Inovio Pharmaceuticals, Inc. (INO) Q4 2014 Earnings Report, Transcript and Summary

Greetings and welcome to the Inovio Pharmaceuticals Inc. Fourth Quarter and Year-end 2014 Financial Results Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Bernie Hertel, VP of Investor Relations and Communications. Thank you, sir. You may begin.

Thank you. Good morning, everyone. Today’s call may contain certain forward-looking statements relating to our business, including our plans to develop DNA immunotherapies, electroporation-based delivery technologies as well as our capital resources. Please keep in mind that actual events or results may differ from the expectations discussed as a result of a number of factors, including uncertainties inherent in preclinical studies, clinical trials and product development programs, including but not limited to the fact that preclinical and clinical results referenced on the call may not be indicative of results achievable in other trials, studies and trials may not achieve the results desired, and they may not commence or be completed in the time periods anticipated. There may also be risks related to collaborative arrangements, including the timing and receipt of payments, the availability or potential availability of alternative therapies for the conditions targeted by the Company or its collaborators, issues involving product liability, issues involving patents, the adequacy of our capital resources, the impact of government healthcare proposals and other factors set forth in our Annual Report on Form 10-K for the year and quarter ended December 31, 2014, and other regulatory filings from time-to-time. Finally, there can be no assurance that any product in Inovio’s pipeline will be successfully developed or manufactured, that final results of clinical studies will be supportive of regulatory approvals required to market licensed products or that any of the forward-looking information provided will be proven accurate. Now Inovio’s President and CEO, Dr. J. Joseph Kim.

Thanks, Bernie. Good morning, everyone. Last year was the most important in the Company’s history. While as in July Inovio demonstrated for the first time in the field that a DNA active immunotherapy could achieve clinically relevant efficacy using targeted in vivo T cell activation in a large controlled clinical trial. In our randomized, placebo-controlled, double-blind phase II study of over 148 women with high grade cervical dysplasia caused by HPV type 16 or 18; we used three immunization regimens of our SynCon DNA-based immunotherapy called VGX-3100. Evaluating these women 36 after their first treatment, our endpoints were to measure histologic regression of the pre-cancer cervical lesion which is an assessment of the cell and virological clearance. How do we do? Treatment with VGX-3100 resulted in histologic regression of high grade cervical pre-cancer called CIN2/3 down to CIN1, which is a low grade pre-cancer or to no disease meeting the study’s primary end point. In addition, the trial demonstrated clearance of HPV in conjunction with regression of cervical lesions, meeting the secondary endpoint. Robust T cell activity was detected in subjects which received VGX-3100 compared to those who received placebo. Why is this important for women? These results are significant steps for providing women and their physicians a non-surgical approach to treat pre-cancers. By stimulating their immune system to eliminate cells that have been detrimentally altered by HPV as well as any presence of the virus itself, women treated with this immunotherapy can potentially avoid an invasive procedure, eliminates a small but nevertheless real risk of pre-term birth and reduce the risk of recurrence or passing on the virus to others. The data from this proof-of-concept trial is now guiding the planning of our Phase II trial for VGX-3100. The success of which would then bring this product to a vital step closer to clinical use. What do these results mean for Inovio and its pipeline? These Phase II data are vital in planning for the other HPV indications, including cervical and head and neck cancers, for which we have initiated human studies, and in general, pre-cancers and cancers. These are all very important targets. Equally importantly, you can extrapolate these results for all disease applications of our technology. The results of our efficacy trial validate the potential of our SynCon product to be effective, efficient, and safe. Now let me take a step back and briefly expand on our approach to bringing a new type of medicine, DNA-based immunotherapies to the market. Like many sciences, we have long held the view that we should be able to create a new era of immunotherapy technology to not just prevent, but treat challenging diseases. We’ve also asked ourselves the question, is there such a thing as an ideal immunotherapy? What would this look like? Our view point and what we have been striving for through our years of R&D and now late stage clinical development is to advance an immunotherapy with the following important characteristics. We want to help the immune systems recognize and target disease-specific antigens that is proteins unique to a cancer or infectious disease. It should now have to be patient-specific and personalized, why remove cells from the body, modify and then reintroduce them to a patient? Why take on the manufacturing quality control, and cost challenges, if you can do the most important work in the patient? Keep that simple. It must activate functional T cells; CD8 positive killer T cells with the tools necessary to kill the target cells, these tools include for example granzyme and perforin. This immunotherapy must generate robust T cell responses, meaning a significant number of T cells, and we want them to be persistent and durable over time, we call this a memory response. We also do not want to induce any unwanted immune responses against the beneficial agent. We also don’t want medicine to induce toxic inflammatory responses in the patient. Furthermore, in the case of cancer, we want to help the body break its tolerance of cancer cells grown in the body. This is not intended to be a lecture on immunology. However, to understand and differentiate Inovio’s DNA-based immunotherapy technology and its potential, it’s vital to appreciate these variables. The science is driving our technology have decades of experience and they set a high standard as to how to conduct their research and clinical development. We published over 80 preclinical and clinical peer review publications just in the last six years. Our view is that ideal immunotherapies and active immunotherapy that achieves these various factors I just described, a Phase II clinical data has provided significant evidence that we’re on the right path. There are additional factors that define the power, simplicity, and potential of our technology. With just three simple injections over three months, we generated significant killer CD8 positive T cells that are measurable in the blood of significant accomplishment compared to most other immunotherapies. The T cells we generate our then trafficked to the disease tissue, these are often described as tissue infiltrating T cells, and we see a direct correlation between the CD8 T cells and actual clinical efficacy. Finally, let me emphasize the importance of safety. We have now treated over 550 subjects over a 1,300 immunizations across various clinical studies we conducted, and experience -- and we have not experienced a single severe adverse event. Our only common adverse event is the injection site redness, which is a sign that the immune system is actually at work. We sometimes take the idea, do no harm for granted. At Inovio, it is fundamental to our approach. First, we view our VGX-3100 data as the highlight of 2014 and illustrative of the power of our SynCon construct coupled with our proprietary delivery technology. Together, they drive effective T cell responses able to eliminate lesions, and in this case viral level. For us at Inovio, this is about the tip of the iceberg, a fourth coming data in our burgeoning pipeline. As a combination of this particular study and milestone, there is a much deeper and more detail review of our Phase II efficacy and other data coming soon in a medical journal. So next key step as you know is our plan to independently advance VGX-3100 into a phase III registrational study with target patient characteristics and a treatment regimen similar to our Phase II study. Steps we must complete include scaling up commercial-level production of our immunotherapy product and the delivery devices. We expect to complete our end-of-Phase-II meeting with the FDA in 2015 and begin treating women in Phase III study in early 2016, sooner if possible. With this positive data in tackling HPV related diseases, we want to play a significant role in addressing HPV associated diseases. To this end, Inovio has broadened its therapeutic HPV franchise to include other pre-cancers caused by HPV infection such as vulvar, vaginal, and other anogenital neoplasia as well as the cancer -- cancers of the cervix, head and neck, and anogenital areas. Late last year, we initiated Phase I/II clinical studies of INO-3112, which consists of VGX-3100 plus our IL-12 immune activator against HPV-caused cervical cancer and head and neck cancer. Our IL-12 immune activator has been shown to speed the onset and increase the already high levels of antigen-specific T cells generated by the immunotherapy. We expect to report the first interim data from one of these cancer -- first cancer studies in the second half of this year. Can our SynCon technology address other cancers not caused by HPV and that’s resounding yet. The broad evidence in the field is that several way of unleashing and enhancing T cell responses are varying results against various cancers. As we advance our view of an ideal immunotherapy to generate functional killer T cells, we’re well in motion in applying SynCon products to other cancers. You will be hearing from us about our hTERT construct in the months and years ahead. In preclinical studies, we observe significant impact when we target this gene human telomerase reverse transcriptase which is found in many cancers, but is rare in normal cell. We started a Phase I trial of our hTERT immunotherapy alone or in combination with Inovio's IL-12 immune activator in adults with breast, lung, or pancreatic cancer at high risk of relapse after surgery and other cancer treatments. Because high levels of hTERT expression are found in 85% of all human cancers, this immunotherapy candidate holds the potential as a broad spectrum universal cancer therapeutic. Staying with our rich oncology pipeline, our prostate DNA immunotherapy INO-5150 targeting prostate-specific membrane antigen and prostate-specific antigen has achieved regulatory clearance to start a Phase I study and we will soon begin enrolling patients. A preclinical study in monkeys showed that immunization with INO-50 generated strong and robust T-cell immune responses that were the highest generated by a PSA-targeting immunotherapy in animal studies and were very similar to the immune responses we generated in patients with VGX-3100 which generated best-in-class T-cell immune responses. While I’m proud of the cancer pipeline Inovio has filled, let’s not forget the value in our products targeting challenging infectious diseases. I will tell you about four of them: hepatitis B, hepatitis C, Ebola and HIV. First, hep B. Along with providing full funding, Roche entrusted Inovio with the responsibility of running the first study. We have received regulatory clearance to start the INO-1800 Phase I study and will soon begin enrolling patients. The treatment of the first patient in this trial will trigger a milestone payment from Roche. Second, hepatitis C. Inovio’s multi-antigen SynCon immunotherapy targeting hep C virus genotypes 1a and 1b, is called INO-8000, is being studied in a phase I/IIa clinical study in Korea in collaborations with our international affiliate GeneOne Life Sciences. Together we expect to report interim data from this clinical study later this year. Even though there has been recent therapeutic break-throughs for this chronic disease, we think we can bring a safer, more long lasting product to market with our DNA-based hep C therapy. Third is Ebola. We intend to initiate a Phase I study of our Ebola immunotherapy called INO-4212 in the first half of 2015 in collaboration with GeneOne. We will begin this trial with great expectations based on our previous -- preclinical data -- published preclinical data showing 100% protection of animals immunized with our Ebola DNA vaccine. In this brief look at our infectious disease pipeline, all end with HIV. Subsequent to year-end, we reported that a 12-patient Phase I study of HIV therapy, PENNVAX-B, in HIV-infected patients revealed that induced T cell immune responses characteristics were similar to those observed in extremely rare HIV-infected individuals who without treatment do not progress to further stages of disease although these patients are called the long-term non-progressors. Scientists believe that part of their ability to control infection may lie in their unique immune responses, that’s why our DNA-based immunotherapy approach hold so much promise, because it drove the expansion of activated HIV-specific CD8 T cells with functional characteristics similar to those of long-term non-progressors. The knowledge from our PENNVAX-B studies in healthy and HIV-infected people has been used to create our global, multi-clade PENNVAX-GP preventive and therapeutic HIV DNA immunotherapy candidate. Development of this product was funded in part by a $25 million NIH contract over the last five years. We expect to initiate a Phase I study of PENNVAX-GP in the first half of this year. This study will be conducted by the HIV Vaccine Trials Network with funding provided from -- also from the NIH. We are also very pleased to have announced earlier this morning that Inovio and its all-star academic collaborators including the University of Pennsylvania were awarded a new five-year $16 million grant from the National Institute of Allergy and infectious disease, part of the NIH to further support our novel DNA-based HIV immunotherapy development. Under the integrated preclinical, clinical AIDS vaccine development program or IPC AVD, this grant was awarded based on par on the clinical successes of Inovio’s PENNVAX HIV vaccine program. The new grant will fund research to expand PENNVAX coverage of HIV strains as well as to further enhance antibody responses generated by the vaccine. Overall goal of this project is to further build upon this important HIV vaccine approach as well as to gain fundamental insight into new technologies to improve vaccination. As part of this grant consortium, Inovio will bring its expertise in vaccine constructs, developing, and manufacturing of HIV vaccines with researchers of four of the world’s leading academic institutions, including UPenn, Emory University, Duke University and the University of Massachusetts. This new award reinforces Inovio’s position as one of the eminent, global developers of novel HIV therapies to prevent and treat this disease. So on top of the $25 million contracts over the last five years, we will be receiving additional $16 million over the next five years. I’ll close with the quick accounting of our other Company developments. DARPA, the Defense Advanced Research Projects Agency awarded a $12.2 million for a collaborative project to develop Inovio’s DNA-based monoclonal antibodies or dMAbs using technology developed by Inovio and Penn against influenza and antibiotic-resistant bacteria. This research is being conducted by scientists from Inovio, Penn, MedImmune. In this previous -- in previous clinical studies, our dMAbs demonstrated robust virus neutralization and protected treated animals challenged with a lethal virus. I promise you, you will be hearing more about Inovio’s dMAbs going forward. Remember, that conventional monoclonal antibodies have become the most valuable medical product class in recent years. In 2012, worldwide sales of monoclonal antibody products exceeded $50 billion and the top 10 selling pharma drug, 6 of them are monoclonal based products. So we are able to apply our technology to get our large slice of this important product class. On another note, we view as our -- as a non-core asset, our Animal Health business, VGX Animal Health, Inc. We still -- we will still process from this development, but it is now in the hands of a company Plumbline Life Sciences of Korea, who will focus on this asset and move it forward. We granted an exclusive license for animal application of VGX Animal Health is growth hormone-releasing hormone or GHRH technology and animal DNA vaccines plus non-exclusive license for Inovio’s electroporation delivery systems in animals for these applications. Our VGX Animal Health subsidiary will accept -- will receive $2 million in cash in multiple payments, along with 20% of the outstanding shares of Plumbline, as well as the milestone payments, and royalties on product sales. Inovio still retains the human application of its GHRH technology. Now our CFO, Peter Kies, will provide our financial highlights. Peter?

Thank you, Joseph. Good morning, everybody. Total revenues was $2.5 million and $10.5 million for the quarter and year ended December 31, 2014 as compared to $1.7 million and $13.5 million for the same periods in 2013. Total operating expenses for the quarter and year ended December 31, 2014 were $13.5 million and $50 million as compared to $9.7 million and $33 million for the same periods in 2013. Net loss attributed to common shareholders for the quarter and year ended December 31, 2014 was $7.4 million or $0.12 per share and $36.1 million or $0.61 per share as compared with a net loss attributed to common shareholders of $15.5 million or $0.30 per share and $66 million or $1.43 per share for the same quarter and year-end -- for the quarter and year-ended December 31, 2013. The improvement of $8.1 million and $29.9 million in net loss resulted primarily from a reduction in a non-cash accounting expense. In 2014 related to the change and fair value of common stock warrants based on a required quarterly market-to-market adjustment to reflect the changes in the Company’s stock price. A look at revenue. We are receiving ongoing payments from Roche under our collaborative research and development agreement. The decrease in revenue was primarily due to the upfront payment associated with the partnership agreement executed in the third quarter of 2013. This was offset by an increase in recognized revenue related to the research and development services performed under the agreement. Now operating expenses. Research and development expenses for the quarter and year ended December 31, 2014 were $9.2 million and $34.1 million as compared to $66.4 million and $21.4 million for the same periods in 2013. The increase in R&D expenses is generally related to an increased investment in our product development programs and our Roche partnership, the latter being fully offset by the development fees from Roche. General and administrative expenses for the quarter and year ended December 31, 2014 were $4.2 million and $15.9 million compared to $4.3 million and $13.6 million for the quarter and year ended December 31, 2013. As of December 31, 2014, cash and cash equivalents and short-term investments were $93.6 million compared to $52.7 million as of December 31, 2013. This increase was primarily due to net proceeds from our March financing and warrants and options exercised during the period. Also as of the end of last year, the Company had 60.7 million shares outstanding and 66.6 million on a fully diluted basis. Based on management’s projections and analysis, the Company believes the cash, cash equivalent and short-term investments are sufficient to meet its planned working capital requirements through the end of 2017, excluding its planned Phase III clinical trial of VGX-3100. As you might expect, the Company does expect to raise additional capital to fully fund the study. More detailed information can be found in our press release issued this morning and on our Web site in the IR section under SEC filings. Joseph, now back to you.

Thanks, Peter. It's very clear what are the characteristics of an ideal immunotherapy. 2014 was transformational for Inovio and the field because we showed for the first time that an active DNA-based immunotherapy can generate efficacy by activating well targeted robust killer T cell exclusively in the body. We think Inovio is closer than any competitor for achieving such ideal immunotherapy. We are starting everyday to turn this ideal into reality with a growing pipeline of preclinical and clinical immunotherapy targeting a range of cancers and challenging infectious diseases. Our aim is to make a big impact on the lives of people suffering from these diseases. Ensuring that we’re moving in the right direction, we have validating data, we have validation in the form of third-party non dilutive grants now amounting to roughly $85 million over the last six years. We have notable collaboration and our partnership with Roche is focused on one of the most widely prevalent diseases in the world and as you can see from today’s HIV award announcements, we continue our efforts to secure further grants, collaboration and partnerships to advance our technology, and the many products we’re building and developing with our novel technology. Finally, we have an outstanding team of experts, and continue to add to our strength and bandwidth throughout our organization. I’ll end by simply saying, we’re pleased with our progress and our potential over the next few months, watch this phase and watch Inovio. Now I’m ready for your questions.

Thank you. [Operator Instructions] Our first question is coming from the line of Charles Duncan with Piper Jaffray. Please proceed with your question.

Hey, good morning, Joe, and thanks for the detailed review of last year as well congrats on that HIV grant - additional HIV grant. My question is regarding VGX-3100 in terms of the visibility and timelines; I understand that you’re doing some more manufacturing work to prepare for a Phase III, but I’m wondering if you can tell us if you actually requested end of Phase II meeting with the FDA? And if so, when -- approximately when that might take place as well as can you provide some color on the sizing and cost estimates for that Phase III?

Good morning, Charles. Thank you. So VGX-3100 product manufacturing as you already know, where you manufacture your Phase II -- Phase III product is where you manufacture your commercially launch product as well. So we’ve been scaling up and are conducting manufacturing activities to launch our Phase III studies from a newly selected larger contract manufacturer. Along with that is our delivery devices that we’ve designed and scaled up a commercially manufacturable and distributable electroporation device. This is our simple to use and robust device that can go out and -- into mass production and into mass distribution. And these have been taking some time to prepare. And along with that is the preparation to have the end of Phase II meeting with our full Phase III clinical protocol as well as the endpoints where we will seek to get the FDA’s concurrence. We expect the FDA end of Phase II meeting to occur sometime in the midyear this year, and that will allow us to move into our Phase III initiations by early 2016, if not sooner. So, obviously we all want to start this important trial as soon as possible. As well as the Phase III study size and characteristics, as I’ve stated before, we expect this trial size to be somewhat larger than Phase II, but because of the low overall P values of our efficacy parameters, we don’t expect it to be a huge size. So we’re currently estimating somewhere between 300 to 400 patients total to get to the endpoints that we want, and as we discussed before, we’re looking for a full clearance of the lesions potentially as our Phase III endpoints, clearly that will diminish the placebo effect that you may see in a more easier target. So, I think what we’ve shown in Phase II studies is extremely compelling from our ability to generate just what the three simple injections into the arm in the first three months of treatment for these women, we can clear the CIN2/3 lesions down to normal and also clear the -- eliminate the virus that cause the disease in the first place than no other treatment options can claim the -- those two things currently or in development.

Yes, we saw that data and it was impressive. When do you anticipate the full Phase II data to be published, and in what type of journal could you characterize that then? And finally, can you ballpark the cost of that 300 to 400 patient trial?

Yes, the whole trial on should be around $80 million to $100 million ballpark. And the full -- we’ve submitted the manuscripts to one of the top medical journals, and we expect to publish this very impressive efficacy immunogenicity and safety data in one of the top journals. It’s currently undergoing a reviewing process at a journal right now.

That’s helpful. And then one additional question for you please, if you could compare and contrast, there has been some other movement in the market with regards to DNA vaccine platform such as those using listeria. I’m wondering if you could point out some of the key differences in your mind, if you would just briefly.

Yes, one of the -- I guess, the biggest key differences is safety. Our DNA-based immunotherapy sounds as such. It’s pure DNA, it’s pure naked DNA in water, and deliver what [indiscernible] electrical energy. So, in theory, it’s both -- it should be as safe as any other drug regimens out there, and in reality as I stated with treated over 550 patients over 1,300 different administration,s and we haven’t had any SAEs. Only thing you see is the redness at the site of injection which just shows that immune responses are getting generated by the therapy. The other difference will be the -- in the immune responses. Any efficacy without measurable responses in immune-oncology is rubbish. So because otherwise you’re just waving your hands and I think the difference in our field is, if you want to invest into where there are clear mechanisms of action being demonstrated, and in randomized controls, double-blinded clinical studies at Inovio, or some other more nebulous approach. Speaking to what you had asked earlier, part of our manuscript will include a natural foaled [ph] of clinical efficacy meetings as early as week six or week 14. So this is after the second or third injection with our 3100. We can correlate and predict which patients are going to clear the lesions and clear the virus versus those who are not. So this level of immune responses data collected from a large double-blinded trial does not exist anywhere outside of Inovio currently, and we can apply this dataset and what we learned from our Phase II studies to other cancer product development programs we’ve ongoing including pancreas, breast, lung, and soon to start prostate cancer program. So we’re really pushing the envelope in our immune-oncology field by our ability to measure and correlate the T cell immune responses both from the blood where the blood -- T cells are circulating, but also we can track them to the sites of interest, the tissues of interest whether be it in the cervical tissues, prostrate, or elsewhere.

Thanks for the added color, Joe. Congrats on a good year of progress.

Thank you very much.

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

Hi, guys. Thank you for taking my question. So first on 3100. Just want to get a better sense of your proposed Phase III program, will you be treating and evaluating patients for the same amount of time or do you think you will extend the evaluation period? And then secondly, can you give us a sense of what the endpoint might be and if it’s going to be the same as the Phase II endpoint or if you’re looking at potentially some other endpoints?

Thank you, Brian. So in terms of the regimen, we expect it to very similar. So just to recap, as three injections that -- one each at month 0, 1 and 3 and the clearance of the lesions and the virus are evaluated at month nine. There is also in Phase II a one-year additional follow-up post month nine. So that’s to measure the safety as well as the durability of these responses and efficacy. So our Phase III studies, we expect it to target a similar timeline, but perhaps with additional follow-ups to build up how long and how persistent or efficacy and immunogenicity of these programs. As far as the endpoints, we haven’t finalized, but also it’s never final until you get the concurrence with the FDA. But by looking at our Phase II data, most of our drug treatment effects in the patients who cleared, they clear down to normal clearance. And if you use that parameter the p-values which were very good even goes down further, down to 0.006. So likely that will help in reducing the trial size, and likely that’s one of the ways that we will be able to accelerate the completion of this important Phase III study. The other portion of the trial that I don’t want to loose sight of, because it has a huge implication not just for HPV based products, but also to other chronic infection targets, that’s our ability to eliminate HPV virus from the cervical tissue by treating women with VGF-3100. So, we’ll also be measuring likely in our Phase III study, and that -- this characteristic is going to be a huge factor in our market penetration and our ability to establish our VGF-3100 potentially at the first line treatment for women who are diagnosed with CIN2/3 indication. So we’re very excited about that and there hasn’t been any other therapies today on the market or in development that has shown such an impressive level of viral clearance using an immunotherapy. And it has other additional implications to our Hepatitis B therapy, hep C and HIV therapies as well because, we’ve already demonstrated that we can powerfully impact the elimination of the virus using a targeted immunotherapy as we have done with 3100 Phase II results.

Great. Thank you. And then just two quick questions on your prostate cancer vaccine. First, can you tell us what the target population you’ll be going after there will be? And then secondly, do you still plan to re-partner that program?

Well last question first. As we have with all of our rich pipeline of products in our portfolio, all of these products are up for a partnership with a right partner and for a right price. So, we have a very active and busy corporate development programs to bring about additional partners, not just for 5150 or 3100, but for other products in our rich pipeline. But to prostate cancer, we’re going to be looking at an earlier stage patients likely away from the castrate-resistant. In the first study, we’re looking to see if we can generate the high levels of T-cells that we were able to do in cervical pre-cancer patients with 3100 and therefore we can use our correlation to predict our clinical efficacy. But we feel that the -- where, if most high potential for these immunotherapy’s to bring about the highest level of significant impact is in slightly earlier stage than the castrate-resistant end stage patient, but more data to come. We expect to initiate the studies soon and more data -- more information will come.

Great. Thank you.

Thanks, Brian.

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

Thanks. Hi, good morning, Joe.

Good morning.

I was wondering, what could go wrong to either delay the start the Phase III early next year or even result in the request for more Phase II work. I was wondering specifically what bearing [ph] does, do follow-ups beyond nine months have on the sufficiency of Phase II?

So, as you know in this area, anything can go wrong that can delay, but we don’t expect any delays. We do have a lot of balls in the air in terms of scaling up and manufacturing the plasmids as well as the devices. And when it comes to the regulatory interactions I think we have one of the best track records out there especially with such a novel therapy. But it’s not done until the FDA blesses with the concurrence at the end of Phase II. In terms of the follow-up of -- year long follow-up from our primary readout from week 36, we do have a week 88 follow-ups. But safety from week 36 was very typical of our other trials within say any [indiscernible] related to the treatment of the drug, there weren’t any significant problems compared to the placebo groups. So, we don’t expect real surprises from week 88. And I think the efficacy and immune response that correlate to efficacy speak for themselves. So, we’re pretty confident, but I just want to stress that you never know when you’re dealing with FDA but our track records and our credibility have been extremely good with the FDA.

I mean it’s hard to imagine a safety complication, but I was just wondering are they holding to a maintenance at efficacy or some sort of efficacy at that last endpoint.

No, we haven’t had those discussions with the FDA. We’ll have that in the Phase II meetings with the FDA. Being immune based therapy with clear efficacy readouts, we’re pretty optimistic that we’ll get a straight path into our Phase III study.

Okay, I was just actually curious about the grant that you got. What were the specific successes that inclined in to give you another $60 million?

Total success as you know are based on our two published clinical studies using PENNVAX vaccine, PENNVAX-B. So, what we’ve shown was in preventive setting just three injections again in months 0, 1 and 3 where we were able to generate the highest CD8 T-cell response level using this HIV vaccine than any other HIV vaccine candidates, which were tested in the last 20 years far enough, so that’s -- immunologically that’s the props. Similarly same products being studied in HIV infected patients in a treatment setting in a virally suppressed patient population we’re able to generate the T-cell signature in these patients that were pretty much identical to what you read out from a long-term non-progressor patients, which means if patients can be off drugs and still not progress, they’re just genetically blessed with their ability to control. And we can turn at least in these 12 subjects who volunteer these HIV infected patients; we’re able to generate these important long-term non-progressor T-cell traits just with administration of our HIV vaccine. So, we’re optimistic certainly with the progress of those programs. Those two studies and advancements prior to the publication less to $25 million contract from the NIH in the last five years, that’s turned into the development of global clade PENNVAX-GP, and then this new grant of $60 million to us and our academic collaborators really will also further expand our knowledge and development of this important HIV vaccine platform. So, I can't stress anymore. I think our technology, our science, our research have been validated, its $40 million across the last five years and the next five years, it is one of the largest in the whole HIV research field. So, I think dollars speak for themselves. I think the results and the publications speak for themselves. We do have these measurable statutory levels of T-cells we can generate using our immunotherapy. As I stated before, I challenge other platforms or products in our field to generate even similar levels of immune responses. So I think that’s where our strength comes from, our technology is grounded in phenomenal science, and not to mention over 600 issued and pending patents globally protecting our assets. So, we’re very confident of where we’re going to take this platform and our rich pipeline of products.

Thanks a lot, Joe.

Thank you.

Thank you. Our next question is coming from the line of Jason Kolbert with The Maxim Group. Please proceed with your question.

Hi, Joseph this is actually Jason McCarthy for Jason Kolbert.

Good morning.

I just have a comment on cancer immunotherapy. Good morning. When it sounds like everything is going great, but for cancer immunotherapy in general there’s just not a lot of data in humans, and I think your group is fortunate enough for doing so well with the cervical dysplasia that you do have data and you could show that vaccination does work in cancer. But I think a lot of vaccination is driven by that DNA backbone that you’re using. And seeing what happened with Bavarian Nordic and Bristol Myers, are you turning more attention to prostate cancer in 5150, after Bavarian Nordic is kind of showing that you can vaccinate against prostate cancer and maybe getting 5150 back from Roche might kind of be a blessing in disguise for the company.

Yes. Thank you, Jason. Getting a product return from the license from a large pharma is never pleasant. But in the long run I do think we can develop 5150 and their components even more expensively in this important immuno-oncology filed, and we’re very glad to see the entrance of BMS back into the cancer vaccine field because it really stresses the importance of doing this in products -- cancer areas like prostate cancer. Obviously it raises the profile of 5150, that’s why we’re pleased to have announced this morning that all of the regulatory clearance has been given and we should be initiating our study for 5150 in the next few weeks, so we’re very excited about that. Beyond that, I think -- I have full confidence that we can generate, as you said similar levels of T-cell immune responses from our prostate cancer patients with 5150 as we’ve seen with 3100 in cervical pre-cancer. So as the owner of this largest dataset of immune responses in patients we’ll be able to build out this important big data of information, and we can apply to develop these cancer indications much quicker and more intelligibly than other competitors in the field, and I think that’s going to be important draw to some of these big pharma folks, and we expect to be very important interest back to this field. And I’m very excited to do our prostate cancer study. We think this is an area that we can really leverage what we have and make a huge impact in the field.

Great. Again it sounds like everything is going great. Looking forward to the year.

Thank you very much, Jason.

Thank you. [Operator Instructions] Our next question is coming from the line of Yi Chen with H.C. Wainwright. Please proceed with your question.

Hi. Thank you for taking my questions. My first question is, could you give us some color on the age distribution of patients in the completed Phase II trial of VGX-3100, and also if you have such information, the age distribution of people who currently are receiving vaccine -- preventive vaccines for HPV infection. Thanks.

Yes. Well preventive vaccine is an easier thing because that’s published and those are mostly in pre-teen girls and boys, highest impacted and most marketed target groups are in those age groups. Our 3100 is a therapy and its in treatment of women who’ve fully diagnosed with these CIN2 or CIN3 pre-cancer histologically, and our Phase II studies required them to have an active borrow transcript from measurable add entry by PCR [ph]. So, age distribution will allow the women of, I believe 18 to 55 typically adult age group and we’ve stratified these women between placebo and the treatment group. So, that was stratified pretty much identically. In terms of the age distribution, obviously the 3100 group has been older than what the [indiscernible] and other preventive vaccines have been targeting, but that’s because of the indications more than the age distribution. And [indiscernible] stratification will be presented at the -- publish in the manuscript that we expect to come out. But let me just stress, there’s no age impact between the placebo and the treated group, they were equally stratified and randomized in a blind fashion.

Thanks. My second question is, in the press release regarding the new funding -- additional funding for the HIV program, it says you may consider a -- start a separate Phase I study for it. So, what kind of difference in design can we expect in this new program as compared to PANNVAX-GP?

Yes, so $25 million over the last five years resulted in PENNVAX-GP a global clade coverage vaccine that can be used as a preventive or as a treatment. And the PENNVAX-GP studies in the U.S. Phase I studies we expect to start with NIH funding in the first half of this year. So that’s from the last $25 million of funding. For the next five years this new grant will fund additional research and development of our HIV vaccine program, and it would likely culminate in a trial by end of that granting period, so five years from now. So, I can't really predict what kind of research finding and development findings it will have into the future, but likely we’ll have better durability and higher immune responses. We think its -- its not going to be much higher in terms of T-cell responses magnitude that we have already been generating, but it is also possible with different combination of immuno activators that we have in development. The other focus is also getting an antibody based responses to HIV which we can -- we’re looking in this next five years of research period funded with grant to improve. So these are broadly neutralizing antibody responses. This is the other arm of immune system that can be very important for the preventive vaccine indication. So, we have some room to improve even for PENNVAX in that regard. So we look forward to really advancing this important vaccine still. So, we feel very good about achieving the validation of getting this new award. So, we’re looking forward to doing lot more significant research using this significant funding.

Okay. Thank you. My final question is, considering that you will be initiating few clinical trials in the near-term or within this year. Could you give us some color on the projected operating expenses for 2015 as compared to 2014?

So let me just summarize, we expect to be an annual burn of about -- net burn of about 30’ish million dollars, that’s our current projection. Obviously that can change. A lot of our trials are funded, like the hep B, HIV, HCV with other people’s money. The prostate cancer study will only add $1 million, $1.5 million to our burn, because most of the heavy lifting has been done with Roche’s money for 2015. So, I think we’re very good with our cash. Obviously we stated explicitly that we’ll raise additional capital for Phase III if we’re going to take this on our self, and even if we’re partnering this we may raise the money just to increase our leverage in this partnership discussion. So, I think we’re very strong financially and we hope to be even stronger with a lot of the activities we have ongoing in the clinical development program.

Okay. Thank you very much.

Thank you, Yi.

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to Mr. Hertel for any additional or concluding comments. End of Q&A

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