Inovio Pharmaceuticals Inc (INO) 2013 Q4 法說會逐字稿

Greetings, and welcome to the Inovio conference call. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jeff Richardson, Senior Director, Corporate Communications, for Inovio. Thank you, Mr. Richardson. You may begin.

Good morning. Today's call may contain certain forward-looking statements relating to our business, including our plans to develop electroporation-based drug and gene delivery technologies, and DNA vaccines, and 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.

Risks related to collaborative agreements, including the timing and receipt of payments; the availability, or potential availability, of alternative therapies for 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 ended December 31, 2013, or Form 10-Q for the year ended December 31, 2013, and other regulatory filings from time to time.

There can be no assurance that any product in Inovio's pipeline will be successfully developed and manufactured, that 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.

Thank you, Jeff. Good morning, everyone. I appreciate the time you will spend with us for our review of a landmark year for Inovio. First, some perspective. One year ago, Inovio's market cap was around $100 million; we had no active partnerships with major pharma companies; we had under two years of operating runway; and Phase II efficacy data was more than a year away.

Now, just 12 months later, our market cap is around $800 million. We have a partnership with the pharma giant, Roche, exceeding $400 million in value, with others in the works. Our cash position gives us about four years of operating runway, and allows us to accelerate various programs. We have reported more best-in-class T-cell immune response data, and are only months away from reporting Phase II efficacy in immune response data. That's a successful year for a biotech company -- for any company, for that matter.

But that's last year. For a team on a mission to build a great immune therapy company with the aspiration to become the next Gilead or Amgen, Inovio has many steps yet to climb. When I stand before you at this time next year, I expect we will have initiated a handful of new clinical studies alone; and, with collaborators, we may have additional partnerships with hand. We will have released Phase II efficacy and immune response data. I am optimistic that I will be describing another year of goals met, results delivered, and expectations exceeded. As one of my mentors said to me, success predicts success.

Let's take a look back at last year. In a major corporate development for our Company, we announced last September that Roche and Inovio entered into an exclusive, worldwide license agreement to research, develop, and commercialize two of Inovio's highly optimized, multi-antigen DNA vaccine products targeting prostate cancer and hepatitis B.

To recap the financial terms of the agreement, Roche provided an upfront payment (technical difficulty) Inovio of $10 million. They are covering all preclinical and clinical development costs for these products, and will make milestone payments potentially up to $412.5 million upon reaching certain development and commercial goals for the development of INO-5150 or INO-1800.

While the financial benefits of this deal are significant, Roche's commitment at this stage of our development emphasizes the degree of strategic weight this global pharma giant is applying to an active immunotherapy capable of generating strong T-cells, and how it might be used alone or in combination with other therapies.

The bottom line is this: it's all about the T-cells. Whether it's about our partnership with Roche, awards we have received, or positive feedback we get through the frequent dialogue we have with other industry players and very knowledgeable institutional investors, we are clearly seeing recognition of the importance and the potential of active immunotherapies, and the recognition of Inovio's best-in-class T-cell immune responses, specifically. We believe that an effective, active immunotherapy should be able to generate a high enough level of functional killer T-cells to overwhelm cancerous or infected cells.

On the other hand, we also believe that an effective, active immunotherapy could be used as a vital component of a combination therapy. For example, checkpoint inhibitors -- which have achieved some notable results against cancer -- are able to unleash existing T-cells to perform their intended function, but they are not able to stimulate greater T-cell generation, which is what our technology does.

In two published clinical studies, Inovio products generated more T-cells than any other peer product that is marketed or in development. And it's not just about generating more T-cells; we have shown that the durability and functional killing effect of our T-cells. We are generating quality T-cells. Achieving and building on these results is what drives our R&D and clinical development focus. That's what is attracting major industry players to discuss accessing Inovio's products. So I predict that 2014 could become the year of T-cells, and 2014 will usher in a new era of immunotherapies.

First, I think we'll see a lot of new data further characterizing the ability and constraints of checkpoint inhibitors to enable T-cells to perform their intended tasks. Second, more relevantly to us, Inovio will be unveiling its first data ever from a large control Phase II study, focused on characterizing T-cells generated from our active cancer immunotherapies and their potential clinical efficacy.

So let's talk more about this study. Our lead product, VGX-3100, is Inovio's DNA-based immunotherapy against precancers and cancers cause by HPV types 16 and 18, which cause 70% of late stage cervical precancers and cancers. These HPV types also cause head and neck cancer and other anal/genital cancers. Each of these disease areas represents potentially billion-dollar-plus market opportunities.

In 2013, we completed enrollment of a double-blinded, placebo-controlled, randomized Phase II clinical trial called HPV-003, focused on cervical dysplasia. Inovio previously reported Phase I results showing that VGX-3100 achieved best-in-class T-cell immune responses with magnitude far exceeding alternative technologies; long durability; and a strong killing effect against cells targeted by this therapeutic vaccine. We look forward to the important milestone of reporting unblinded efficacy and immune response data from this Phase II study in mid-year 2014.

There are two important elements to this forthcoming data. One is, obviously, the efficacy of this therapeutic vaccine against these cervical precancers. We have our sights set on demonstrating that noninvasive immune therapy like VGX-3100 could generate enough killer T-cells in patients' immune system to significantly reduce or clear their precancerous cervical lesions. What will be equally important, however, is the generation of the T-cell immune response data itself. As a result of this Phase II study, Inovio could demonstrate efficacy linked to T-cell mediation from a targeted immunotherapy in the largest industry study today.

As I discussed before, we have generated excellent human T-cell data from our HPV and HIV DNA immunotherapies, which are highlighted in two published studies. This data leads our team to be optimistic about the Phase II results achieving the desired outcome. But our own data is also supported by our other independent observations about natural regression of HPV and cervical dysplasia, or avoidance of HIV in people with high T-cell levels. Without question, the Phase II data will be a key event for Inovio and our shareholders, and could be a significant driver of industry and investor interest.

If the results of the Phase II warrants advancing our HPV program into Phase III, Inovio is well-positioned from a valuations perspective to secure incremental capital to fund such a study on our own, but we would also be willing to partner. It will come down to appropriate valuation in terms. We are already laying the early groundwork for a Phase III study by developing a preliminary trial design. Of course, this will not be fully completed until we analyze the data and confer with FDA on what's called an End of Phase II meeting. We are also planning for scaled-up manufacturing of this DNA immunotherapy and our devices to deliver them.

We are also taking VGX-3100 into two new clinical studies in 2014 for other HPV-related diseases -- cervical cancer, and head and neck cancer studies -- in which we will be adding a new ingredient, a DNA-based cytokine immune activator called IL-12, or the interleukin-12. The data from our human HIV studies showed that DNA-based IL-12 significantly improved CD8 T-cell levels, even above the levels seen in our DNA product alone, and we look forward to assessing the addition of this immune activator in multiple cancer studies.

While our current focus is on IL-12 and IL-28 in the clinic, Inovio researchers are investigating other immune activators to combine with technology for ultimate outcome. To focus on this area for a moment, our immune activator initiative may play a large role in Inovio's future, as we have reported multiple successes in employing immune activators to further optimize and modulate immune response characteristics to achieve specific goals. I am very proud to say that Inovio has more of these immune activators in its pipeline than anyone else in our field. We plan to pursue multiple R&D and clinical programs to further advance this opportunity.

Of course, when I bring up combination therapy, I'm always asked if we are designing studies using Inovio's products along with checkpoint inhibitors. Obviously, that's a next step that we logically envision, but which is not yet planned at this time. Now I must add, while this Phase II study is obviously meaningful to us, we are moving forward on multiple other studies that will continue to characterize the potential of our DNA vaccine technology, and how to best employ its capabilities.

We are not a one-trick pony. And let me bring several to your attention. By this summer, we expect to jointly initiate with Roche a first clinical trial of the therapeutic prostate cancer DNA vaccine that they licensed from Inovio. The beginning of this trial will result in a material milestone payment from Roche. I'm also looking forward to beginning a human study this year with our therapeutic vaccine encoded for hTERT, or human telomerase reverse transcriptase, and antigen whose overexpression is seen in over 85% of all cancers. In this first exploratory study, we will be treating patients with breast, lung, and pancreatic cancers. These results will help guide future combinations and clinical studies.

We are now positioned for an explosive advancement of our cancer program, based on the best-in-class T-cell data we have generated, and with the new capital we recently secured. By the end of this year, we will have a complete portfolio of cancer immunotherapy candidates targeting a handful of key antigens that we believe have the greatest potential to treat a broad spectrum of cancers. Armed with what we hope to be a positive Phase II data, the potential combination of these antigens, immune activators, and other technologies such as checkpoint inhibitors, is enormous. And this portfolio will lead to a significantly expanded set of oncology clinical studies carried out both independently by Inovio and with partners.

The infectious disease side of our pipeline made a very important data contribution in 2013 with the compelling Phase I T-cell data from Inovio's PENNVAX-B preventative HIV DNA vaccine that was published in the well-respected Journal of Infectious Diseases last summer. In patients in whom the vaccine was delivered with electroporation technology, there was a sevenfold increase in the response rates of patients with robust CD8 killer T-cells, compared to patients in which the vaccine was delivered without electroporation. Knowledge gained from the study of the single-clade HIV vaccine has been incorporated into Inovio's globally-oriented, multi-clade, PENNVAX-GP vaccine, which is now Inovio's primary preventative and therapeutic HIV DNA vaccine candidate. This program is fully funded by the NIH, and we expect the Phase I study to start in the second half of this year.

We are also analyzing final data from our Phase I study of PENNVAX-B in patients chronically infected with HIV, with the intent to prepare a paper for submission to a peer-reviewed scientific publication. And also last year, Inovio and its partner VGX International announced that VGX had initiated a Phase I clinical trial using Inovio's highly optimized therapeutic hepatitis C DNA vaccine, called INO-8000, delivered with our CELLECTRA device. Published preclinical results from this multi-antigen SynCon HCV vaccine demonstrated robust T-cell responses in the liver, as well as in the periphery. This study is being fully funded by VGX and being conducted at multiple study sites in Korea to test safety, tolerability, and immunogenicity. We expect an additional HCV clinical study will begin in the US later this year, pending external funding.

We have reported notable proof-of-concept data from our human H5N1 and H1N1 influenza studies, and will prepare manuscripts for submission to peer-reviewed scientific publications. To build on this promising preclinical and clinical data from Inovio's universal flu vaccine program, we are actively seeking additional grant funding and partnerships to further develop our potentially paradigm-changing seasonal and pandemic flu vaccines. As we initiate multiple additional clinical studies this year, we will expand the recognition of Inovio's broad pipeline with multiple shots on goal and an additional forthcoming data that, in aggregate, will continue building our expertise, ideas for further optimization, and potential for success with our DNA vaccines delivered with electroporation.

Importantly, we are also creating a growing pipeline of partnerable products. We have the resources to independently advance on many fronts. At the same time, we value the benefit of collaboration. We have continued to state that we have ongoing partnering discussions with big pharma. What matters to us most is that the partners we commit to have strong competitive positioning in the areas that they wish to partner with us, and they are making a (technical difficulty) commitment to achieving future success in those areas, using Inovio products. We will continue on the path to find the right deals for our earlier-stage assets, or potentially our HPV program, following the release of our Phase II data, mid-year.

5321762

Greetings, and welcome to the Inovio conference call. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jeff Richardson, Senior Director, Corporate Communications, for Inovio. Thank you, Mr. Richardson. You may begin.

Good morning. Today's call may contain certain forward-looking statements relating to our business, including our plans to develop electroporation-based drug and gene delivery technologies, and DNA vaccines, and 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.

Risks related to collaborative agreements, including the timing and receipt of payments; the availability, or potential availability, of alternative therapies for 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 ended December 31, 2013, or Form 10-Q for the year ended December 31, 2013, and other regulatory filings from time to time.

There can be no assurance that any product in Inovio's pipeline will be successfully developed and manufactured, that 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.

Thank you, Jeff. Good morning, everyone. I appreciate the time you will spend with us for our review of a landmark year for Inovio. First, some perspective. One year ago, Inovio's market cap was around $100 million; we had no active partnerships with major pharma companies; we had under two years of operating runway; and Phase II efficacy data was more than a year away.

Now, just 12 months later, our market cap is around $800 million. We have a partnership with the pharma giant, Roche, exceeding $400 million in value, with others in the works. Our cash position gives us about four years of operating runway, and allows us to accelerate various programs. We have reported more best-in-class T-cell immune response data, and are only months away from reporting Phase II efficacy in immune response data. That's a successful year for a biotech company -- for any company, for that matter.

But that's last year. For a team on a mission to build a great immune therapy company with the aspiration to become the next Gilead or Amgen, Inovio has many steps yet to climb. When I stand before you at this time next year, I expect we will have initiated a handful of new clinical studies alone; and, with collaborators, we may have additional partnerships with hand. We will have released Phase II efficacy and immune response data. I am optimistic that I will be describing another year of goals met, results delivered, and expectations exceeded. As one of my mentors said to me, success predicts success.

Let's take a look back at last year. In a major corporate development for our Company, we announced last September that Roche and Inovio entered into an exclusive, worldwide license agreement to research, develop, and commercialize two of Inovio's highly optimized, multi-antigen DNA vaccine products targeting prostate cancer and hepatitis B.

To recap the financial terms of the agreement, Roche provided an upfront payment (technical difficulty) Inovio of $10 million. They are covering all preclinical and clinical development costs for these products, and will make milestone payments potentially up to $412.5 million upon reaching certain development and commercial goals for the development of INO-5150 or INO-1800.

While the financial benefits of this deal are significant, Roche's commitment at this stage of our development emphasizes the degree of strategic weight this global pharma giant is applying to an active immunotherapy capable of generating strong T-cells, and how it might be used alone or in combination with other therapies.

The bottom line is this: it's all about the T-cells. Whether it's about our partnership with Roche, awards we have received, or positive feedback we get through the frequent dialogue we have with other industry players and very knowledgeable institutional investors, we are clearly seeing recognition of the importance and the potential of active immunotherapies, and the recognition of Inovio's best-in-class T-cell immune responses, specifically. We believe that an effective, active immunotherapy should be able to generate a high enough level of functional killer T-cells to overwhelm cancerous or infected cells.

On the other hand, we also believe that an effective, active immunotherapy could be used as a vital component of a combination therapy. For example, checkpoint inhibitors -- which have achieved some notable results against cancer -- are able to unleash existing T-cells to perform their intended function, but they are not able to stimulate greater T-cell generation, which is what our technology does.

In two published clinical studies, Inovio products generated more T-cells than any other peer product that is marketed or in development. And it's not just about generating more T-cells; we have shown that the durability and functional killing effect of our T-cells. We are generating quality T-cells. Achieving and building on these results is what drives our R&D and clinical development focus. That's what is attracting major industry players to discuss accessing Inovio's products. So I predict that 2014 could become the year of T-cells, and 2014 will usher in a new era of immunotherapies.

First, I think we'll see a lot of new data further characterizing the ability and constraints of checkpoint inhibitors to enable T-cells to perform their intended tasks. Second, more relevantly to us, Inovio will be unveiling its first data ever from a large control Phase II study, focused on characterizing T-cells generated from our active cancer immunotherapies and their potential clinical efficacy.

So let's talk more about this study. Our lead product, VGX-3100, is Inovio's DNA-based immunotherapy against precancers and cancers cause by HPV types 16 and 18, which cause 70% of late stage cervical precancers and cancers. These HPV types also cause head and neck cancer and other anal/genital cancers. Each of these disease areas represents potentially billion-dollar-plus market opportunities.

In 2013, we completed enrollment of a double-blinded, placebo-controlled, randomized Phase II clinical trial called HPV-003, focused on cervical dysplasia. Inovio previously reported Phase I results showing that VGX-3100 achieved best-in-class T-cell immune responses with magnitude far exceeding alternative technologies; long durability; and a strong killing effect against cells targeted by this therapeutic vaccine. We look forward to the important milestone of reporting unblinded efficacy and immune response data from this Phase II study in mid-year 2014.

There are two important elements to this forthcoming data. One is, obviously, the efficacy of this therapeutic vaccine against these cervical precancers. We have our sights set on demonstrating that noninvasive immune therapy like VGX-3100 could generate enough killer T-cells in patients' immune system to significantly reduce or clear their precancerous cervical lesions. What will be equally important, however, is the generation of the T-cell immune response data itself. As a result of this Phase II study, Inovio could demonstrate efficacy linked to T-cell mediation from a targeted immunotherapy in the largest industry study today.

As I discussed before, we have generated excellent human T-cell data from our HPV and HIV DNA immunotherapies, which are highlighted in two published studies. This data leads our team to be optimistic about the Phase II results achieving the desired outcome. But our own data is also supported by our other independent observations about natural regression of HPV and cervical dysplasia, or avoidance of HIV in people with high T-cell levels. Without question, the Phase II data will be a key event for Inovio and our shareholders, and could be a significant driver of industry and investor interest.

If the results of the Phase II warrants advancing our HPV program into Phase III, Inovio is well-positioned from a valuations perspective to secure incremental capital to fund such a study on our own, but we would also be willing to partner. It will come down to appropriate valuation in terms. We are already laying the early groundwork for a Phase III study by developing a preliminary trial design. Of course, this will not be fully completed until we analyze the data and confer with FDA on what's called an End of Phase II meeting. We are also planning for scaled-up manufacturing of this DNA immunotherapy and our devices to deliver them.

We are also taking VGX-3100 into two new clinical studies in 2014 for other HPV-related diseases -- cervical cancer, and head and neck cancer studies -- in which we will be adding a new ingredient, a DNA-based cytokine immune activator called IL-12, or the interleukin-12. The data from our human HIV studies showed that DNA-based IL-12 significantly improved CD8 T-cell levels, even above the levels seen in our DNA product alone, and we look forward to assessing the addition of this immune activator in multiple cancer studies.

While our current focus is on IL-12 and IL-28 in the clinic, Inovio researchers are investigating other immune activators to combine with technology for ultimate outcome. To focus on this area for a moment, our immune activator initiative may play a large role in Inovio's future, as we have reported multiple successes in employing immune activators to further optimize and modulate immune response characteristics to achieve specific goals. I am very proud to say that Inovio has more of these immune activators in its pipeline than anyone else in our field. We plan to pursue multiple R&D and clinical programs to further advance this opportunity.

Of course, when I bring up combination therapy, I'm always asked if we are designing studies using Inovio's products along with checkpoint inhibitors. Obviously, that's a next step that we logically envision, but which is not yet planned at this time. Now I must add, while this Phase II study is obviously meaningful to us, we are moving forward on multiple other studies that will continue to characterize the potential of our DNA vaccine technology, and how to best employ its capabilities.

We are not a one-trick pony. And let me bring several to your attention. By this summer, we expect to jointly initiate with Roche a first clinical trial of the therapeutic prostate cancer DNA vaccine that they licensed from Inovio. The beginning of this trial will result in a material milestone payment from Roche. I'm also looking forward to beginning a human study this year with our therapeutic vaccine encoded for hTERT, or human telomerase reverse transcriptase, and antigen whose overexpression is seen in over 85% of all cancers. In this first exploratory study, we will be treating patients with breast, lung, and pancreatic cancers. These results will help guide future combinations and clinical studies.

We are now positioned for an explosive advancement of our cancer program, based on the best-in-class T-cell data we have generated, and with the new capital we recently secured. By the end of this year, we will have a complete portfolio of cancer immunotherapy candidates targeting a handful of key antigens that we believe have the greatest potential to treat a broad spectrum of cancers. Armed with what we hope to be a positive Phase II data, the potential combination of these antigens, immune activators, and other technologies such as checkpoint inhibitors, is enormous. And this portfolio will lead to a significantly expanded set of oncology clinical studies carried out both independently by Inovio and with partners.

The infectious disease side of our pipeline made a very important data contribution in 2013 with the compelling Phase I T-cell data from Inovio's PENNVAX-B preventative HIV DNA vaccine that was published in the well-respected Journal of Infectious Diseases last summer. In patients in whom the vaccine was delivered with electroporation technology, there was a sevenfold increase in the response rates of patients with robust CD8 killer T-cells, compared to patients in which the vaccine was delivered without electroporation. Knowledge gained from the study of the single-clade HIV vaccine has been incorporated into Inovio's globally-oriented, multi-clade, PENNVAX-GP vaccine, which is now Inovio's primary preventative and therapeutic HIV DNA vaccine candidate. This program is fully funded by the NIH, and we expect the Phase I study to start in the second half of this year.

We are also analyzing final data from our Phase I study of PENNVAX-B in patients chronically infected with HIV, with the intent to prepare a paper for submission to a peer-reviewed scientific publication. And also last year, Inovio and its partner VGX International announced that VGX had initiated a Phase I clinical trial using Inovio's highly optimized therapeutic hepatitis C DNA vaccine, called INO-8000, delivered with our CELLECTRA device. Published preclinical results from this multi-antigen SynCon HCV vaccine demonstrated robust T-cell responses in the liver, as well as in the periphery. This study is being fully funded by VGX and being conducted at multiple study sites in Korea to test safety, tolerability, and immunogenicity. We expect an additional HCV clinical study will begin in the US later this year, pending external funding.

We have reported notable proof-of-concept data from our human H5N1 and H1N1 influenza studies, and will prepare manuscripts for submission to peer-reviewed scientific publications. To build on this promising preclinical and clinical data from Inovio's universal flu vaccine program, we are actively seeking additional grant funding and partnerships to further develop our potentially paradigm-changing seasonal and pandemic flu vaccines. As we initiate multiple additional clinical studies this year, we will expand the recognition of Inovio's broad pipeline with multiple shots on goal and an additional forthcoming data that, in aggregate, will continue building our expertise, ideas for further optimization, and potential for success with our DNA vaccines delivered with electroporation.

Late last year, we also unveiled several significant new applications of DNA plasmid technology in peer-reviewed papers. First, Inovio announced its success in generating therapeutic monoclonal antibodies using DNA plasmids. Published in the Human Vaccines & Immunotherapeutics Journal, this study demonstrated that a highly optimized, DNA-based, monoclonal antibodies in mice generated antibody molecules in the bloodstream, possessing desirable functional activity. These results were not previously achievable with other DNA-based core viral technologies. Although early in development, DNA-based monoclonal antibodies have the potential to become a powerful technology against cancers and autoimmune diseases, and compete favorably in the $50 billion monoclonal antibody product market.

Similarly, we reported published data highlighting the ability of gene therapy to stimulate blood vessel growth, limb function recovery, and survival from limb necrosis and amputation, which may be beneficial for the treatment of critical limb ischemia and other form of a peripheral arterial disease. While these new applications fall outside of our primary current focus of vaccines and immunotherapies, they highlight the fact that, outside of the very large opportunities for DNA vaccines, Inovio's core technology platform has significant breadth and additional multi-billion-dollar potential in other notable markets and applications. These other applications could represent new opportunities for additional new products and corporate partnerships.

To sum up, we are advancing a late stage trial while initiating multiple Phase I studies in diverse and broad market cancers. We do this from a foundation based on the two important pillars: science and cash. That is, we have best-in-class immune response data from numerous studies, coupled with the financial foundation that we measure in multiple years, while other companies our size measure their cash runway in months. And we move forward with our first -- and I emphasize first -- collaboration with a major pharma partner. Most importantly, we have a team of experts, experienced and motivated people in our Company and on our Scientific Advisory Board and Board of Directors, who are all focused on the end goal of taking all the right steps to advance our products to commercialization.

Now I want to introduce Inovio's Chief Financial Officer, Peter Kies, who will discuss our financial results. Peter?

Thanks, Joseph. Good morning, everyone. We announced earlier today that total revenues were $1.7 million and $13.5 million for the quarter and year ended December 31, 2013, as compared to $1.1 million and $4.1 million for the same periods in 2012. Total operating expenses for the quarter and year ended December 31, 2013, were $9.7 million and $33 million, as compared to $7.4 million and $27.6 million for the same periods in 2012.

The loss from operations -- which is prior to other income and expenses -- for the quarter and year ended December 31, 2013, was $8 million or $0.04 per share, and $19 million or $0.11 per share, as compared to $6.2 million or $0.04 a share, and $23.5 million or $0.17 per share for the quarter and year ended December 31, 2012. Net loss attributed to common shareholders for the quarter and year ended December 31, 2013, was $15.5 million or $0.07 per share, and $66 million or $0.36 per share, as compared with a net loss attributed to common shareholders of $659,000 or $0.00 per share, and $19.7 million or $0.14 per share for the quarter and year ended December 31, 2012.

The increase in revenue for the comparable periods was primarily due to $9.4 million of revenue recognized from our upfront $10 million payment from Roche. The $46.4 million increase in net loss attributed to common shareholders for the last year resulted primarily from a non-cash accounting expense, which relates to the change in the fair value of the common stock warrants, based on a required quarterly mark-to-market adjustment to reflect changes in the Company's stock price, which increased significantly during the year.

Most importantly, I wanted to focus your attention on our strong capital foundation. On March 4, 2014, the Company closed and underwritten public offering of 21,810,900 shares of the Company's common stock, which includes 2.8 million shares of common stock issued pursuant to the underwriters exercise of its overallotment option, at a price of $2.90 per share. The gross proceeds of this offering were approximately $63.3 million. Net proceeds to the Company -- after deducting the underwriters' discounts, commissions, and other estimated offering expenses payable by the Company -- were approximately $59.2 million.

The Company believes that the current cash, cash equivalents, plus short-term investments, will meet our planned working capital requirements through 2017. At the same time, this robust capital position is the strongest in the Company's history, and it will allow us to accelerate specific product and technology development programs. For more detailed financial information, I direct you to Inovio's 10-K, which will be filed later this morning, and will be on our website, and also on EDGAR.com.

And that's it. Back to you, Joseph.

Thank you, Peter. I've said, since the beginning of last year, that 2013 would be a year in which Inovio surges ahead. By all measures, we have accomplished what our team set out to do. We have the first major pharma deal under our belt; we have a very strong cash position; we currently have over $100 million in cash; and we have the people with which to advance our strong product pipeline of DNA vaccines and immunotherapies.

This year, we look forward to the multiple clinical study initiations; and the cumulative knowledge from all these studies will benefit all our product development efforts. We will release data that could be a breakthrough for active immunotherapies in general, and Inovio and its shareholders specifically. We are well-positioned in terms of our potential to establish traditional partnerships and collaborations that can help move our pipeline forward, and ultimately bring better health to the global population.

Now I'm pleased to answer any questions that you may have. Thank you very much.

(Operator Instructions). Jonathan Aschoff, Brean Capital.

Joe, I was wondering, roughly how many new oncology antigen plasmids do you intend to generate by the time you're done, by about the end of 2014 with that priority list you have? And how much of that do you intend to bring into the clinic yourselves; or, rather, with the bulk of it, wait until there's partner interests? Or you could probably just say maybe a short list, in addition to 1400, that you would intend to bring into the clinic of what is currently preclinical.

Yes, Jonathan, thank you for the question. Our new cancer antigen generation has really started after we saw the powerful T-cells being generated, specifically the CD8-positive killer T-cells, from our human vaccine study. So it really starts with hTERT, which is INO-1400, which covers over 85% of different cancer types. We also have added another 4 to 6 additional antigen candidates which will be fully ready to be going into the clinic by end of this year. And with the combination of these antigens, I expect we will be able to address almost every cancer type out there.

Obviously, we will have to partner some of those. But we also intend to keep some of these combination products within Inovio's pipeline for years to come.

Do you envision, going forward with these new oncology candidates, that all of them would involve combination therapy of some --?

Yes, we really believe in the multi-antigen approach. That's to provide your immune system multiple antigens to recognize and go after the cancers from all different approaches, all different perspectives. So we are a firm believer in multi-antigen approach, so we expect -- but these combinations can address almost every solid tumor, as well as the blood-borne hemo tumors as well.

Is Roche going to take that approach with prostate cancer, or just a single-antigen approach?

The prostate cancer -- the 5150, just to touch on that, is a combination of two antigens: one encoding for a prostate-specific antigen; second, encoding for the PSMA. So that's going into the clinic this year, plus/minus IL-12 DNA plasmid. But we have publicly stated that Roche also is funding Inovio to develop five additional prostate cancer antigens, with option for Roche to license those. So that's part of the funded program as part of our license agreement from last fall. So, of course, we believe Roche is also a firm believer in a multi-antigen approach, just as Inovio is.

Thanks. And, lastly, should the CIN 2/3 trial succeed, I'm going to guess sometime in the third quarter, wouldn't a Phase III be large enough -- to cost enough that you wouldn't have capital through the end of 2017? Or is there some solid sense you have from potential partners (multiple speakers)?

Yes, so, let me just clarify our cash run rate projection. Our cash through end of 2017 does not account for the full cost of conducting a Phase III trial on our own. Rather, we have accounted for the expenses that we would incur leading up to a Phase III trial.

If the Phase II study results are positive, we expect one of two things: we will have an attractive partnership offer for VGX-3100 for CIN 2/3 and the franchise; as well as our market cap being much higher than where it is now. In any case, we will be able to raise the incremental revenue -- funds that would require to do a Phase III trial.

We expect that to be about $100 million in total under the current projections. So that's something we can either bear out on our own, but preferably using a partnership. But having the current, strong funding position -- cash position today of $100-plus million in the bank -- allows us to negotiate with a potential partner from the position of strength. And that's really where we want to be.

Thank you very much, Joe.

Charles Duncan, Piper Jaffray.

Thanks for taking the question, and congratulations on a great year of progress.

Thank you, Charles.

First of all, I'm wondering if you could help me better understand what would define success in that cervical dysplasia Phase II. I understand it's a Phase II, so perhaps less focus on statistical significance. But you mentioned efficacy as well as T-cell responses. Could you maybe focus our attention on what is the key observation that you'd like to take away from that Phase II?

Yes, so, efficacy readout is -- our trial is a placebo-controlled study. So the 75% of the 150-plus women enrolled in the trial have received the vaccine. 25% received the placebo. And, based on the literature, we expect the natural regression rate of the placebo group to be estimated around 25%. So we've designed this trial to be 80% statistically powered to determine the difference of at least 27% above the background rate in the drug-treated group.

So, it is said, now, if we see greater than 52% of CIN 2 or 3 regression, compared to a perceived 25% natural regression in the placebo group, we would expect that to be statistical success. Obviously, if we see greater than 27% difference, the power of the study will go up, and we certainly will be more excited as well.

And in terms of correlating those measures of efficacy with T-cell responses, can you perhaps provide a little more color on what you'd like to see there?

Yes, absolutely. So, until now, it's just been a theoretical consideration that better T-cell levels in people should translate into clinical efficacy. Until now, the field hasn't had the right -- the technology or products to generate high enough relevant T-cells in the clinic to correlate between the high T-cell levels from immune responses to a clinical efficacy. We expect Inovio's HPV-003 Phase II study to be the first one where we can proactively correlate, not just in the magnitude of T-cells, but the characterization of T-cells.

We will have more if we're successful in Phase II. We will have the highest set of big data that can correlate between the right characterization of T-cells -- the magnitude, the types of T-cells, and different markers that they would have -- correlating to a clinical efficacy. No others in our field would have such a data, whether they are big pharma or biotech, so this will allow us to apply our technology. This data set that we hope to get from this HPV-003 Phase II study will allow us to apply and predict the successes of all of our immunotherapies products in our pipeline for our own development, as well as for our potential partners, and the current partners. And that's going to be an extremely valuable data set for us and our partners.

Okay, that's helpful. And then specifically, moving on to the cervical cancer, and the head and neck studies that you signaled that you were interested in starting this year, are you waiting for the data from this cervical dysplasia study? Or are there other observations you've made in previous studies, or even the blinded data you've seen in the cervical dysplasia studies, that encourages you to start these studies?

We are very optimistic about how HPV-003 data will come out, as I said before, based on all the T-cells that we've seen from other studies, and so on. We are starting the head and neck and advanced cancer studies during the first half of this year, even prior to our Phase II data, as well as our prostate cancer program we are starting with Roche. All of these three studies are based on our firm belief that our ability to generate high levels of antigen-specific killer CD8 T-cells is the bottom line. And we're moving ahead with that, because we want to capture these markets as soon as possible.

We are very bullish on our capabilities to generate T-cells. And, certainly, we're banking on that to start these studies, which would allow us to expand into a proof-of-concept studies for these indications as rapidly as possible.

And I assume we'll get details on the study designs for head and neck, and cervical cancer, at the time that you start the studies?

Absolutely, absolutely. And as I said, those studies are expected to start in the second quarter of this year, before the mid-year this year.

Okay, very good. Thanks for taking my questions. Congrats on a good year (multiple speakers).

(Operator Instructions). Jason Kolbert, Maxim.

Good morning. It is Pamela Bassett in for Jason Kolbert this morning. I want to focus on the Roche partnership for a minute. First, HBV -- what biomarkers will be used to determine the response in hep B patients?

So, hepatitis B patient study -- we expect to start during the very first part of 2015. So it's about a few months behind our prostate cancer study we're starting with Roche. What's very interesting on how we set this up is, Roche has had the confidence to ask us to quarterback each of the clinical studies, even though they're funding all costs involved in those study, conducting an initiation. So, Inovio has a tremendous impact in the timeline and the speed at which we'll be executing the studies.

So, back to your question. Certainly we're looking at the T-cells, CD8-positive T-cells, both in the periphery as well as in the liver. And we'll also be looking at different liver enzymes and so on for biomarker and surface antigen on HPV. So all of these parameters will be examined. Obviously, we're going to learn a lot from the first study. And as you mentioned, or as you alluded to, hepatitis B is a huge market for us. Inovio believes it's the next hep C market, with three or four times as many patients who are chronically infected. So we're very excited to -- moving into this product arena with a partner like Roche behind us.

Thanks for covering that, and for covering next steps with the Roche partnerships in HBV. Will you do the same for the prostate cancer program that's headed into the clinic?

Yes. As I said earlier, it's a PSA/PSMA product, plus/minus IL-12 cytokine DNA immune activator. We'll be tracking both T-cells, as well as both in the periphery and the prostate, in biopsies; as well as PSA, actual measurement of PSA, as a biomarker. But we expect a lot more detail will be put into the clintrials.gov as we go forward.

Thank you, Joseph. And other than cost, is there any reason to believe a plasmid vector can initiate a more robust response than processed dendritic cells, such as Dendreon's PROVENGE, for prostate cancer?

Yes. The answer is absolutely yes. Because DNA plasmids, along with an active bowel infection, we believe are the only ways that you can generate high enough levels of killer CD8-positive T-cells in people. And we challenge all of our peers to put their T-cell data on the table, as we're willing to go and measure mano-a-mano with anyone else. And that's why we put all of our data into publication through peer-reviewed journals. There's a lot of noise out there in the field of immunotherapies.

I do believe that it's all about the T-cells, as I said in the earlier remarks. And that's bearing fruit, even from the data that's coming out of the checkpoint inhibitor space. You need the basal levels of T-cells for those checkpoint inhibitors to work in the patients, and specifically the CD8-positive killer T-cells.

We have published from two different studies, Phase I studies, that we can generate higher levels of functional and durable CD8-positive T-cells than anyone else in our peer group. And we look forward to demonstrating more of this data from our Phase II results to be -- come out this summer.

Great. Thanks, Joseph. Congrats.

Joon Lee, Cowen and Company.

Congratulations on your phenomenal year. My question has to do with your Phase II study. If you could tell us, what is the CIN 2/3 treatment rate with the current standard of care, such as cone or LEEP, or things like that?

Yes, the current standard of treatment is a surgical removal of the lesion in the cervix. It's more invasive, obviously, than what we envision with VGX-3100. And it also impacts both perception and reality; the reproductive capabilities of these women in published studies. So, what would we would offer with our noninvasive therapy is empowering the woman's own immune system, specifically the T-cells, the CD8-positive killer T cells. We boost them up through our vaccination, and those T cells can then seek out those lesions and destroy them. At least, that's what our hypothesis is, and we look forward to getting to the efficacy data showing the power of this approach.

Great. And just one more question on that, and then another question after that on a different subject. So, the people reading the slides -- is this done by an independent pathologist? Or what kind of methods are built in, to get rid of any subjective --?

Yes, thank you for drawing attention to that. We've taken care to make sure that we can get the most meaningful and least amount of noise from (technical difficulty) when we unblind and report the data. We have established a centralized pathology panel of three pathologists, all based in the US; top pathologists in our field who blindly review all the pathology, biopsy slides, going into the study. And they also read every slide coming off at the end of the study, at our primary endpoint -- time point of nine months after the initiation.

So it's the same three pathologists who read them. And then we wanted to remove any noise as much as possible. And they do so in a blinded fashion.

Great. And one last question. The interleukin-12 and 28 as an augmentation for your vaccine is very interesting. Is that something you would pursue for the Phase III cervical dysplasia program, if the Phase II is positive?

(technical difficulty) I actually (technical difficulty) with Dave Weiner. This was the first paper that I published as a graduate student (technical difficulty) very satisfying to see (technical difficulty) translate from science to something that can help people at the clinic. So we have, along with IL-12 that's going to be in most of our (technical difficulty) generation cancer studies -- including our head and neck and cervical, prostate, and other -- we have IL-28 that's currently being used (technical difficulty) hepatitis (technical difficulty) therapy study. That's published on IL-33 in a (technical difficulty) cancer research journal, of the impact of the immune activator in regressing tumors in animal models.

All in all, we have almost a dozen different immune activators in our portfolio. (technical difficulty) be able to utilize (technical difficulty) combinations. We have (technical difficulty) activator that can generate higher levels of antibodies for vaccine (technical difficulty), and so on.

For the direct question of applying this in Phase III, we certainly have the capability to do that, if the need arises. But we feel very strongly that our levels of efficacy may not require the use of IL-12 immune activator for cancer, which we hope -- we expect are more difficult to treat, because they are more well-established -- we feel that are really required to really stack the deck as much as possible on our favor, for our patients.

Great. Thank you so much. And congrats, again, on a phenomenal year.

Thank you very much.

We have no further questions at this time. I would now like to turn the floor back over to management for closing or additional comments.

Well, thank you very much. We really appreciate all of the loyal support of Inovio through the years. 2013 was a great year for us. We believe that 2014 is setting up for even a brighter year for Inovio. And we look forward to executing and ensuring our capabilities even further for our shareholders, to our public followers in general, and to major industry players out there.

So I'd like to thank you all for taking this time, and thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.