunk)[327](index=327&type=chunk) - Business involves hazardous materials and compliance with environmental laws, which can be expensive and restrict operations[328](index=328&type=chunk) - Collaborations with Chinese companies and reliance on materials manufactured in China expose the company to uncertainties in Chinese laws, trade wars, political unrest, and unstable economic conditions[329](index=329&type=chunk)[330](index=330&type=chunk) - Risk of misconduct by employees, principal investigators, and consultants, including non-compliance with regulatory standards and insider trading, could lead to regulatory sanctions and reputational harm[331](index=331&type=chunk) - Employee litigation and unfavorable publicity could negatively affect future business and reputation[332](index=332&type=chunk)[333](index=333&type=chunk) [Risks Related to Our Intellectual Property](index=55&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section discusses challenges and uncertainties in generating, protecting, and enforcing intellectual property rights - Generating and protecting intellectual property (patents, trademarks, trade secrets) is difficult and costly, with uncertainties in patent laws and potential for limited protection or invalidation[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - Reliance on licensors and collaborators to protect intellectual property means their failure to do so could significantly harm the business[336](index=336&type=chunk) - Trade secrets are difficult to protect from unintentional or willful disclosure, and enforcement is expensive and unpredictable[337](index=337&type=chunk) - Being sued for infringing third-party intellectual property rights would be costly, time-consuming, and could lead to substantial damages, injunctions, or required licensing fees[340](index=340&type=chunk)[342](index=342&type=chunk) - Failure to register trademarks in all potential markets could adversely affect the ability to enforce them against third parties[343](index=343&type=chunk) [Risks Related to an Investment in Our Common Stock](index=60&type=section&id=Risks%20Related%20to%20an%20Investment%20in%20Our%20Common%20Stock) This section outlines risks specific to investing in common stock, including market volatility, liquidity, and corporate governance - An active trading market for common stock may not be sustained, making it difficult for investors to sell shares without depressing the market price[344](index=344&type=chunk) - The price of common stock has been and may continue to be volatile, subject to substantial drops due to various factors including clinical trial developments, financial results, and industry trends[345](index=345&type=chunk)[346](index=346&type=chunk) - Management has broad discretion in using cash, cash equivalents, and investments, and ineffective use could lead to financial losses and stock price decline[347](index=347&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could delay or prevent a change of control, potentially limiting the market price of common stock[348](index=348&type=chunk)[350](index=350&type=chunk) - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future, making capital appreciation the sole source of potential gain[351](index=351&type=chunk) - Ability to utilize net operating loss carryforwards and other tax attributes may be limited due to ownership changes or changes in tax laws[352](index=352&type=chunk) [General Risk Factors](index=62&type=section&id=General%20Risk%20Factors) This section covers broad risks impacting the company, including listing standards, market fluctuations, economic conditions, and regulatory changes - Failure to comply with Nasdaq's continued listing standards (e.g., minimum bid price) could result in delisting, negatively impacting stock price, access to capital markets, and financial condition[353](index=353&type=chunk)[354](index=354&type=chunk)[356](index=356&type=chunk)[357](index=357&type=chunk) - Quarterly operating results may fluctuate significantly due to variations in expenses, clinical trials, litigation, regulatory developments, and investment fair value changes, leading to stock price volatility[358](index=358&type=chunk) - Market fluctuations and general economic conditions (inflation, interest rates, geopolitical issues, financial services industry instability) could materially affect results of operations and liquidity[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk) - Limited equity research analyst coverage or unfavorable reports could cause stock price and trading volume to decline[363](index=363&type=chunk) - Issuance of additional stock in connection with financings, acquisitions, or incentive plans will dilute existing stockholders[364](index=364&type=chunk) - Incurring significant costs and demands upon management as a public company due to legal, accounting, and compliance requirements[365](index=365&type=chunk)[366](index=366&type=chunk) - Changes in tax laws (e.g., Tax Cuts and Jobs Act) could adversely affect business and financial condition[367](index=367&type=chunk)[368](index=368&type=chunk) - Increasing use of social media platforms presents new risks and challenges, including noncompliance with regulations, inappropriate disclosure of sensitive information, and negative publicity[369](index=369&type=chunk) [ITEM 6. EXHIBITS](index=65&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL files - Exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), certifications from the CEO and CFO (Sarbanes-Oxley Act), and XBRL financial data files[371](index=371&type=chunk) [SIGNATURES](index=67&type=section&id=SIGNATURES) This section contains official signatures of INOVIO's President, CEO, and CFO, affirming the Form 10-Q submission - The report is signed by Jacqueline E. Shea, President, Chief Executive Officer and Director, and Peter Kies, Chief Financial Officer, on November 9, 2023[376](index=376&type=chunk)

Inovio Pharmaceuticals, Inc. (NASDAQ:INO) H.C. Wainwright 25th Annual Global Investment Conference Call September 12, 2023 4:30 PM ET Company Participants Jacqueline Shea - President and Chief Executive Officer Conference Call Participants Li Chen - H.C. Wainwright Li Chen Good afternoon, everyone, and welcome to H.C. Wainwright 25th Annual Global Investment Conference. My name is Li Chen, and I'm H.C. Wainwright Equity Research Associate. I'd like now to welcome our next speaker, Dr. Jacqueline Shea, Presi ...

Financial Data and Key Metrics Changes - Revenue for Q2 2023 was $226,000, down from $784,000 in Q2 2022, indicating a significant decline in revenue [5] - Net loss for Q2 2023 was $35.5 million or $0.13 per share, compared to a net loss of $108.5 million or $0.46 per share in Q2 2022, representing a 67% year-over-year reduction in net loss [5] - General and administrative (G&A) expenses for Q2 2023 were $13.5 million, a 72% decrease from $48.5 million in Q2 2022, primarily due to one-time costs related to litigation settlements in 2022 [4] Business Line Data and Key Metrics Changes - The company announced the cessation of further development of VGX-3100 for cervical HSIL in the U.S. due to FDA requirements for additional trials [2] - INO-3107, targeting recurrent respiratory papillomatosis (RRP), is progressing towards a Phase 3 trial, with patient dosing expected to start in Q1 2024 [38][64] - The company is also advancing VGX-3100 for anal HSIL and other oncology candidates, including INO-3112 and INO-5401 [40][68] Market Data and Key Metrics Changes - The anal HSIL disease affects an estimated 210,000 to over 1 million people in the U.S., with a similar estimate for Europe, highlighting a significant market opportunity [66] - The company is focusing on global markets for VGX-3100, particularly in China, where a Phase 3 trial is ongoing without the use of the novel biomarker [46] Company Strategy and Development Direction - The company is undergoing a strategic overhaul to focus on pipeline candidates closest to market with the highest likelihood of success [29] - A workforce reduction of approximately 30% has been implemented to align resources with current pipeline needs, aiming to fund operations into Q3 2025 [41][60] - The company is actively pursuing strategic partnerships and funding opportunities to support the development of its late-stage candidates [68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pipeline and the potential of DNA medicines to address unmet medical needs [8] - The company is optimistic about the progress of INO-3107 and other candidates, with plans to provide updates in future quarterly calls [68] - Management acknowledged the challenging funding environment for pre-commercial biotech companies and emphasized the importance of resource allocation [53] Other Important Information - The company reported a total operating expense of $37.3 million for Q2 2023, down 64% from Q2 2022 [61] - Research and development expenses for Q2 2023 were $23.7 million, a 58% reduction from the same period in 2022, primarily due to lower drug manufacturing and clinical trial costs [62] Q&A Session Summary Question: What is the status of the 3107 program and FDA discussions? - Management confirmed positive interactions with the FDA regarding the trial design and is preparing to open clinical trial sites for 3107 [83] Question: Will the patient population criteria change for the Phase 3 trial? - Management indicated that they have not provided specific details on patient recruitment but are optimistic about the clinical need and timely recruitment [18][77] Question: What updates are available for INO-5401 and discussions with Regeneron? - Management stated that the study is wrapping up, and discussions with Regeneron are ongoing regarding the next steps for INO-5401 [86] Question: When can further updates on INO-4201 be expected? - Management mentioned that updates on INO-4201 will be provided in due course as discussions with regulators and collaborators are ongoing [90]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NO. 001-14888 660 W. Germantown Pike, Suite 110 Plymouth Meeting, Pennsylvania 19462 (Address of principal executive offices) (Zip Code) (I.R.S. Employ ...

Summary of Inovio Pharmaceuticals Conference Call Company Overview - Inovio Pharmaceuticals, Inc. is a biotechnology company focused on developing DNA medicine targeting infectious diseases, HPV-related diseases, and cancer [5][6] - The company utilizes a proprietary delivery device called CELECTRA for its DNA medicines [5] Key Product Candidates - **INO-3107**: Targeting recurrent respiratory papillomatosis (RRP), a rare disease caused by HPV subtypes 6 and 11 [5][7] - **VGX-3100**: Focused on HPV-related pre-cancers, recently completed two Phase 3 studies [5][24] Disease Insights - RRP is characterized by wart-like growths in the throat and airway, leading to significant quality of life impacts, including voice quality and breathing difficulties [7][8] - The U.S. prevalence of RRP is estimated at about 14,000 cases, with incidence rates ranging from 1 to 400,000 [11] Clinical Data and Efficacy - In a Phase 1-2 study of INO-3107, over 81% of patients experienced a reduction in surgeries in the year following treatment, with a median reduction of three surgeries [13][14] - Approximately 28% of patients had no surgeries at all in the year after treatment [14] - The average cost of surgery for RRP is estimated at $72,000 per year, not including additional economic impacts [16] Regulatory Engagement - Inovio has submitted data to the FDA and is in discussions regarding the design of a Phase 3 trial, which will be placebo-controlled [18] - The FDA appears to align with Inovio on the importance of surgery reduction as a key endpoint [18] Competitive Landscape - Other companies are also developing treatments for RRP, but Inovio is focused on advancing its own development path [20] Pipeline and Future Opportunities - Inovio has completed Phase 2 studies for anal and vulvar indications, with promising results in clearing virus-related lesions [28][30] - The company is excited about its glioblastoma candidate (5401) and the potential of 3112 for HPV-related cancers [32][33] - Collaborations with external partners are ongoing for various early-stage technologies, including HIV and Ebola vaccine development [34] Market Potential - The market for HPV-related diseases is significant, with hundreds of thousands of women diagnosed with cervical dysplasia annually in the U.S. [30] - Anal H-cell is an underdiagnosed indication, with estimates of 210,000 to over a million people affected in the U.S. [30] Conclusion - Inovio Pharmaceuticals is positioned to address significant unmet medical needs in HPV-related diseases and is advancing its clinical programs with promising data and regulatory engagement [5][18][20]

Inovio Pharmaceuticals, Inc. (NASDAQ:INO) Q1 2023 Earnings Conference Call May 10, 2023 4:30 PM ET Company Participants Thomas Hong - Manager of Investor Communications Jacqueline Shea - President and Chief Executive Officer Michael Sumner - Chief Medical Officer Peter Kies - Chief Financial Officer Conference Call Participants Hartaj Singh - Oppenheimer Li Chen - H.C. Wainwright Operator Good day and welcome to the Inovio First Quarter 2022 Financial Results Conference Call. All participants will be in a l ...

Part I. Financial Information This section provides INOVIO Pharmaceuticals, Inc.'s unaudited condensed consolidated financial statements and related notes for Q1 2023 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section details INOVIO Pharmaceuticals, Inc.'s unaudited condensed consolidated financial statements for Q1 2023, including balance sheets, income statements, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=a)%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2023 ASSETS and LIABILITIES (March 31, 2023) | ASSETS (March 31, 2023) | Amount ($) | | :---------------------- | :--------- | | Cash and cash equivalents | 28,238,152 | | Short-term investments | 195,513,005 | | Total current assets | 233,896,429 | | Total assets | 266,582,724 | | LIABILITIES (March 31, 2023) | Amount ($) | | Accounts payable and accrued expenses | 24,752,171 | | Convertible senior notes (current) | 16,394,841 | | Total current liabilities | 55,151,077 | | Total liabilities | 67,369,042 | | STOCKHOLDERS' EQUITY (March 31, 2023) | Amount ($) | | Total stockholders' equity | 199,213,682 | - Total assets decreased from **$348.5 million** at December 31, 2022, to **$266.6 million** at March 31, 2023. Total liabilities decreased from **$126.2 million** to **$67.4 million** in the same period[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=b)%20Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenue, expenses, and net loss for the three months ended March 31, 2023 Operating Metrics (Three Months Ended March 31,) | Metric (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | | :------------------------------------ | :------- | :------- | | Revenue from collaborative arrangements and other contracts | 114,943 | 199,074 | | Research and development expenses | 30,176,511 | 55,978,611 | | General and administrative expenses | 13,890,610 | 15,953,458 | | Total operating expenses | 44,067,121 | 71,932,069 | | Loss from operations | (43,952,178) | (71,732,995) | | Net loss | (40,649,317) | (79,073,719) | | Net loss per share (Basic and diluted) | (0.16) | (0.36) | - The company significantly reduced its net loss by **48.6%** year-over-year, from **$(79.1) million** in Q1 2022 to **$(40.6) million** in Q1 2023, primarily due to a substantial decrease in research and development expenses[13](index=13&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=c)%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section details the company's comprehensive loss, including net loss and other comprehensive income/loss items for the three months ended March 31, 2023 Comprehensive Loss (Three Months Ended March 31,) | Metric (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | | :------------------------------------ | :------- | :------- | | Net loss | (40,649,317) | (79,073,719) | | Other comprehensive (loss) income: | | | | Foreign currency translation | (1,918) | (6,555) | | Unrealized gain (loss) on short-term investments, net of tax | 117,862 | (169,097) | | Comprehensive loss | (40,533,373) | (79,249,371) | - Comprehensive loss decreased by **48.8%** from **$(79.2) million** in Q1 2022 to **$(40.5) million** in Q1 2023, driven by the reduction in net loss and a positive shift in unrealized gains on short-term investments[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=d)%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit as of March 31, 2023 Stockholders' Equity (March 31, 2023) | Stockholders' Equity (March 31, 2023) | Amount ($) | | :------------------------------------ | :--------- | | Common stock | 262,738 | | Additional paid-in capital | 1,728,030,842 | | Accumulated deficit | (1,528,497,101) | | Accumulated other comprehensive loss | (582,797) | | Total Inovio Pharmaceuticals, Inc. stockholders' equity | 199,213,682 | - Total stockholders' equity decreased from **$222.4 million** at December 31, 2022, to **$199.2 million** at March 31, 2023, primarily due to the net loss incurred during the period, partially offset by common stock issuance for legal settlement and stock-based compensation[19](index=19&type=chunk) - The company issued **9,121,000 shares** of common stock for a legal settlement, contributing **$14.0 million** to stockholders' equity[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=e)%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2023 Cash Flow Activity (Three Months Ended March 31,) | Cash Flow Activity (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | | :------------------------------------------------ | :------- | :------- | | Net cash used in operating activities | (36,664,478) | (61,882,102) | | Net cash provided by investing activities | 18,999,893 | 21,332,353 | | Net cash (used in) provided by financing activities | (424,704) | 28,422,017 | | Decrease in cash and cash equivalents | (18,091,207) | (12,134,287) | | Cash and cash equivalents, end of period | 28,238,152 | 59,009,491 | - Net cash used in operating activities decreased by **40.8%** from **$61.9 million** in Q1 2022 to **$36.7 million** in Q1 2023, mainly due to decreased operating expenses and timing of working capital changes[22](index=22&type=chunk)[173](index=173&type=chunk) - Net cash provided by investing activities decreased slightly from **$21.3 million** in Q1 2022 to **$19.0 million** in Q1 2023, primarily due to timing differences in short-term investment transactions[22](index=22&type=chunk)[174](index=174&type=chunk) - Net cash used in financing activities was **$(0.4) million** in Q1 2023, a significant change from **$28.4 million** provided in Q1 2022, due to no proceeds from common stock sales under the Sales Agreement in 2023[22](index=22&type=chunk)[175](index=175&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=f)%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the condensed consolidated financial statements, covering accounting policies, liquidity, and specific financial items [1. Organization and Operations](index=11&type=section&id=1.%20Organization%20and%20Operations) This note describes INOVIO Pharmaceuticals, Inc.'s core business as a biotechnology company focused on developing DNA medicines for various diseases - INOVIO Pharmaceuticals, Inc. is a biotechnology company focused on developing and commercializing DNA medicines for HPV, cancer, and infectious diseases[24](index=24&type=chunk)[149](index=149&type=chunk) - The company's DNA medicine candidates generate immune responses (CD4+, CD8+, and memory T-cells) using precisely designed plasmids delivered by its proprietary smart device, CELLECTRA[25](index=25&type=chunk)[150](index=150&type=chunk) - INO-3107, a lead candidate for HPV-6 and HPV-11 associated Recurrent Respiratory Papillomatosis (RRP), showed a statistically significant reduction in median surgeries in Phase 1/2 trials[26](index=26&type=chunk)[150](index=150&type=chunk) [2. Basis of Presentation, Liquidity and Risks and Uncertainties](index=11&type=section&id=2.%20Basis%20of%20Presentation,%20Liquidity%20and%20Risks%20and%20Uncertainties) This note addresses the company's financial position, including net loss, accumulated deficit, liquidity, and future capital requirements - The company incurred a net loss of **$40.6 million** for the three months ended March 31, 2023, and had an accumulated deficit of **$1.5 billion**[32](index=32&type=chunk) - Cash, cash equivalents, and short-term investments totaled **$223.8 million** as of March 31, 2023, sufficient to support planned operations for at least 12 months[32](index=32&type=chunk) - Additional capital will be needed to fund future R&D activities, potentially through strategic alliances, licensing, grants, or public/private debt or equity financings[33](index=33&type=chunk) [3. Critical Accounting Policies](index=12&type=section&id=3.%20Critical%20Accounting%20Policies) This note outlines the company's critical accounting policies, particularly those related to collaboration agreements, revenue recognition, and milestone payments - The company accounts for collaboration agreements under ASC Topic 808 or Topic 606, depending on whether the partner is a customer or involved in joint operating activities[36](index=36&type=chunk) - Revenue from non-refundable, upfront license fees is recognized when the license is transferred and the licensee can use and benefit from it[39](index=39&type=chunk) - Milestone payments are included in the transaction price if considered probable of being reached and a significant revenue reversal would not occur, with re-evaluation each reporting period[40](index=40&type=chunk) [4. Revenue Recognition](index=13&type=section&id=4.%20Revenue%20Recognition) This note details the company's revenue sources, including contributions from affiliated entities and other contracts for the three months ended March 31, 2023 Revenue Source (Three Months Ended March 31,) | Revenue Source (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | | :-------------------------------------------- | :------- | :------- | | From affiliated entity Plumbline Life Sciences, Inc. | 0 | 9,000 | | From various other contracts | 115,000 | 190,000 | | Total Revenue | 115,000 | 199,000 | [5. Short-term Investments and Fair Value Measurements](index=13&type=section&id=5.%20Short-term%20Investments%20and%20Fair%20Value%20Measurements) This note provides details on the company's short-term investments, including their fair value measurements and associated unrealized gains or losses Available-for-Sale Securities (March 31, 2023) | Available-for-Sale Securities (March 31, 2023) | Cost ($) | Fair Market Value ($) | | :--------------------------------------------- | :------- | :-------------------- | | Mutual funds | 85,986,541 | 79,831,242 | | U.S. treasury securities | 111,591,593 | 111,649,420 | | Certificates of deposit | 2,977,897 | 2,990,765 | | U.S. agency mortgage-backed securities | 1,402,093 | 1,041,578 | | Total short-term investments | 201,958,124 | 195,513,005 | - The company recorded a net unrealized gain on available-for-sale equity securities of **$3.2 million** for the three months ended March 31, 2023, compared to a net unrealized loss of **$(4.8) million** in the prior year period[46](index=46&type=chunk) - As of March 31, 2023, the company had **$6.5 million** in aggregate unrealized losses on **24** available-for-sale securities, primarily due to changes in interest rates rather than credit risks[46](index=46&type=chunk)[47](index=47&type=chunk) [6. Certain Balance Sheet Items](index=15&type=section&id=6.%20Certain%20Balance%20Sheet%20Items) This note provides a breakdown of specific balance sheet items, including prepaid and other current assets, and accounts payable and accrued expenses Prepaid and Other Current Assets | Prepaid and Other Current Assets | March 31, 2023 ($) | December 31, 2022 ($) | | :------------------------------- | :----------------- | :-------------------- | | Insurance recovery | — | 30,000,000 | | Prepaid manufacturing expenses | 565,072 | 1,401,028 | | Other prepaid expenses | 4,349,241 | 18,729,453 | | Total | 4,914,313 | 50,130,481 | Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses | March 31, 2023 ($) | December 31, 2022 ($) | | :------------------------------------ | :----------------- | :-------------------- | | Trade accounts payable | 11,194,396 | 19,862,487 | | Accrued compensation | 7,607,673 | 12,574,921 | | Accrued litigation settlement | — | 44,000,000 | | Other accrued expenses | 5,950,102 | 3,249,477 | | Total | 24,752,171 | 79,686,885 | - The company issued **9,121,000 shares** of common stock during Q1 2023 as part of a **$44.0 million** securities class action settlement, with the **$30.0 million** cash component paid by insurance carriers[54](index=54&type=chunk) [7. Goodwill and Intangible Assets](index=16&type=section&id=7.%20Goodwill%20and%20Intangible%20Assets) This note details the company's goodwill and intangible assets, including their net book value and associated amortization expenses Goodwill and Intangible Assets | Asset Class | March 31, 2023 Net Book Value ($) | December 31, 2022 Net Book Value ($) | | :-------------------- | :-------------------------------- | :----------------------------------- | | Goodwill | 10,513,371 | 10,513,371 | | Licenses | — | — | | Bioject | 2,047,778 | 2,111,111 | | Other | — | 18,750 | | Total intangible assets | 2,047,778 | 2,129,861 | | Total goodwill and intangible assets | 12,561,149 | 12,643,232 | - Aggregate amortization expense on intangible assets was **$82,000** for Q1 2023, down from **$127,000** in Q1 2022[57](index=57&type=chunk) - Estimated aggregate amortization expense for the remainder of fiscal year 2023 is **$190,000**[57](index=57&type=chunk) [8. Convertible Debt](index=16&type=section&id=8.%20Convertible%20Debt) This note describes the company's convertible senior notes, including their principal amount, carrying value, and related interest expense - The company has **$78.5 million** aggregate principal amount of **6.50%** convertible senior notes due March 1, 2024[58](index=58&type=chunk)[59](index=59&type=chunk) - As of March 31, 2023, the net carrying amount of the convertible senior notes was **$16.4 million**, with **$62.1 million** of the original principal amount converted into common shares[63](index=63&type=chunk) - Interest expense related to the Notes was **$313,000** for both Q1 2023 and Q1 2022[63](index=63&type=chunk) [9. Stockholders' Equity](index=17&type=section&id=9.%20Stockholders'%20Equity) This note provides information on the company's stockholders' equity, including authorized and issued shares, and recent stock transactions Stock Type and Shares (March 31, 2023) | Stock Type | Authorized Shares | Issued Shares (March 31, 2023) | | :-------------------------------- | :---------------- | :----------------------------- | | Common Stock, $0.001 par value | 600,000,000 | 262,739,126 | | Series C Preferred Stock, $0.001 par value | 1,091 | 1,091 | - No shares were sold under the 2021 ATM Equity Offering Sales Agreement during Q1 2023, leaving **$167.4 million** in remaining capacity[66](index=66&type=chunk) - The company issued **9,121,000 shares** of common stock in Q1 2023 as part of a securities class action settlement[66](index=66&type=chunk) [10. Net Loss Per Share](index=18&type=section&id=10.%20Net%20Loss%20Per%20Share) This note presents the basic and diluted net loss per share, along with the weighted average common shares outstanding for the period Net Loss Per Share (Three Months Ended March 31,) | Metric (Three Months Ended March 31,) | 2023 | 2022 | | :------------------------------------ | :--- | :--- | | Basic and diluted net loss per share | (0.16) | (0.36) | | Weighted average common shares outstanding (Basic and diluted) | 258,437,714 | 218,940,693 | - Potential common shares excluded from diluted net loss per share calculation due to anti-dilutive effect totaled **20.5 million** in Q1 2023, including options, RSUs, preferred stock, and convertible notes[73](index=73&type=chunk) [11. Stock-Based Compensation](index=19&type=section&id=11.%20Stock-Based%20Compensation) This note details the company's stock-based compensation expenses for employees, directors, and non-employees, and unrecognized compensation Stock-Based Compensation (Three Months Ended March 31,) | Stock-Based Compensation (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | | :------------------------------------------------------ | :------- | :------- | | Total employee and director stock-based compensation expense | 3,600,000 | 7,200,000 | | Included in R&D expenses | 1,500,000 | 3,700,000 | | Included in G&A expenses | 2,100,000 | 3,500,000 | | Non-employee stock-based compensation expense | 220,000 | 550,000 | - Total unrecognized compensation expense for unvested stock options was **$10.5 million**, expected to be recognized over a weighted-average period of **1.7 years**[76](index=76&type=chunk) - Total unrecognized compensation expense for unvested service-based RSUs was **$6.1 million**, expected to be recognized over a weighted-average period of **1.7 years**[77](index=77&type=chunk) [12. Related Party Transactions](index=20&type=section&id=12.%20Related%20Party%20Transactions) This note describes transactions with related parties, including revenue from Plumbline Life Sciences and research expenses with The Wistar Institute - The company recognized no revenue from Plumbline Life Sciences, Inc. (PLS) in Q1 2023, down from **$9,000** in Q1 2022, and held an **18.7%** ownership interest in PLS[79](index=79&type=chunk)[80](index=80&type=chunk) - Contra-research and development expense from The Wistar Institute (Wistar) was **$211,000** in Q1 2023, a decrease from **$1.5 million** in Q1 2022, related to sub-grant agreements[84](index=84&type=chunk) - Research and development expenses recorded from Wistar increased to **$422,000** in Q1 2023 from **$181,000** in Q1 2022[85](index=85&type=chunk) [13. Commitments and Contingencies](index=20&type=section&id=13.%20Commitments%20and%20Contingencies) This note outlines the company's commitments and contingencies, including operating lease liabilities and legal settlements for class action and derivative lawsuits Operating Lease Liabilities (March 31, 2023) | Operating Lease Liabilities (March 31, 2023) | Amount ($) | | :------------------------------------------- | :--------- | | Total remaining lease payments | 19,137,000 | | Less: present value adjustment | (4,371,000) | | Total operating lease liabilities | 14,766,000 | | Less: current portion | (2,580,000) | | Long-term operating lease liabilities | 12,186,000 | | Weighted-average remaining lease term | 5.8 years | | Weighted-average discount rate | 8.6% | - The company settled a securities class action lawsuit in January 2023 for **$30.0 million** in cash (paid by insurance) and **$14.0 million** in common stock (**9,121,000 shares** issued)[93](index=93&type=chunk)[54](index=54&type=chunk) - A settlement in principle was reached for the shareholder derivative litigation in March 2023, with preliminary approval sought in April 2023[98](index=98&type=chunk)[99](index=99&type=chunk) [14. Collaborative Agreements](index=23&type=section&id=14.%20Collaborative%20Agreements) This note details key collaborative agreements, including those with Advaccine, CEPI, and the DoD, and their implications for product development and funding - Advaccine Biopharmaceuticals Suzhou Co., Ltd. will continue to develop INO-4800 (COVID-19 vaccine candidate) with its own resources in Greater China and **33** other Asian countries, following INOVIO's discontinuation of internally funded efforts[108](index=108&type=chunk) - Under the Advaccine Agreement, INOVIO is entitled to receive up to **$200.0 million** in milestone payments and high single-digit royalties on net sales[109](index=109&type=chunk) - The company and CEPI discontinued development of vaccine candidates for Lassa fever and MERS in November 2022 after initial data analysis[122](index=122&type=chunk) - Funding received from CEPI for INO-4800 grants decreased from **$510,000** in Q1 2022 to **$53,000** in Q1 2023[124](index=124&type=chunk) - The DoD discontinued funding for the Phase 3 segment of the INO-4800 clinical trials in 2021, and all performance obligations under the CELLECTRA 2000 device procurement contract were satisfied[126](index=126&type=chunk) [15. Income Taxes](index=25&type=section&id=15.%20Income%20Taxes) This note explains the company's income tax position, including the absence of a tax provision or benefit due to net operating losses and a full valuation allowance - The company did not record any income tax provision or benefit for Q1 2023 or Q1 2022 due to a history of net operating losses and a full valuation allowance against net deferred tax assets[128](index=128&type=chunk) [16. Geneos Therapeutics, Inc.](index=25&type=section&id=16.%20Geneos%20Therapeutics,%20Inc.) This note clarifies the company's relationship with Geneos Therapeutics, Inc., including its ownership interest and licensing agreements for immunotherapy technology - INOVIO no longer consolidates Geneos Therapeutics, Inc. as it ceased to be the primary beneficiary in June 2020, holding approximately **26%** of outstanding equity as of March 2023[133](index=133&type=chunk)[143](index=143&type=chunk) - The company's investment in Geneos was reduced to **$0** as of March 31, 2022, and it will not record further net losses as it has no obligation to fund Geneos[142](index=142&type=chunk) - INOVIO exclusively licenses its SynCon immunotherapy and CELLECTRA technology platform to Geneos for personalized, neoantigen-based cancer therapy, with potential future royalty payments[144](index=144&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section offers management's analysis of the company's financial condition and operational results for Q1 2023, covering performance, liquidity, and future funding needs [Overview](index=28&type=section&id=Overview) This overview describes INOVIO's biotechnology focus on DNA medicines, its R&D stage, lack of product sales, and significant accumulated deficit - INOVIO is a biotechnology company developing DNA medicines for HPV, cancer, and infectious diseases, with lead candidates focused on HPV-related diseases like RRP[149](index=149&type=chunk)[150](index=150&type=chunk) - All DNA medicine candidates are in R&D, with no product sales revenue generated to date, and significant additional R&D efforts and regulatory approvals are required[153](index=153&type=chunk) - As of March 31, 2023, the company had an accumulated deficit of **$1.5 billion** and expects to incur substantial operating losses in the future due to R&D programs[154](index=154&type=chunk) [Reduction in Force](index=29&type=section&id=Reduction%20in%20Force) This section details the corporate reorganization, including a **24-employee** reduction in force, expected to yield annual savings and a one-time charge - On January 31, 2023, INOVIO implemented a corporate reorganization plan, including a reduction in force of approximately **24 employees** (**11%** of full-time staff)[155](index=155&type=chunk) - The Reduction is expected to provide annual savings of approximately **$4.3 million** and resulted in a one-time pre-tax charge of **$1.1 million** in Q1 2023[155](index=155&type=chunk) [Securities Class Action Settlement](index=29&type=section&id=Securities%20Class%20Action%20Settlement) This section outlines the class action securities litigation settlement, involving cash and common stock, and associated legal fees incurred - In January 2023, a class action securities litigation settlement was approved, involving **$30.0 million** in cash (paid by insurance) and **$14.0 million** in common stock (**9,121,000 shares** issued)[156](index=156&type=chunk) - The company incurred approximately **$11.0 million** in legal fees and related expenses through March 31, 2023, associated with the litigation[156](index=156&type=chunk) [Critical Accounting Policies and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no significant changes to the company's critical accounting estimates since December 31, 2022 - There have been no significant changes to the company's critical accounting estimates since December 31, 2022[157](index=157&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the company's operational results, including changes in revenue, research and development, general and administrative expenses, and other income/expense items Operating Metric (Three Months Ended March 31,) | Operating Metric (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :---------------------------------------------- | :------- | :------- | :--------- | :--------- | | Revenue | 115,000 | 199,000 | (84,000) | (42)% | | Research and development expenses | 30,177,000 | 55,979,000 | (25,802,000) | (46)% | | General and administrative expenses | 13,900,000 | 16,000,000 | (2,100,000) | (13)% | | Interest income | 2,200,000 | 670,000 | 1,530,000 | 228% | | Net unrealized gain (loss) on available-for-sale equity securities | 3,200,000 | (4,800,000) | 8,000,000 | 167% | | Other expense, net | (2,400,000) | (153,000) | (2,247,000) | 1469% | - The **$25.8 million** decrease in R&D expenses was primarily due to lower drug manufacturing and clinical study costs for INO-4800 (**$14.3 million**), reduced expenses for CELLECTRA 3PSP device (**$4.7 million**), and lower employee compensation (**$4.0 million**)[161](index=161&type=chunk) - General and administrative expenses decreased by **$2.1 million**, mainly due to lower stock-based compensation (**$1.5 million**) and employee compensation (**$0.5 million**), partially offset by higher legal expenses (**$1.5 million**)[163](index=163&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity and capital resources, including cash, investments, working capital, and cash flow activities Financial Metrics | Metric | March 31, 2023 ($) | December 31, 2022 ($) | | :-------------------------------- | :----------------- | :-------------------- | | Cash, cash equivalents and short-term investments | 223,800,000 | 253,000,000 | | Working capital | 178,700,000 | 218,400,000 | Cash Flow Activity (Three Months Ended March 31,) | Cash Flow Activity (Three Months Ended March 31,) | 2023 ($) | 2022 ($) | | :------------------------------------------------ | :------- | :------- | | Net cash used in operating activities | (36,700,000) | (61,900,000) | | Net cash provided by investing activities | 19,000,000 | 21,300,000 | | Net cash (used in) provided by financing activities | (425,000) | 28,400,000 | - The company's cash, cash equivalents, and short-term investments decreased by **$29.2 million** from December 31, 2022, to March 31, 2023[172](index=172&type=chunk) [Funding Requirements](index=32&type=section&id=Funding%20Requirements) This section discusses the company's funding requirements, noting the sufficiency of current capital for 12 months but the need for additional financing for development and commercialization - Current cash and short-term investments are sufficient for planned working capital requirements for at least the next twelve months[179](index=179&type=chunk) - Additional financing will be required to complete clinical development of product candidates and for commercialization, as current resources are insufficient[179](index=179&type=chunk) - Restructuring plans and discontinuation of internally funded INO-4800 development are expected to extend the cash runway into Q1 2025[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, including interest rate risk, foreign currency risk, and inflation risk, and how these factors could impact its financial condition and results of operations [Interest Rate Risk](index=32&type=section&id=Interest%20Rate%20Risk) This section addresses the company's exposure to interest rate risk, including unrealized losses in its investment portfolio and mitigation strategies - The company's primary market risk exposure is interest rate sensitivity, with a **$6.5 million** unrealized loss in its investment portfolio as of March 31, 2023, due to rising interest rates[183](index=183&type=chunk) - The company mitigates default risk by investing in short-term investment-grade securities and does not use interest rate derivative instruments[183](index=183&type=chunk) [Foreign Currency Risk](index=32&type=section&id=Foreign%20Currency%20Risk) This section discusses the company's limited exposure to foreign currency fluctuations and its policy against using derivative financial instruments for hedging - The company has limited exposure to foreign currency fluctuations, primarily from cash and equity investments denominated in South Korean Won, Euros, British Pounds, and Canadian Dollars[185](index=185&type=chunk)[186](index=186&type=chunk) - The company does not use derivative financial instruments for speculative purposes or engage in exchange rate hedging[187](index=187&type=chunk) [Inflation Risk](index=33&type=section&id=Inflation%20Risk) This section notes that inflation primarily affects labor costs but has not materially impacted the company's business or financial results in Q1 2023 - Inflation generally affects the company by increasing labor costs, but it has not had a material effect on its business, financial condition, or results of operations during Q1 2023[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the company's disclosure controls and procedures, confirming their effectiveness as of March 31, 2023, and reporting no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, at a reasonable assurance level[191](index=191&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2023 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[192](index=192&type=chunk) Part II. Other Information This section provides other pertinent information, including legal proceedings, risk factors, equity sales, and details on controls and procedures [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) This section provides updates on various legal proceedings involving the company, including the settlement of a securities class action, ongoing shareholder derivative litigations, and disputes with contract manufacturers VGXI and GeneOne [Securities Litigation](index=34&type=section&id=Securities%20Litigation) This section details the settlement of a shareholder class action complaint concerning COVID-19 vaccine statements - A shareholder class action complaint regarding COVID-19 vaccine statements was settled in January 2023 for **$30.0 million** cash (paid by insurance) and **$14.0 million** in common stock (**9,121,000 shares** issued)[195](index=195&type=chunk) [Shareholder Derivative Litigation](index=34&type=section&id=Shareholder%20Derivative%20Litigation) This section discusses the consolidation and settlement in principle of multiple shareholder derivative complaints based on similar allegations - Multiple shareholder derivative complaints, based on similar allegations as the class action, have been consolidated and are currently stayed[196](index=196&type=chunk)[197](index=197&type=chunk) - A settlement in principle for the consolidated derivative action and other stockholder demands was agreed upon in March 2023, with preliminary approval sought in April 2023[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [VGXI Litigation](index=34&type=section&id=VGXI%20Litigation) This section outlines the company's complaint against VGXI, Inc. for breach of a supply agreement and VGXI's subsequent counterclaims - The company filed a complaint against VGXI, Inc. in June 2020 for material breach of a supply agreement, seeking specific performance and damages[100](index=100&type=chunk)[201](index=201&type=chunk) - VGXI filed counterclaims alleging breach of supply agreement, misappropriation of trade secrets, and unjust enrichment, which the company disputes[101](index=101&type=chunk)[203](index=203&type=chunk) [GeneOne Litigation](index=35&type=section&id=GeneOne%20Litigation) This section details GeneOne Life Science, Inc.'s complaint alleging breach of a license agreement and the company's counterclaims - GeneOne Life Science, Inc. filed a complaint against the company in December 2020, alleging breach of the CELLECTRA Device License Agreement, which the company terminated[103](index=103&type=chunk)[205](index=205&type=chunk) - The company filed counterclaims alleging GeneOne breached the agreement and intends to aggressively prosecute its claims and defend against GeneOne's claims[104](index=104&type=chunk)[206](index=206&type=chunk) [Other Matters](index=35&type=section&id=Other%20Matters) This section acknowledges the potential for other disputes in the normal course of business, which could lead to significant legal expenses and adverse effects - The company may be involved in other disputes in the normal course of business, which could lead to costly legal expenses and potentially material adverse effects on financial results or reputation[105](index=105&type=chunk)[106](index=106&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could adversely affect the company's business, financial condition, and results of operations, covering financial position, product development, reliance on third parties, commercialization, operational matters, intellectual property, and investment in common stock [Risks Related to Our Financial Position and Need for Additional Capital](index=35&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) This section highlights risks related to the company's financial position, including a history of operating losses, dependence on product development, and the need for substantial additional capital - The company has incurred significant operating losses since inception, with an accumulated deficit of **$1.5 billion** as of March 31, 2023, and expects to continue incurring losses[208](index=208&type=chunk) - Success is dependent on developing DNA medicines and proprietary smart device technology, as the company has limited revenue sources and no commercially available products[209](index=209&type=chunk)[210](index=210&type=chunk) - Substantial additional capital will be needed for R&D, clinical testing, and market entry, which may be difficult and costly to obtain, potentially leading to dilution or adverse business actions[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) [Risks Related to Product Development, Manufacturing and Regulatory Approval](index=36&type=section&id=Risks%20Related%20to%20Product%20Development,%20Manufacturing%20and%20Regulatory%20Approval) This section addresses risks in product development, manufacturing, and regulatory approval, including FDA approval, clinical trial uncertainties, and reliance on single-source suppliers - Failure to obtain FDA approval for product candidates would prevent commercialization in the United States, significantly impairing revenue generation[215](index=215&type=chunk)[218](index=218&type=chunk) - Clinical trials are lengthy, expensive, and uncertain, with results from earlier studies not always predictive of later-stage trials, and potential delays due to various factors including patient enrollment and regulatory holds[220](index=220&type=chunk)[222](index=222&type=chunk)[224](index=224&type=chunk) - The company discontinued internally funded development of its COVID-19 vaccine candidate (INO-4800) as a heterologous booster due to market demand, regulatory changes, and diminishing government support[228](index=228&type=chunk) - Reliance on single-source suppliers for components and materials for product candidates creates risks of supply disruptions, price increases, and delays[238](index=238&type=chunk)[239](index=239&type=chunk) [Risks Related to Reliance on Third Parties](index=43&type=section&id=Risks%20Related%20to%20Reliance%20on%20Third%20Parties) This section outlines risks associated with reliance on third parties, including collaborators, government agencies, and contract research organizations (CROs) - Loss of or inability to secure collaborators or partners, or their failure to apply adequate resources, could harm product development and profitability[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk) - Agreements with government agencies are subject to termination and uncertain future funding, which could negatively impact pipeline development and require alternative funding[254](index=254&type=chunk)[255](index=255&type=chunk) - Reliance on third-party CROs to conduct clinical trials poses risks if they fail to meet contractual duties, deadlines, or GCP regulations, potentially delaying regulatory approval[256](index=256&type=chunk)[257](index=257&type=chunk) [Risks Related to Commercialization of Our DNA Medicine Candidates](index=45&type=section&id=Risks%20Related%20to%20Commercialization%20of%20Our%20DNA%20Medicine%20Candidates) This section details risks in commercializing DNA medicine candidates, including establishing marketing and sales capabilities, achieving market acceptance, and securing reimbursement - The company has a small marketing organization and no sales organization; failure to establish these capabilities or partner with third parties could prevent product revenue generation[261](index=261&type=chunk) - Commercial success depends on broad market acceptance by the medical community and patients, influenced by factors like safety, efficacy, convenience, pricing, and third-party payor coverage[262](index=262&type=chunk)[263](index=263&type=chunk) - Uncertainty regarding coverage and reimbursement policies from third-party payors could hinder or prevent commercial success, as adequate reimbursement is crucial for product adoption[264](index=264&type=chunk)[266](index=266&type=chunk)[268](index=268&type=chunk) [Risks Related to Employee and Operational Matters](index=46&type=section&id=Risks%20Related%20to%20Employee%20and%20Operational%20Matters) This section covers risks related to employee and operational matters, including restructuring impacts, ongoing litigation, leadership changes, and intense industry competition - Restructuring plans, including a **25%+** headcount reduction, may not achieve anticipated results, potentially leading to increased attrition, reduced morale, and increased litigation risk[270](index=270&type=chunk)[271](index=271&type=chunk) - Ongoing and potential future litigation, including shareholder class action and derivative lawsuits, could result in substantial damages, significant legal expenses, and diversion of management's attention[273](index=273&type=chunk)[274](index=274&type=chunk) - Changes in senior leadership, such as the CEO transition in May 2022, create uncertainty and could disrupt operations, employee morale, and relationships with partners[275](index=275&type=chunk) - Intense and increasing competition from large pharmaceutical and biotechnology companies, some with greater resources, may impede the successful commercialization of DNA medicines[279](index=279&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) [Risks Related to Our Intellectual Property](index=53&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses risks concerning intellectual property, including challenges in protection, uncertainties in patent positions, and potential infringement lawsuits - Difficulty and cost in generating and protecting intellectual property (patents, trademarks, trade secrets) may prevent the company from maintaining a competitive advantage[312](index=312&type=chunk)[317](index=317&type=chunk) - The patent positions in biotechnology are highly uncertain, with evolving laws and regulations that may diminish the value of intellectual property or lead to invalid/unenforceable patents[313](index=313&type=chunk)[314](index=314&type=chunk) - Being sued for infringing third-party intellectual property rights would be costly, time-consuming, and could result in substantial damages, injunctions, or the need to redesign products[319](index=319&type=chunk)[321](index=321&type=chunk)[322](index=322&type=chunk) [Risks Related to an Investment in Our Common Stock](index=55&type=section&id=Risks%20Related%20to%20an%20Investment%20in%20Our%20Common%20Stock) This section outlines risks associated with investing in common stock, including price volatility, anti-takeover provisions, and the absence of cash dividends - The price of the company's common stock has been and may continue to be highly volatile, subject to substantial drops due to various factors beyond its control[325](index=325&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could delay or prevent a change of control, potentially limiting the market price of common stock[330](index=330&type=chunk) - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future, making capital appreciation the sole source of potential gain for investors[331](index=331&type=chunk) [General Risk Factors](index=56&type=section&id=General%20Risk%20Factors) This section covers general risk factors, including Nasdaq listing compliance, potential fluctuations in operating results, and adverse developments in the financial services industry - Failure to comply with Nasdaq's continued listing standards, specifically the minimum bid price requirement, could lead to delisting, negatively impacting stock price and access to capital markets[334](index=334&type=chunk)[335](index=335&type=chunk) - Quarterly operating results may fluctuate significantly due to various factors, and comparisons are not necessarily meaningful indicators of future performance[336](index=336&type=chunk) - Adverse developments in the financial services industry, such as bank failures, could impact the company's access to capital and liquidity, despite maintaining deposits in large financial institutions[339](index=339&type=chunk)[340](index=340&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports the issuance of 9,121,000 shares of common stock during the three months ended March 31, 2023, in connection with a class action securities litigation settlement, relying on an exemption under Section 3(a)(10) of the Securities Act of 1933 - The company issued **9,121,000 shares** of common stock during Q1 2023 for a class action securities litigation settlement, under the exemption of Section 3(a)(10) of the Securities Act of 1933[348](index=348&type=chunk) [Item 5. Other Information](index=59&type=section&id=Item%205.%20Other%20Information) This section discloses that the company received a notice from Nasdaq on May 4, 2023, regarding non-compliance with the minimum bid price requirement, and outlines the compliance period and potential actions - On May 4, 2023, the company received a Nasdaq notice for non-compliance with the minimum bid price requirement (**$1.00** per share for **30** consecutive business days)[349](index=349&type=chunk) - The company has **180** calendar days, until October 31, 2023, to regain compliance by having its common stock close at **$1.00** or more for a minimum of **ten** consecutive business days[350](index=350&type=chunk) - Failure to regain compliance could lead to delisting, though the company may be eligible for an additional **180-day** period if it transfers to The Nasdaq Capital Market[351](index=351&type=chunk) [Item 6. Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Certificate of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications, and XBRL interactive data files - Exhibits include the Certificate of Incorporation, Amended and Restated Bylaws, CEO and CFO certifications (pursuant to Regulation S-K and 18 U.S.C. Section 1350), and XBRL Instance Document and Taxonomy Extension files[353](index=353&type=chunk) [Signatures](index=61&type=section&id=Signatures) This section contains the signatures of the company's President, Chief Executive Officer, and Director, Jacqueline E. Shea, and Chief Financial Officer, Peter Kies, certifying the filing of the report on May 10, 2023 - The report is signed by Jacqueline E. Shea, President, Chief Executive Officer and Director, and Peter Kies, Chief Financial Officer, on May 10, 2023[357](index=357&type=chunk)

Inovio Pharmaceuticals, Inc. (NASDAQ:INO) Oppenheimer 33rd Annual Healthcare Conference Call March 13, 2023 10:40 AM ET Company Participants Jacqueline Shea - President and Chief Executive Officer Conference Call Participants Hartaj Singh - Oppenheimer Hartaj Singh Great, thank you. Thanks always to the operators for making this so easy. Hey, everybody. I apologize for the little delay here. I just had a lack of a better term a brain fart. And we have Jacqueline Shea here with us with Inovio, representing t ...

Inovio Pharmaceuticals, Inc. (NASDAQ:INO) Q4 2022 Earnings Conference Call March 1, 2023 4:30 PM ET Company Participants Thomas Hong - Manager-Investor Communications Jacqueline Shea - President and Chief Executive Officer Michael Sumner - Chief Medical Officer Peter Kies - Chief Financial Officer Conference Call Participants Hartaj Singh - Oppenheimer Charlie Young - Bank of America Yi Chen - H.C. Wainwright Operator Good afternoon, and welcome to the Inovio Pharmaceuticals Fourth Quarter 2022 Financial R ...