Q2 2017 Earnings Call

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Jeff Richardson Vice President of strategic relations. Thank you Sir.

You may begin.

Good afternoon, ladies and gentlemen, thank you for joining US today 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 products and product candidates as well as our capital resources, all of which involve certain assumptions risks and.

Certainties that are beyond our control and could cause actual results to differ materially from these statements. A description of these risks can be found in the latest SEC disclosure documents and recent press releases. These statements speak only as of today's date, and we undertake no duty to update or revise them presenting.

Today will be Dr. J, Joseph Kim <unk>, President and CEO and Peter Keys, our CFO now Dr. Kim.

Thank you Jeff good afternoon, everyone.

The focus of today's call is on X curious tooting our strategy.

Executing our strategy to event and <unk> phase III and phase two immuno oncology products into key data and business milestones.

When we spoke last.

That in May at <unk>, we delivered a strong package to the FDA in response to their device related questions and comments.

Turning to our <unk> 100 phase III pre cancer program.

The FDA agreed with us and lifted our clinical hold allowing <unk> to deliver on our promise to initiate the phase III study for our lead product in the first half of 2017.

We also told you that during the whole period, we were moving ahead on our trial preparations our preparation paid off and just over one month since we initiated phase III, who have activated 27 sites in the United States up running and recruiting patients.

Year end, we expect to have activated at least 50 sites in the U S Europe Asia and Africa.

Initiating <unk> first phase III program marks a significant milestone.

<unk> for the company for DNA based immunotherapy.

And most importantly for women suffering from cervical pre cancer caused by chronic HPV infection.

The pivotal data from this program if positive to support a license or application of VEGF 3100 at the first immunotherapy for this disease.

Beyond trading treating this one HPV associated disease.

<unk> goal is to own HPV treatment period.

Here, the clinical roadmap with my vision for <unk> HPV therapeutic ownership.

First we begin with our first phase three program for HPV associated cervical dysplasia.

We combined that with companies now initiated phase II clinical trial of <unk> 3100 for treating HPV related <unk> neoplasia, and so that will add planned 2018 clinical trial for treating HPV associated anal neoplasia.

To those in house trials, we had many 0457, formerly called Iron ore 31, 12 checkpoint inhibitor based combination study with Astrazeneca medimmune targeting HPV associated metastatic head and neck cancers.

With this broad clinical roster, we are well positioned to comprehensively treat HPV associated pre cancers and cancers across the continuum of HPV infection through to cancer and both women and men.

We want to become the go to therapeutic solution provider for all diseases caused by HPV infection.

To that end in April and <unk> commenced a randomized open label phase II trial to evaluate the efficacy of <unk> 100, and women with high grade HPV related evolve, our intra epithelia neoplasia or even a disease with high unmet medical need.

You may not know this.

But HPV and this win is one of the major causes of morbidity for young and middle aged women with HPV induced pre cancer.

It is also associated with repetitive need for surgery, multiple biopsies and a major cause of pain and sexual dysfunction.

Extending our immuno.

Extending our immuno oncology franchise in May.

<unk> announced that medimmune commenced a new phase one slash Iia clinical trial investigating the combination of <unk> 0457, and immunotherapy designed by <unk> to generate antigen specific killer T cells targeting HPV associated tumors.

And Tim Zee.

Medimmune PDL, one checkpoint inhibitor.

The combination trial is intended to enroll 50 patients with metastatic HPV associated head and neck cancer with persistent or recurrent disease after chemotherapy treatment.

This study marks a significant moment for <unk>.

As you May recall in 2015, Medimmune acquired exclusive rights to <unk> iron ore 31, 12 immunotherapy for all HPV associated cancers, Medimmune provided an upfront payment of $27 5 million de novo as well as potential future payments.

Upon reaching development and commercial milestones.

<unk> up to $700 million.

Medimmune will also fund all development costs, while <unk> is entitled to receive up to double digit tiered royalties on <unk> zero for $5 seven product sales.

And this current combo study, we expect that the phase II portion of the trial will trigger a milestone payment from Mehdi by early 2018.

As a part of this deal.

Two companies have also collaborator and a new funded research program, which medimmune has now selected a new cancer immunotherapy candidate to advance into the clinic. This new product candidate was designed and constrict constructed by <unk> to treat and undisclosed cancer.

And we will also trigger milestone payments from medimmune as well as royalty based on sales.

In addition to medimmune.

Our technology has promise in cancer has attracted significant attention from other pharma companies developing or marketing oncology product <unk>.

Just in the past quarter, we struck two independent and collaboration agreement with Regeneron and Genentech in.

In Maine, Innovia, and regeneron incurred into a immuno oncology clinical study agreements for Glioblastoma combination therapy.

Our phase <unk> clinical study will combine regeneron PD one inhibitor, we Jan 28, 10 and in <unk> T cell activator, INR, 50, 401, and immune activator, INR 90, 12 and brain cancer.

INR 50, 401 includes three of an <unk> cop zinc con cancer antigens. These our WT, one H <unk> NPS SMA, which are expressed widely in multiple tumor types does INR 50, 401 has the potential to be a powerful and broad.

Cancer immunotherapy in combination with checkpoint inhibitors.

The open label trial, which is expected to begin before year end is designed to evaluate the safety and efficacy of the combination therapy in approximately 50 patients.

To focus on the disease for a moment.

Senator John Mccain recent diagnosis GBM is the most aggressive form of brain cancer.

And as the prognosis is extremely poor.

Therefore, if.

This combination treatments showed at least a moderate level of efficacy against this aggressive cancer. We would expect to have an expedited approval path for iron ore 50 401.

Building on our INR 50, 401 cancer product development in June Innovia entered into a collaboration agreement with Genentech to commence a clinical trial to evaluate the combination of 50, 401, and genentech's PD Lone checkpoint inhibitor <unk> in patients.

With advanced bladder cancer.

This phase one flex two immuno oncology trial is also anticipated to start later this year and is designed to evaluate the safety immune response and clinical efficacy of the combination therapy in approximately 80 patients with advanced bladder cancer.

Combining INR 50, 401, slash INR 9090, <unk> 12, with Concentrix may provide a synergistic therapeutic effect.

Result of generating high levels of activated T cells and simultaneously inhibiting PD one.

We have chosen metastatic bladder cancer as the second cancer indications to test for INR 50, 401, with a checkpoint inhibitor because it is a highly immune responses to cancer.

Bladder cancer has often been described as an immunogenic tumor and care our approaches to augment the anti PD one PDL, one driven efficacy by further enhancing the T cells against the tumor in a tumor antigen specific manner.

As you can see from our recent collaborations I am a strong believer in combination immuno oncology regimens employing an immunotherapy to generate significant entered in specific killer T cell.

So lacking T cell suppression.

Checkpoint inhibition.

With our strategic selection of our first combo efficacy studies in GBM and bladder cancer. We believe we can demonstrate the immense potential of INR 50 401.

Universal cancer immunotherapy to treat patients with multiple cancers.

This is why unlike our medimmune license deal in <unk> decided to retain the full economic rights to iron ore 50 401 under these collaboration study.

As you know well.

<unk> is not just a promising immuno oncology development company.

Our technology is nimble enough to targets challenging infectious diseases.

Products that may become stockpile vaccine and those that have also have commercial potential and we are accomplishing all of this vaccine development with an extensive non dilutive external funding.

<unk> will continue to advance these vaccines for combating emerging infectious diseases.

External funding.

Recently <unk> reported that his HIV vaccine 10, Vax GP produce amongst the highest overall levels of immune responses rates ever observed in a human study by an HIV vaccine.

These significant results are consistent with <unk> recent data reported from Ebola.

Victor and Mers clinical trials in terms of achieving nearly 100% vaccine response rates with a favorable safety profile.

Winding out our infectious disease results for this quarter in June .

We announced full enrollment of our second phase one clinical trial in Puerto Rico, evaluating our Zika vaccine <unk> 5700, and 160 volunteers.

Along with safety and immune responses.

The study is also assessing differences in zika infection rates and participants given either placebo or a vaccine.

As part of an exploratory efficacy endpoint being evaluated over one year.

<unk> is very proud to be at the forefront of Zika vaccine development and to produce foundational data that clearly supports advancement of DNA technology and our vaccine.

Our vaccine candidates.

We were the first two clinical vaccine testing.

And the first to report positive immune data from the clinical trial.

We look forward to the prospect of securing external funding for phase III efficacy studies in our effort to potentially commercialize our zika vaccine.

We expect to report on additional data from our vaccine clinical studies and publish the data and the top medical journals. This year.

Now I'd like to introduce our CFO Peter Keith.

Who will discuss our recent capital raise and our financial results Peter.

Thank you Joseph.

Before I walk through our financials.

Let me focus on our recent financing on July 25th.

We closed an underwritten public offering of 12 5 million shares of our common stock for gross proceeds of $75 million.

After deducting underwriter discounts and commissions.

<unk> estimated offering expenses payable by us the net proceeds to us were $70 2 million.

We have granted the underwriters an option through August 18th to purchase up to one 875 million additional shares.

Of our common stock on the same terms and conditions.

Looking at the Big picture.

Our July financing will.

Fund, our future to the benefit of the shareholders and patients in need.

It nearly doubled <unk> cash position and allows for a runway.

That will allow us to meaningfully fund our development programs.

With these proceeds we expect to be able to advance our vgs 3100 phase III trials.

For phase two immuno therapy oncology trials.

And fund other pipeline advancements.

The financing will also add new this financing actually also added new.

Institutional investors to our shareholder base.

We also look forward to reporting on new data from INR 50, 150 <unk>.

<unk> <unk> hundred <unk>.

And INR 1800, immunotherapy phase one data.

All in the second half of this year.

We previously announced back in February and <unk> entered into a collaborative.

And license collaboration and license agreement with Apollo <unk> Corporation.

If the if the agreement receive the appropriate approvals.

From Apollo's.

Stock exchange its board of directors.

And.

The agreed and its shareholders than the agreement will become effective at which time, we will expect to receive up to $50 million in payments from our Paulo.

Consisting of $15 million in upfront payments for the license of 3100.

In greater China.

And up to $35 million in the form of an equity investment in our common stock.

I refer you to our Q2 press release for more details.

But our topline financials. Our total revenue was $20 4 million for the three months ended June 30th.

2017, compared to $6 2 million for the same period in 2016.

Total operating expenses for the three months ended June 32017.

We're $30 million compared to $24 4 million for the same period in 2017.

Net loss attributed to common stockholders for the quarter ended June 32017.

Was $9 5 million or <unk> 13 per share compared to $8 7 million or <unk> 26 per share for the same quarter ended June 32016.

The increase in revenue was primarily due to $13 8 million in revenue recognized.

From our Medimmune agreement from the buyer.

Initial 27 5 million upfront payment received in September 2015.

This revenue recognition occurred upon medimmune definitive selection of a new <unk>.

Cancer.

Product candidate to be tested in the clinical trials.

As a new immunotherapy against an undisclosed cancer target.

For our ongoing our ongoing research.

The successful advancement of this new product candidate by Medimmune will also trigger future milestone payments and sales based royalties.

Joseph back to you.

Thanks Peter.

I would like to follow up on our recent financing as well as the largest individual shareholder of <unk> and.

And the CEO I try to avoid dilution as much as possible.

In fact, we have funded much of the advancement of our technology platform with over $150 million in non dilutive grants and contracts receive over the last few years from top vendors select the NIH DARPA and the Gates Foundation as well as corporate partnerships with medimmune in ROE.

<unk>.

So.

We're in a new drug development business and this business requires a lot of capital.

We undertook the last round of equity financing to make sure we have a sufficient balance sheet to fund our important late stage efficacy studies in immuno oncology.

I don't have to remind our long term shareholders.

Have licensed just one of our phase one product candidates to medimmune for a $700 million overall deal.

I believe that both VEGF 3100, and INR 50, 401 could each be worth several times more.

Our current financial resources will allow allow us the development time.

This.

Let me close with this message.

We said, we would start our pivotal phase III trial and in HPV caused cervical pre cancer in the first half and we did.

In addition to our phase III trial.

And the phase III trial for evolve our pre cancer, we have three best friend PD, one or PDL, one immuno oncology combo efficacy studies with three different top companies Medimmune Regeneron and Genentech.

Is three shots on goal with three different checkpoint inhibitors.

In fact, I believe <unk> already has the most extensive and dynamic T cell immunotherapy combo portfolio in our field.

Our focus now is on execution excellence.

Focus on the execution of our efficacy study.

To bring meaningful data to the market.

And our shareholders.

I have no doubt that Innovia will accomplish this because we have a superior technology and products.

We have sufficient financial and supporting resources.

As well as the right partners and collaborators.

But most of all we have an extremely dedicated and experienced team executing our programs.

We get up every day with a real sense of urgency because we all know that the patients are waiting thank.

Thank you for your attention the floor is now open for Q&A with the analysts.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.

I would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that Youre line is my question.

Hey, Presto or Kelly, if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset.

With Barclays.

My first question is coming from the line of Charles Duncan with Piper Jaffray. Please proceed with your question.

Hi, guys.

Congratulations on the progress in the quarter and thanks for taking my question Jos Joe. Thanks.

Also let me let me add that.

Great. Thanks, guys, Okay, Ron Saks for many years and you guys have actually Jonathan in my opinion.

Your next job of monetizing the platform.

And seeking out non dilutive financing. So that's just my perspective.

Quick quick question Dx 3100.

And cervical dysplasia.

Nice update in terms of the number of sites opened.

I'm wondering if you could provide us a goal by the end of the year in terms of not only high telephone I think you mentioned that but also percentage of patients enrolled by year end 17.

Thank you Charles for SaaS for.

Helpful comment and the question as well.

Our policy is not to update on our goals or an extra accrual until we're done.

So we know we have <unk>.

So.

198 patient studies that will be we are conducting for reveal one and reveal two studies we plan to open a total of 100 total sites across the globe.

So I have already stated that we will have about 50.

Sites up and running and.

Just continue EMEA and all of our employees here, we would like to.

Crew and recruit as rapidly as possible.

And I'm sure. That's the case and when you say that sites are up and running does that mean that some patients have been enrolled or at least in screening for those sites that have been open.

Yes, so we have multiple patients.

And screening.

And again.

Going to refrain from referring to a natural.

Dosing and so on but.

It's for we were preparing us.

We have discussed before.

The device sold we are preparing our sites getting all the paperwork and IRB approvals. So when we had the finally the clinical hold removed in our PSP device, we're able to hit the road running so.

I can assure you.

Our overall objective number one is to accrue.

All of these patients as rapidly as possible.

Okay and then.

I believe in your prepared remarks, you mentioned that you anticipated.

Anticipated patients or sites in the U S.

In Asia and in Africa can you give us a target in terms of the percentage of patients that are U S Asia and.

In Africa African patients.

Third each of US at 40 40 20.

Weaker we expect a couple.

Countries.

Asia, We have South Africa is one of our sites, but other than that.

In Europe will be the predominant.

Sites that country countries and regions, which will provide the patients for us but once they are up we don't have any quarters for each country. It's first come first serve so if we enroll everyone in the U S.

However, unlikely because of the ex U S patients.

There are a lot more of them outside the U S but.

Our primary.

Commercial initial target markets, our U S and Europe . So we would expect most of the patients will come out of those two regions.

Okay and then one last question hopping over to falls are neoplasia was 3100 can you give us some sense of time to date of <unk>.

Do you anticipate that.

Next year.

Topline data on to that study.

So it's 36 patients.

Dramatically smaller than our sin trials.

It's a open label trial, because there is very little regression and a placebo group so thorough.

That allows us to track the progress.

The patients visually so I think by late next year.

Or even early following year, we may have a very good idea, but all of these are predicated upon the enrolment of the first.

Percentages of patients. So we are again pressing.

The pedal to the metal with urban stuff.

Eddie.

Okay. Thanks for the added color and congrats on progress recently in the last quarter. Thank you Sean.

Thank you.

Thank you. The next question is coming from the line of Ram <unk> with Rodman <unk> Renshaw. Please proceed with your question.

Thanks, very much for taking my questions and congratulations once again on all the progress I wanted to ask firstly with respect to 3100, if you could just clarify for US what you expect to be the sequence of data release from the phase III program if there.

Only going to be a single readout of data or if we can expect to see some interim indications of efficacy as the trial program progresses.

Secondly, I wanted to ask about the plan for Apollo bio to advance VEGF 3100 in the greater China territory and win this clinical development might start and what kind of.

Shape or form it might take in terms of the sort of trial or trials they might decide to run and finally, if you could perhaps comment on the potential utilization of your technology platform, including but not limited to met either a four or $5 seven within the immuno oncology.

<unk> and when you anticipate that this might potentially be expanded beyond combination with PD, one and PDL one alone.

Two other checkpoint inhibitor and other Io strategies. Thank you.

Thank you Ron these are all great questions and I'm going to.

Briefly go through each of them directly so <unk> 3100, both reveal one and two are designed to.

And the line at the end of the study, including the safety follow ups. So reveal one very quickly.

First three months of dosing three times month, nine efficacy readout, but that there is a 12 month safety on top of that it will be unblinded at the end of that time reveal two although it will be started about a quarter behind reveal one.

And the on drug time is identical to reveal one and reveal two will have a shorter follow up safety follow up. So our goal is to underline both studies at the same time in 2020 and file for a BLA application in 2021, so the market should.

Expect the data in 2020, both from both reveal one and reveal two phase III studies.

Obviously, we can therefore patients faster we will.

Reported us.

That much faster so our focus is on enrollment enrollment enrollment.

And we have a very dedicated team.

Working on that.

And number two Apollo bio.

We are waiting for their approval process for this agreement.

We will report on the exact development path in China, but I think what I can tell you about this is there will be a lot of leveraging of our global trial going on reveal one and reveal two and.

We're doing this deal with Apollo bio for two reasons, one upfront and equity investment obviously $50 million is important number two though is more important that in our in our loan <unk>.

Development.

Plan our goal our primary markets as I stated earlier is U S and Europe .

And China is way down, but there are perhaps 10 times its not 50 times as many patients who can benefit from <unk> 3100, who live currently in greater China. So it's our efforts to both access to market quicker and China and bring economic Val.

Okay.

That's P D. One N P. D O one because we think we can have that covered pretty well between medimmune.

Regeneron and Genentech.

I think we have the best combination therapy strategy out there and the whole field. So I feel very good about that and we're looking for other combination collaboration or partnerships going forward as well.

Thank you very much.

Thank you Ron.

Thank you and the next question is coming from the line of Jason Mccarthy with Maxim gable. Please proceed with your question.

Thanks for taking my questions. Congratulations on all the progress I was wondering if you can give us a sense of the speed of enrollment in the other Hpv's studies.

Involve our neoplasia.

And when can we expect data and what's the progress.

And.

Expect to see some data even interim data there.

So thank you, Jason and Yeah I agree with you I think we had a great quarter on multiple fronts. We got the phase III approved we got the phase two approved for for then.

Referred to and we were able to add to our balance sheet. Since then so.

All systems are firing for us at this point I feel extremely fortunate.

To have Innovia, where it is and having all the resources and trials at disposal, including our partnership.

Program with many in in our recent collaborations studies with.

Regeneron in Genentech 454 O. One fact event, we just got the approval to start that phase two trial in the second quarter. So we have sites up.

We will have more sites up and we expect to have the patients moving forward is 36 patients study.

So it is much smaller in scale than even our phase two <unk> study was four.

Sin.

Indication and unlike the sin indication the Vin study is going to be an open label since the randomized, but it's an open label, there's very few self progressors out there with hot high recurrence wait even after surgery. So this is a horrible.

A disease for these patients and and our goal is to bring this immunotherapy.

Too bye.

By leveraging the same antigen specific T cell that we've seen generated in and cervical dysplasia patients.

Same power to clear the virus HPV 16, and 18 and cervical dysplasia patients, we hope to see that in our evinced study.

In terms of.

Data I think I'm going to wait before I can project beyond late 2018, or 2019 type of projections, because I think it's too early but this study will have an advantage that it's an open label and its agencies. Unlike cervix.

You can the doctors can follow the progress visually.

So we have reporting mechanisms.

I've written into the protocol that will help US guide the progress of the program much earlier.

Even so we're quite excited about the progress and the second indications for Vijay 3100.

Okay.

If I could one more question I wanted to just die.

Diverged from the oncology and maybe talk a little bit about infectious disease.

Particularly Penn Vax, you had great data back in May.

Can you just give us an update what are the plans for Penn Vax going forward and where do you see that fitting into innovia his priorities right now.

Yes. Thank you Jason I agree with you the data that was presented.

As a surprise there was a late breaker it wasn't HPN conference there was not originally flavor.

Slated to be presented at the plenary session I think the data was so overwhelmingly impressive.

As I remarked T cells, an antibody responses were.

At the highest observed by any vaccine that th VPN is tested over the last 25 30 years. So I think there are actions speak volumes.

So it was a interim look that provided a very higher levels of 10, Vax gp's ability to generate both antibodies and T. So in.

In 94 healthy volunteers.

For the study so what's going on since May.

More complete analysis is being done.

By the HB turn the other part of this trial is not that we don't trust our own numbers, but it's great to see similar levels of consistent immune responses in these vaccines, whether youre doing an HIV vaccine with HB 10 were just to jog your memory and this was a funded pro.

Graham by the NIH with the $25 million contract Innovia and HB 10 is also funded by DNA ancient they conducted design conducted and executed the trial. There are core lab started doing all of the assay. So.