Inovio Pharmaceuticals, Inc. (INO) Q2 2015 Earnings Report, Transcript and Summary

Greetings and welcome to the Inovio Pharmaceuticals Second Quarter 2015 Financial Results. 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. I would now like to turn the conference over to your host, Mr. Bernie Hertel, Vice President of Investor Relations and Communications. Thank you, Mr. Hertel, you may now begin.

Thank you. Good morning, ladies and gentlemen. Today's call may contain certain forward-looking statements relating to our business, including our plans to develop DNA immunotherapies and 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 different factors, including uncertainties inherent in pre-clinical studies, clinical studies, and product development programs, including but not limited to the fact that pre-clinical 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 2014, our 10-Q for the quarter ended June 30, 2015, 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, and 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 on this transformative day for Inovio, our many shareholders and stake holders. I say transformative because we invested $727 million license agreement and strategic cancer vaccine collaboration with MedImmune we just announced this morning, and we just added a second major pharma partnership for Inovio’s CNA based immunotherapy technology. This significant deal also unveiled the pivotal step in our overall immuno-oncology strategy in which our goal is to take immunotherapy to the next level by planning a vital role in combination therapy. Let me outline the detail. MedImmune, which is AstraZeneca’s global biologics research and development arm, has acquired exclusive rights to our HPV cancer product called INO-3112. This immunotherapy targets cancer caused by human papillomavirus types 16 and 18 it is already in Phase I clinical trial for cervical and had a neck cancer. MedImmune intends to study INO-3112 in combination with selected immunotherapy molecules within its pipeline and HPV-driven cancers. In addition, MedImmune and Inovio will conduct research and design of the two additional DNA-based cancer vaccine products that are not in Inovio's current product pipeline. MedImmune will have the exclusive rights to develop and commercialize these products. MedImmune will pay Inovio $27.5 million upfront, or development cost as well as development and commercialization milestone totalling upto $700 million. Inovio is also entitled to receive upto double digit sale royalties on INO-3112 product sales for the two additional cancer products MedImmune will fund development cost and pay Inovio certain development and milestone payments and royalties on sales. Finally, Inovio retains all rights to VGX-3100 for HPV-associated pre-cancer, in fact, our phase III preparations are progressing well and we are on track for a 2016 trial initiation. This new deal stands as Inovio’s second major pharma industry partnership in less than three years, adding to our global hepatitis B license with Roche. For a little background, just MedImmune deal would not have been materialized if not for the best-in-class T-cell data generated in our phase II trial of VGX-3100 which is the core of our newly licensed INO-3112 product. In fact, you all get much more detail from the VGX-3100 study, yes I’m pleased to report that a top tier peer-reviewed medical journal has accepted our clinical paper for publication. We don’t control the publishing date, but I expect you will see this publication by year-end. We have always said that all of us at T-cell and our immuno-oncology strategy begins with our T-cell. There are three characteristics that set our T cell activating immunotherapy technology apart from others and access the foundation for our cancer strategy. Number one, we activate T-cells in vivo meaning directly in the patient’s body. Number two, our immune responses are best-in-class generating fully functional antigen specific T-cells in high quantity without unwanted inflammatory responses and number three, the killing effect of those T-cells co-relates with better clinical outcomes and benefits. With these powerful T-cell characteristics, we are building an arsenal of cancer acting products that you will hear more about in due course. I want to emphasize we have only scrapped [ph] the surface of the cancer related antigen that we can mix and match to design new anti cancer products. So how do we develop and commercialize these products? Let me review the three strong strategy that we’ve been working on for some period of time. First, we aim to leverage the power of our products as mono therapies for single agents, second, we will advance immune-oncology combinations of our products with conventional oncology products and in particular third party immunotherapy subset checkpoint inhibitors and third, we will advance in-house immunotherapy combinations of our T-cell activating product with our own checkpoint molecule. I will expand on this strategy evidence. The oncology’s field recognizes that some cancers are potentially addressable with single immunotherapy such as that is as a monotherapy. This first throng [ph] may be more attractive for early stage disease and you have seen us move down this path with VGX-3100, our immunotherapy product for getting high grade cervical pre cancer. We also have plans to pursue other HPV related anogenital pre-cancer indications. There are slowly progressing early stage cancer for which immunotherapy may also be appropriate first line therapy such as prostate cancer, the second prong [ph] of immune-oncology strategy is to combine our T-cell activating product with complimentary immunotherapy technology where we believe we can contribute significantly to maximizing the clinical utility and the value of the combination. One of the most impactful technology development that has brought immunotherapy into the realm of oncology in recent years has been the success of checkpoint inhibitors which helps to overcome cancer cells ability to hide and protect themselves from T-cells, while this technology attracts a significant enthusiasm the fact is that individual checkpoint inhibitors have not exceeded overall response rates of 20% to 40%. As was expressed by leading oncologists at ASCO this year, this technology alone is not adequate. Taking the field of immunotherapy to the next level, requires more targeted and robust T-cell generation and Inovio’s cancer vaccine are designed especially to make that happen. If you allow me an analogy, think of checkpoint inhibitors as providing the ability to break down the patent [ph] wall in order to reveal the cancer cell hiding behind. But, there has to be an army of highly trained, well armed T-cells ready to move through the bridge and destroy the cancer cell, while that does not always exist naturally Inovio’s products activate the immune system to raise up and command these army of T-cells. Today’s field with MedImmune brings together these two powerful forces; let me make an important point. We have been signing for this step for a long time. We strongly subscribe to the notion that a product must first demonstrate its utility as a single agent before it can be considered potentially impactful and valuable as a component of a contamination [ph] therapy, look with all sorts of data; you are just waving your hands and hoping for the best. With VGX-3100 data and the first INO-3112 data in hand, we are optimistic about the prospects for 3112 to play a vital role as a product immune-oncology combination, and we will continue to initiate studies of cancer vaccines that will allow us to characterise the potential and undertake even more ambitious combination study. So the MedImmune deal is the first visible step in our plants combined other companies’ complimentary immunotherapy molecule as subtest checkpoint inhibitors. In a mutually beneficial combination arrangement, we’ve always said there is ongoing interest by multiple companies and our other organizations in these important T-cell generating capability. We will continue to strive for addition of partnerships that combine our T-cell generating cancer vaccine product with more checkpoint molecules. There is a third prong [ph] to our immuno-oncology strategy that I will detail briefly. Almost all current checkpoint inhibitors are based on conventional monoclonal antibody technology, when I say conventional these dMAb products must be constructed manufactured and purified in factory and then delivered into the body. This process is complex and expensive and you have already heard about Inovio’s stake about a DNA based monoclonal antibodies, we call them dMAb. Book an engineer, send any code for monoclonal antibodies directly and generate these antibodies directly in the person’s body so they combine with the targeted cancer cell and help break down the castle wall. While you have so far only heard of our dMAb in the context of infectious diseases, we have already constructed multiple dMAb base checkpoint molecule of our own and are testing these candidates in animal model. You will by end hear more about the first steps of Inovio’s team and products targeting cancer. So those are the three prongs of our immuno-oncology strategy that Inovio is executing on. We believe this is a winning strategy for Inovio, our shareholders and a broad set of patients in need. We already have and expect to soon show many further accomplishments and advancement in each part of this strategy. This morning’s call was of course originally scheduled as our second quarter review, so I’ll touch on some of the additional accomplishments I have and already mentioned. In the second quarter of 2015, DARPA, the U.S. Defense Advanced Research Projects Agency selected Inovio to lead a collaborative team to develop a preventive vaccine and treatment for those infected with the Ebola virus. It was the promise of our team [ph] that brought us to the DARPA’s table and sealed the deal for a $45 million grant. Remember, we also secured a $12.2 million award last fall from DARPA to also develop dMAb products for influenza and bacterial infections. And by the way MedImmune is already a key collaborator on both of these contracts. Second, in partnership with Roche, Inovio initiated a Phase I clinical trial which is now recruiting patients to evaluate our INO-1800 immunotherapy in patients who are chronically infected with hepatitis B virus. This trial initiation triggered a $3 million milestone payment from Roche to Inovio. Third, we secured a partnership with Europe’s largest cancer organization EORTC, to evaluate INO-3112 in combination with chemotherapy, chemo-radiotherapy for the treatment of patients with locally advanced cervical cancer. This trial is expected to begin in 2016 and will be part of MedImmune’s development plan for INO-3112. Finally, we continue to execute the steps towards launching our plan Phase III study of VGX-3100 in cervical dysplasia, a rigorous process of scaling up our immunotherapy production with all the quality assurances checkmark is advancing as is the scaling up of our commercial device design and production. We are aiming to meet with the FDA before year-end. We recognize that much of our progress is behind this team and is not readily visible, but our team, our hardworking dedicated team is working hard every day to advance our R&D and pre clinical work or our engineering and our clinical development. These programs never move as quickly as we would all like, but we are pleased with the important advancements we are accomplishing and we are where we need to be able to – to be able to play a vital role in the emerging immuno-oncology field. Now our CFO, Peter Kies will comment on our financials. Peter?

Thank you, Joseph. As you may have observed in reviewing our second quarter financial statements, Inovio has the greatest cash position that it has ever has. As of June 30, 2015 we had $154.6 million in cash and cash equivalents and short-term investments. With the MedImmunne deal announced today we will be adding $27.5 million of non-dilutive capital to our treasury in the third quarter. As we advanced into later stages of clinical development and expand our programs all with the goal of building novel, intellectual property and a strong presence in the world of immuno-oncology, our research, engineering and clinical expenses are growing and we continue to do so. But clearly, we have also been focussed on maximising our opportunity to steer non-dilutive third party funding with grant such as the recent announcement with NIAID $15 million grant to fund further HIV research to $57 million and combined with the DARPA award in the last year along with major development cost being covered for our hepatitis B program by Roche. And now, for multiple cancer products by MedImmune. We will continue to see collaborators that are strategic and bring such resources to mitigate our burn rate as we advance our cancer and infectious disease programs. In conclusion, I can tell you that our current and expected financial resources would support us through the end of 2018. Joseph, back to you.

Thanks Peter. You can see through advancing our immuno-oncology strategy, based on the unique power of Inovio’s products to generate T-cell in the body in the highest amounts with the desired function of characteristics leading to effective clinical outcome. Our team believes that our three pronged strategy is the best approach to bring the right product to the right patients for the right cancer. There is no other company that has the broad immunotherapy technology platform with more priced product potential that Inovio holds. We are very pleased to take this important step today in unveiling our first major immuno-oncology combination therapy partnership. Yes, we have more R&D to complete and many clinical studies to undertake but in the end it will take time. But we have no doubt that Inovio is going to play a vital role in taking cancer immunotherapies to the next level. We can deliver today’s type of deal every quarter, we would like to, but in the quarters ahead you will continue to see Inovio delivering on all the avenue of our cancer strategy. Now, let’s get to your questions.

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is from the line of Charles Duncan with Piper Jaffray. Please go ahead with your question.

Good morning, Joe and to your team and congratulations on the collaboration with AZ for 3112.

Thank you very much Charles.

Very nice deal, looks like a good one. Can you provide me a little bit of color on the terms of this $700 million in potential milestones with a rough percentage of them of them in terms of development versus commercialization?

First, approximately about half-and-half development, those clinical developments through Phase-I through III, IV for R&D research collaboration products of the two products, 3112 from Phase II milestones up to commercialization. And then there are sales-based milestones as well. And on top of that, very fair share of the royalties from the sales to the product.

And then, with regard to some of the milestones, progressed milestones, would you have the right to talk about those or is that an answer or kind of these still discretion. Would you be able to press release in progress?

Yes. Typically partners like to keep things close to divest. However, we feel these are meaningful events for our shareholders. So, we will able to announce each of the milestones. As we have done with Roche milestone of initiating INO-1800 study, so there will be updates on our progress based on the milestones payments and the phase that we’re at.

Okay. And I believe there are three ongoing Phase-I and II studies with 3112, are you going to continue advantage those or what is the disposition of those study?

Yes. So, immediately today MedImmune is an important part, it’s not the driver for INO-3112 study. Just a little bit color, Inovio's will be in-charge of wrapping up those current studies, but with all of the blessings of MedImmune counterparts.

Okay. And then, if I could ask just couple of more questions, one is 3100, the other is for Peter. For 3100, the end of Phase-II meeting, it does seem like you’re making progress. However, can you help us understand what is really the rate limiting step are, are there any new studies that you need to do or is this really kind of an execution taken now and one that you anticipate being able to have in end of Phase-II meeting?

So, last question first. With respect to end of Phase II meetings is to operate before the year end. And there are lot of preparations going into it as I just lost [ph] sign which are the scale up of our biologics product, 3100, and also commercialize – developing in commercial level devices to deliver our products in Phase III and after commercial launch and all of the things that involves intricate processes that are involved. First, sharing out multiple three major products in [Indiscernible] in manufacturing and curing and clinical and regulatory, but I’m pleased to say that everything is cooking properly and we are vesting to the initiation of the study in 2016 and will – as I stated earlier, we expect that in the Phase-II meeting with the FDA to get a concurrent on our Phase-III plans and protocols by the year-end.

Okay. And question for Peter, your 2018 cash is strong balance sheet. We don’t often talk about 2018 cash with most of our development companies. However, I’m wondering if you can provide some assumptions regarding the sizing and our cost of the Phase-III cervical dysplasia if you made those or at least does that cash runway fully fund that Phase-III for cervical dysplasia with 3100?

Yes, Charles. Yes, we expect that the cost of that Phase-III to run about $80 million and that is factored into that cash runway.

Okay. Thanks for the added color. Congrats on the [Indiscernible] value. Thank you.

Thank you very much.

Our next question is from the line of Tom Shrader with Stifel. Please proceed with your question.

Hi, good morning and congratulations. Seems like a nice feel with the nice partner. Could you give us a little background on the MedImmune’s current programs in cancer vaccines, is there anything you kind of have to move around or are you there only partner?

Tom, thank you very much. We’re not only partner, obviously there are MedImmune and AZ are large pharma. They have fantastic checkpoint inhibitor immunotherapy molecules. They are in late stage developments. We only typically talk about PD-1 and PD-L1 molecules, but MedImmune has a very deep bench of checkpoint molecules perhaps one of the best in the industry. So, our 3112 at our research product to be co-develop with MedImmune, to be combined with those steep bench of checkpoint inhibitor molecules. I think we’ll provide maybe the best ones to punch in this immuno-oncology field. Now, that’s not to say that MedImmune is our only partner, certainly the two research programs to be co-develop with MedImmune as I’ve said in the prepared remarks as well in our press release, is not part of our current oncology pipeline and we have even a deeper pipeline of the immuno-oncology products. So, I fee that this is just first of many potential corporate development activities that we could see in coming months and years, but I’m very excited about the combination of the power the Inovio T-Cell generating platform with MedImmune’s checkpoint molecule products.

Agreed. So, if you were to get into some sort of deep sequencing of tumor program, were you’re looking for patients specific antigens and then combining them with the two technologies. Would that be covered – would that be considered one product?

So, one product will be considered of combination of multiple relevant antigens.

Got ahead. If you were…

We’re not contemplating personalized approach, success where you’re getting at. Really what separates us and MedImmune from hearty type of technologies are product are off the shelves. We’ll be able to address multiple patients of same and plus in many cases against multiple types of cancers. So, our partnership with Medi is contemplating a vast patient population that we want to bring benefits too and obviously that will bring benefits to our shareholders as well.

Okay. Perfect. That was my question. Thank you.

Fabulous.

The next question is coming from the line of Jonathan Aschoff with Brean Capital. Please go ahead with your question.

Hi, thanks. Joe, I was wondering how you can take forward yourself part of something that MedImmune is taking forward in conjunction with another agents, especially in the same cancer?

So, I just wanted to reiterate and Jonathan this is a good question. Thanks for the opportunity to reiterate that. 3112 is exclusively to license stuff. These are HPV driven cancer, so anogenital, cervical, head and neck and so on, those cancers caused by HPV. And then we’re collaborating to develop two more novel products, those will be exclusive to Medi, but there are multiple tumor specific or tumor associated maybe up to 50 or more different agents antigens out there. And Inovio already has great number of those antigens already developed into near products. Now those are off the table for Medi. We’re going to collaborate on developing new antigens together based on their expertise and cancer genomics and immunology and so on along with Inovio SynCon development platform. So I couldn’t be any happier in combining these two capabilities into this field, but Inovio is free to partner or collaborate with other folks as long as these specific antigens and products are not involved.

Okay. But you can commercialized 3100 yourself Medi can commercialized 3112 itself?

Correct. So we divide a 3100, 3112 line is between cancer and pre-cancer. So Inovio retain the pre-cancer areas of dysplasia, neoplasia of cervical head and neck, ano and so on, as well as HPV infection, whereas we have exclusively given the rights to Medi for HPV caused-cancer head and neck cervical anogenital and so forth.

Okay. And the $700 million milestones, is that for all three parts to this collaboration?

Correct.

And do you have that 21 months data or I mean, it is not a little late to be in that publication coming by year-end?

So, publication by year end is up to week-40 which are primary endpoints and week-88 data will be forthcoming, it’s not all available. Obviously all of those patients finished their last visits middle of this year. So, what I can say here is we don’t expect any remarkable change from the impressive efficacy, safety and immunogenicity data we saw from our week-40 data that will be published by the year end.

When we’ll able to see that 88-week data?

When they are available.

Okay. But you will press release that, right?

We’ll press release that or present at a major conference.

All right. Thanks a lot.

Great. Thank you, Jonathan.

Our next question is from the line Jason McCarthy with Maxim. Please go ahead with your question.

Hi, Joe. Congratulations on the MedImmune deal. Just a couple of...

Hi, Jason.

Hi. You’re welcome. The Advaxis also has a Phase-III ready HPV vaccine as partnered to MedImmune, but they weren’t rate for PD-L1 checkpoint combination. And I think the key is that it doesn’t have IL-12 and it seems IL-12 needs to be coming up more and more lately. So my question is the focus turning towards IL-12 in the right combination of cytokine more than the vaccine and a single checkpoint combination alone and this really what attracted MedImmune probably it kind of suggest that there might be a terrible combination with the vaccine IL-12 and a checkpoint coming sooner than later?

So, last part of that question first. IL-12 is a key component of our cancer products development strategies, unlike some of the peers in the group we do own our IL-12 and we do have four rights of multiple IL-12 along with as our similarly potent cytokine gene products on IL-33 and 28 and so on. So we have a complement of tool box, tool kit -- tool box, tool within our kit. What’s the driving force of Medi’s decision, I believe Medi will be the best one to answer that. But what I can surmise is as I’ve said in the prepared statements, really its all about the T-Cell. So I use the game of their own strategy of rushing the castle to kill the cancer cells fighting away the cancer in the castle [ph] wall. So checkpoint inhibitors are very, very good and tearing down some of the walls, but without the army, you never going to see and takeover and kill those cancer cells. And that’s what Inovio has been very good at demonstrating and will, this drew more in our Phase-II paper, but even up to now we’ve been saying best-in-class T-Cell responses against HPV, against first state antigens, against every, almost all antigens targets that we’re being going after. So when it comes to other companies, I think you can just make the direct comparison, maybe Advaxis deal was a drug only deal, there was no real commitments, no money being exchange. In our view there is a significant upfront payment with significant milestones commitments and actually owning the product that Medi sees quite valuable. So, I that’s a great path forward for Inovio’s collaborations with Medi. We are contemplating obviously combining Medi’s potent arsenal of checkpoint inhibitor molecule and other immuno-therapy molecules with INO-3112 as well as the new products that we’re co-developing. So it’s really the best of ones we punch out there. And I’ll come back to Jason of what I said before, its all about the T-Cells and function of high level durable that’s where you need to make checkpoint inhibitors work better educations, that’s where you need combine to bring about better clinical outcomes in these cancer patients.

Great. And just one more question on the DNA-based monoclonals. What hi-dose can you achieve for the single dose and how quickly, because if it’s acute disease like Ebola, you think you need high hi-dose staff? If it’s Hepatitis B, it’s more chronic maybe lower to high-dose, longer period of time. And if its oncology for checkpoint it’s going to be different again. So I guess, how can you control antibody production, is it durable and can you multi-dose?

Again, last question first, we can definitely multi-dose. In animals we’ve treated for many months. We expect, because we’re not generating – these are fully humanized monoclonals. They are not made in animal cells, or these are made in the patient’s body directly. You could have a more design well set monoclonals for each subject you’re dosing with the dMAbs. Now the level -- we just had our first of the -- we just had our second publication on dMAbs and scientific reports earlier this month or in July, where we show that we can in matter of a day or so with a single dose can clear or protect animals from dengue lethal challenge. What I can tell you and this is just first edge of dozens of publications we expect in the next year will show including plans, studies; events should needs to go into human applications both in infectious disease for more relevant in the setting of oncology. So, currently in animal models, we feel that we’ve already achieve what could be clinically relevant dosing levels and without going in to the research dMAbs have a better potentially pharmacokinetic profile than conventional monoclonals antibodies, because the way they are may. You inject the DNA in to the patient in the muscle and the patient will begin to crank out -- the cells will crank out, clones dMAbs in his or her own cell. And you can see the expression as early as two or three hours and they tend to last anywhere between two to four weeks at lease. And we can engineer them to be longer lasting or shorter lasting based on what we want. So, what I can broadly say is at least in small animal and we’re scaling up to larger animals like primates and humans in the next few quarters. I feel better about – I feel – what I can tell you is our dMAbs development is already over delivering on my high expectations for this technology. So, we’re very excited by that. We have the funding from DARPA and others to fully fund the overall technology developments and I couldn’t be any happier and pleased about the development advancements of the dMAbs. It’s very exciting at this point.

Great. Thank you. Congratulations again on the Medi deal.

Thank you very much.

Our next question comes from the line of Yi Chen with H. C. Wainwright. Please go ahead with your question.

Thank you for taking my questions. My first question is and roughly about what timeframe can we expect to see dMAb in human trial and also given the recent used from competitors Ebola vaccine, does they don’t have effect on Ebola program with DARPA?

So, again with the last question first, I think within competitors data from the field is very exciting and very impressive. But we also are progressing very well in our clinical studies for Ebola and we expect to have some data by perhaps at earliest year end in immunogenicity, safety and so on. In terms of the impact, I think the field can and world can have more than one vaccine product for treating or preventing such a deadly disease. So we’re not as concern about the competitive landscape. But I think we have a very strong case for safety and tolerability and perhaps even strong immunogenicity from Inovio’s Ebola vaccine product. And I want to reiterate this is four-week funded program from our DARPA funding. Back to the first question, I want to just say that when DARPA funding was given all of the work completing the vaccines study as well as taking dMAbs into the clinical testing for Ebola was very aggressive and we’re on track. So I did feel within the next year and the half or maybe even shorter we will be entering human testing with our dMAb therapy for Ebola. At that same time we’ll be developing up to a dozens different oncology and infectious disease dMAb product candidates and take them through preclinical testing and these are different checkpoints. Inhibitor molecules as well as the potential therapy are important infectious diseases as well as other oncology products. ES has to know monoclonals antibodies as a product class today generates over $50 billion in market of sales. We feel that dMAb as they develop will give us a strong position to bring new technologies with perhaps better target product attributes that can allow us to start chipping away as a highly lucrative marketplace and perhaps most importantly is that we can bring about products to patients who otherwise would not have the benefits of this monoclonal antibodies. So we’re very excited about advancements of our dMAb program.

Thank you. I have a follow-up financial question. Given that for the second quarter the R&D expenses is significantly higher than previous quarters. So, how should we look at the R&D for the following quarters?

So I mean Peter can probably give you not symbols – I’m just going to give you a broad stroke for the interest and time. There’s a couple of reasons that some of the contract work they were doing under DARPA and others, there is some timing issues, right, so we are going to increase the work and then we get reimbursed for those work. So if you are looking at from quarter to quarter there maybe timing issues, but if you look at in a greater periods of a time like a year, all of those are funded in fact we had overhead and other benefits from doing those work. Secondly, we are increasing some work [ph] because we are gearing up to our phase III and that’s just a fact of the matter, these products are scaling up new devices and preparing for our phase III is going to enhance our brand, but those are all incorporated into the end of 2018 cash run rate as Peter articulated earlier. I want to just add one more thing in here, I think when it comes to the phase III, we are very pleased that we were able to strike the deal with Medi for 3112 and embark on two additional product developments in a very financially and development wise fair deal for those sides. But it allows us to maintain our phase III programs for our cervical dysplasia as well as our other products that are attractive to VGX-3100 in other pre-cancer indications of the anogenital tract. So this allows us to have our cake and eat it too. Now, you may ask why didn’t Medi insist on licensing and the phase III candidates for pre-cancer. The answer is straight, what I feel obviously Medi can answer their own question, but I feel from our perspective is when it comes to combinations with checkpoint inhibitors, those are contemplated the economic and the value are contemplated in more of a later stage cancer patient where you can drive a high economic value for innovative and life saving drug. So the focus as well as Inovio is in these immuno-oncology targets, whereas I am very pleased to retain is we’re able to strike a rate deal, but still maintain our full ownership of pre-cancers indication for cervical and other anogenital tract. So I think this is a great deal for us from now and also going forward.

Okay, thank you Joseph.

Thank you very much.

Thank you. I will now turn the floor back to management for concluding comments.

We are really pleased to have been able to announce this important new partnership today and also update you on our performance in the second quarter. Thank you for your time and attention as well as your ongoing loyal support of our company and what we are doing at Inovio. Thank you very much.

Thank you. This concludes today’s teleconference. Thank you for your participation and you may now disconnect your lines at this time.