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Summary

  • Inovio’s immunotherapy treatment achieved both primary and secondary endpoints but was followed by scrutiny due to data disclosure and a shelf registration.
  • Supplementary filing assured that the intent-to-treat analysis (data for all patients) also achieved statistical significance.
  • The shelf registration makes more sense as a negotiating tool rather than effective dilution.
  • Inovio’s technology has shown it can activate the immune system to fight infections and pre-cancers. More data from INO-3112 will be required to see the potential effects of VGX-3100 in cancers.

Inovio's (NASDAQ:INO) long-awaited Phase II cervical dysplasia results were released on July 23. VGX-3100, Inovio's immunotherapy treatment, achieved primary efficacy endpoint in women with CIN2/3 associated with HPV types 16 or 18. However, the announcement was followed by scrutiny due to Inovio's data disclosure and shelf filing. So far Inovio is up 15% on the VGX-3100 news.

The Data Meeting Endpoints

The study's primary endpoint was regression of the tumors to either CIN 1 or no disease. Even without therapy, prior knowledge has demonstrated that ~30% of patients inflicted with HPV will improve naturally. The trial showed that 30.6% of patients in the placebo arm displayed regression, further supporting prior findings. However, women treated with VGX-3100 showed a 49.5% regression, making the results statistically significant.

Also, as a secondary endpoint, 40.2% of the women receiving VGX-3100 saw both virus cleared and tumor regression. The placebo arm showed that only 14.3% both regressed and had virus cleared. This was statistically significant.

(click to enlarge)

Unwarranted Skepticism

According to ClinicalTrials.gov, Inovio's study was designed to enroll 148 patients (though the company could have enrolled more). Assuming 148 women were enrolled, Inovio collected data on 143 meaning that 5 patients were absent (4 with VGX-3100 and 1 on placebo). If all 5 missing patients were non-responders, results would not be statistically significant. For more info on the skepticism of Inovio results, read Adam Feuerstein's piece.

5 patients dropping out of a study this size is within the parameters of human trials, so there shouldn't be any suspicion on Inovio involving the human subjects. Even with this in mind, Inovio released supplementary information that the intent-to-treat analysis (data for all 148 patients) also achieved statistical significance.

Inovio's results were promising as they met both primary and secondary endpoints. Inovio will initiate Phase III in the future, though I expect the company to find a partner to de-risk the process.

What This Means for Inovio

VGX-3100 data was not a home run, but it got Inovio in great scoring position. Inovio's SynCon immunotherapy technology has shown that it can activate the immune system to fight infections, pre-cancers and potentially even cancers. More data will be required from Inovio's ongoing INO-3112, a combination of VGX-3100 and immune activator expressing IL-12, to see the potential effects of VGX-3100 in cancers.

Shelf Registration and Inovio Financial Position

Shortly after the data, Inovio filed a shelf filing for an additional $175M. Rightfully so, this freaked investors who thought further dilution would be underway. Nonetheless, the shelf registration will not dilute stock until it is used (if it is even used). Also, this current registration replaces a previous one for $120M that had been depleted to $60M by most recent financing earlier in the year.

Looking at Inovio's financial situation, the company ended Q1 2014 with $117M in cash. Dr. Kim, CEO of Inovio, guided that this cash would be able to fund operations until late 2017, without taking into consideration a potential VGX-3100 Phase III trial.

With sufficient cash on hand, I believe this offering was filed as a leveraging tool in negotiations with a potential partner. With access to another $175M, Inovio could fund a potential Phase III trial alone, though I think they would prefer to partner either VGX-3100 or one of the INO-3112 combination treatments.

Conclusion

Inovio investors had set unrealistic expectations with regards to VGX-3100 results. Inovio's leading candidate proved its efficacy in the pre-cancer indication, however the real catch is cancer treatment. With detailed study findings being submitted for peer review and earnings by early August, further clarification that could quiet critics may be on the way.

Source: Inovio Data Not A Home Run, But Got Company In Great Scoring Position