INOVIO PHARMACEUTICALS, INC. [INO] Filings

10-Q 1 ino-20240630.htm 10-Q ino-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 001-14888

INOVIO PHARMACEUTICALS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


Delaware						33-0969592
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

660 W. Germantown Pike, Suite 110 Plymouth Meeting, Pennsylvania						19462
(Address of principal executive offices)						(Zip Code)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (267) 440-4200

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
COMMON STOCK, $0.001 PAR VALUE	INO	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares outstanding of the Registrant’s Common Stock, $0.001 par value, was 25,964,268 as of August 8, 2024.

INOVIO PHARMACEUTICALS, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2024

INDEX


Part I. Financial Information			1
Item 1. Financial Statements			1
a) Condensed Consolidated Balance Sheets			2
b) Condensed Consolidated Statements of Operations			3
c) Condensed Consolidated Statements of Comprehensive Loss			4
d) Condensed Consolidated Statements of Stockholders' Equity			5
e) Condensed Consolidated Statements of Cash Flows			7
f) Notes to Condensed Consolidated Financial Statements			8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			29
Item 4. Controls and Procedures			30

Part II. Other Information			31
Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31



Item 5. Other Information			58
Item 6. Exhibits			58
Signatures			60

SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects. These risks are discussed more fully in Item 1A. Risk Factors herein. These risk factors include, but are not limited to, the following:

•We have incurred significant losses in recent years, expect to incur significant net losses in the foreseeable future and may never become profitable.

•We have limited sources of revenue and our success is dependent on our ability to develop our DNA medicines and proprietary device technology.

•We will need substantial additional capital to develop our DNA medicines and proprietary device technology, which may prove difficult or costly to obtain.

•If we are unable to obtain FDA approval of our proprietary devices and DNA medicine candidates, we will not be able to commercialize them in the United States. In particular, because our product candidates are drug-device combination products comprising an electroporation device for delivery of a biologic, additional time may be required to obtain regulatory approval for our product candidates because of the complexity involved with developing and manufacturing a drug-device combination product. In addition, if the FDA and similar regulatory agencies do not provide marketing authorization for our CELLECTRA delivery devices, then we will not be able to bring to market our DNA medicines that rely on delivery by such a device.

•DNA medicines are a novel approach to treating and preventing disease, and our CELLECTRA delivery devices are a novel approach to administering medicines, and negative perception of the efficacy, safety, or tolerability of any investigational medicines we develop or our devices could adversely affect our ability to conduct our business, advance our investigational medicines, or obtain regulatory approvals.

•Our product candidates are drug-device combination products comprising an electroporation device for delivery of a biologic and, thus, additional time may be required to obtain regulatory approval for our product candidates because of the complexity involved with developing and manufacturing a drug-device combination product. In addition, if the FDA and similar regulatory agencies do not provide marketing authorization for our delivery devices, then we will not be able to bring to market our DNA medicines that rely on delivery by such a device.

•If we and the contract manufacturers upon whom we rely fail to produce our proprietary devices and DNA medicine candidates in the volumes that we require on a timely basis, or at all, or if these contractors fail to comply with their obligations to us or with stringent regulations, we may face delays in the development and commercialization of our proprietary devices and DNA medicine candidates.

•If we lose or are unable to secure collaborators or partners, or if our collaborators or partners do not apply adequate resources to their relationships with us, our product development and potential for profitability will suffer.

•We have agreements with government agencies that are subject to termination and uncertain future funding. Termination or cessation of funding would have a negative impact on our ability to develop certain of our pipeline candidates and/or require us to seek alternative funding sources to advance product candidates.

•Our operating results may be harmed if our corporate restructuring plans and cost reduction efforts do not achieve the anticipated results or cause undesirable consequences.

•We are currently subject to litigation and may become subject to additional litigation, which could harm our business, financial condition and reputation.

•We face intense and increasing competition and steps taken by our competitors, such as the introduction of a new, disruptive technology may impede our ability to develop and commercialize our DNA medicines.

•We have entered into collaborations with Chinese companies and rely on clinical materials manufactured in China for our development efforts. Uncertainties regarding the interpretation and enforcement of Chinese laws, rules and regulations, a trade war, political unrest or unstable economic conditions in China could materially adversely affect our business, financial condition and results of operations.

•It is difficult and costly to generate and protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection.

•If we are sued for infringing intellectual property rights of third parties, it will be costly and time-consuming, and an unfavorable outcome in that litigation would have a material adverse effect on our business.

•We are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences.

Part I. Financial Information

Item 1. Financial Statements

INOVIO PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	34,392,404	$	14,310,862
Short-term investments	76,029,116		130,982,913

Accounts receivable from affiliated entities	1,773,665		2,405,228
Prepaid expenses and other current assets	5,365,860		5,393,665
Prepaid expenses and other current assets from affiliated entities	—		20,432

Total current assets	117,561,045		153,113,100
Fixed assets, net	4,510,869		4,960,986
Investment in affiliated entity	2,319,975		2,780,287



Operating lease right-of-use assets	8,819,399		9,491,735
Other assets	585,915		605,315
Total assets	$	133,797,203	$	170,951,423
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	16,634,761	$	19,847,744
Accounts payable and accrued expenses due to affiliated entity	1,921,457		1,070,519
Accrued clinical trial expenses	5,499,648		2,365,382


Operating lease liability	2,321,984		2,406,522
Grant funding liability	—		87,489
Grant funding liability from affiliated entity	21,918		21,918
Convertible senior notes	—		16,770,654
Total current liabilities	26,399,768		42,570,228




Operating lease liability, net of current portion	10,658,228		11,032,066



Total liabilities	37,057,996		53,602,294
Stockholders’ equity:
Preferred stock	—		—
Common stock	25,962		22,792
Additional paid-in capital	1,783,074,886		1,740,954,074
Accumulated deficit	(1,685,672,105)		(1,622,965,136)
Accumulated other comprehensive loss	(689,536)		(662,601)
Total Inovio Pharmaceuticals, Inc. stockholders’ equity	96,739,207		117,349,129


Total liabilities and stockholders’ equity	$	133,797,203	$	170,951,423

See accompanying notes to unaudited condensed consolidated financial statements.

INOVIO PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023







Revenue from collaborative arrangements and other contracts	$	100,762	$	225,971	$	100,762	$	340,914
Operating expenses:
Research and development	23,090,989		23,743,970		44,001,307		53,920,481
General and administrative	10,206,686		13,523,098		20,781,337		27,413,708

Total operating expenses	33,297,675		37,267,068		64,782,644		81,334,189
Loss from operations	(33,196,913)		(37,041,097)		(64,681,882)		(80,993,275)
Other income (expense):
Interest income	1,307,358		2,168,233		2,807,648		4,375,404
Interest expense	—		(313,488)		(177,833)		(626,976)


(Loss) gain on investment in affiliated entity	(334,294)		156,745		(460,312)		773,384
Net unrealized (loss) gain on available-for-sale equity securities	(20,820)		922,941		480,057		4,141,156
Other income (expense), net	7,571		(1,427,867)		(674,647)		(3,853,543)







Net loss	$	(32,237,098)	$	(35,534,533)	$	(62,706,969)	$	(76,183,850)


Net loss per share
Basic and diluted (1)	$	(1.19)	$	(1.61)	$	(2.48)	$	(3.50)

Weighted average number of common shares used to compute net loss per share
Basic and diluted (1)	27,197,802		22,029,486		25,244,657		21,784,343

(1) Share and per share amounts have been restated to reflect the 1-for-12 reverse stock split effected in January 2024 on a retroactive basis for all periods presented.

See accompanying notes to unaudited condensed consolidated financial statements.

INOVIO PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(32,237,098)	$	(35,534,533)	$	(62,706,969)	$	(76,183,850)
Other comprehensive loss:

Foreign currency translation	—		(376)		32,403		(2,294)
Unrealized (loss) gain on short-term investments, net of tax	(13,322)		(108,089)		(59,338)		9,773


Comprehensive loss	$	(32,250,420)	$	(35,642,998)	$	(62,733,904)	$	(76,176,371)

See accompanying notes to unaudited condensed consolidated financial statements.

INOVIO PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


	Three and Six Months Ended June 30, 2024
	Preferred stock			Common stock (1)
	Number of shares	Amount		Number of shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ equity
Balance at December 31, 2023	9	$	—	22,793,075	$	22,792	$	1,740,954,074	$	(1,622,965,136)	$	(662,601)	$	117,349,129
Issuance of common stock for cash, net of financing costs	—	—		543,620	544		5,224,589		—		—		5,225,133
Vesting of RSUs, net of tax payments	—	—		34,558	34		(174,282)		—		—		(174,248)
Stock-based compensation	—	—		—	—		2,525,433		—		—		2,525,433
Net loss	—	—		—	—		—		(30,469,871)		—		(30,469,871)
Unrealized loss on short-term investments, net of tax	—	—		—	—		—		—		(46,016)		(46,016)
Foreign currency translation	—	—		—	—		—		—		32,403		32,403
Balance at March 31, 2024	9	$	—	23,371,253	$	23,370	$	1,748,529,814	$	(1,653,435,007)	$	(676,214)	$	94,441,963
Issuance of common stock for cash, net of financing costs	—	—		2,536,258	2,536		17,057,132		—		—		17,059,668
Issuance of pre-funded warrants for cash, net of financing costs	—	—		—	—		16,146,397		—		—		16,146,397
Exercise of stock options for cash and vesting of RSUs, net of tax payments	—	—		56,033	56		(172,510)		—		—		(172,454)
Stock-based compensation	—	—		—	—		1,514,053		—		—		1,514,053
Net loss	—	—		—	—		—		(32,237,098)		—		(32,237,098)
Unrealized loss on short-term investments, net of tax	—	—		—	—		—		—		(13,322)		(13,322)

Balance at June 30, 2024	9	$	—	25,963,544	$	25,962	$	1,783,074,886	$	(1,685,672,105)	$	(689,536)	$	96,739,207


	Three and Six Months Ended June 30, 2023
	Preferred stock			Common stock (1)
	Number of shares	Amount		Number of shares	Amount		Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total stockholders’ equity
Balance at December 31, 2022	9	$	—	21,090,938	$	21,090	$	1,710,888,191	$	(1,487,847,784)	$	(698,741)	$	222,362,756
Issuance of common stock for legal settlement	—	—		760,083	760		13,999,240		—		—		14,000,000
Vesting of RSUs, net of tax payments	—	—		43,901	44		(424,748)		—		—		(424,704)
Stock-based compensation	—	—		—	—		3,809,003		—		—		3,809,003
Net loss	—	—		—	—		—		(40,649,317)		—		(40,649,317)
Unrealized gain on short-term investments, net of tax	—	—		—	—		—		—		117,862		117,862
Foreign currency translation	—	—		—	—		—		—		(1,918)		(1,918)
Balance at March 31, 2023	9	$	—	21,894,922	$	21,894	$	1,728,271,686	$	(1,528,497,101)	$	(582,797)	$	199,213,682
Issuance of common stock for cash, net of financing costs	—	—		425,429	425		2,914,754		—		—		2,915,179
Vesting of RSUs, net of tax payments	—	—		19,077	19		(32,311)		—		—		(32,292)
Stock-based compensation	—	—		—	—		2,917,997		—		—		2,917,997
Net loss	—	—		—	—		—		(35,534,533)		—		(35,534,533)
Unrealized loss on short-term investments, net of tax	—	—		—	—		—		—		(108,089)		(108,089)
Foreign currency translation	—	—		—	—		—		—		(376)		(376)
Balance at June 30, 2023	9	$	—	22,339,428	$	22,338	$	1,734,072,126	$	(1,564,031,634)	$	(691,262)	$	169,371,568

(1) All share amounts in this column, including appropriate reclassifications between common stock and additional paid-in capital, have been restated to reflect the 1-for-12 reverse stock split effected in January 2024 on a retroactive basis for all periods presented.

See accompanying notes to unaudited condensed consolidated financial statements.

INOVIO PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(62,706,969)	$	(76,183,850)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	916,019		1,410,649
Amortization of intangible assets	—		145,417
Amortization of operating lease right-of-use assets	672,336		739,469

Impairment of intangible assets	—		1,984,444
Non-cash stock-based compensation	4,039,486		6,727,000


Non-cash interest on senior convertible notes	(355,654)		93,489
Amortization of discounts on investments	(1,154,822)		(2,402,451)
Loss on sales of short-term investments	692,557		3,853,543
Loss on disposal of fixed assets	21,930		334,297


Loss (gain) on equity investment in affiliated entity	460,312		(773,384)



Net unrealized gain on available-for-sale equity securities	(480,057)		(4,141,156)





Changes in operating assets and liabilities:
Accounts receivable, including from affiliated entities	631,563		6,621,990

Prepaid expenses and other current assets, including from affiliated entities	48,237		41,191,898


Other assets	19,400		17,154
Accounts payable and accrued expenses, including due to affiliated entities	(2,362,045)		(43,955,799)
Accrued clinical trial expenses	3,134,266		(4,421,691)




Operating lease right-of-use assets and liabilities, net	(458,376)		(1,406,066)
Grant funding liability, including from affiliated entity	(87,489)		1,185,913



Net cash used in operating activities	(56,969,306)		(68,979,134)
Cash flows from investing activities:
Purchases of investments	(29,359,747)		(106,741,680)
Proceeds from sale or maturity of investments	85,196,528		173,898,007
Purchases of capital assets	(487,832)		(320,898)
Proceeds from sale of capital assets	—		6,071,000




Net cash provided by investing activities	55,348,949		72,906,429
Cash flows from financing activities:
Repayment of convertible senior notes	(16,415,000)		—
Proceeds from issuance of pre-funded warrants, net of issuance costs	16,146,397		—
Proceeds from issuance of common stock, net of issuance costs	22,284,801		2,915,179
Proceeds from stock option exercises	67,675		—
Taxes paid related to net share settlement of equity awards	(414,377)		(456,996)


Net cash provided by financing activities	21,669,496		2,458,183
Effect of exchange rate changes on cash and cash equivalents	32,403		(2,294)
Increase in cash and cash equivalents	20,081,542		6,383,184
Cash and cash equivalents, beginning of period	14,310,862		46,329,359
Cash and cash equivalents, end of period	$	34,392,404	$	52,712,543

Supplemental disclosures:

Interest paid	$	533,487	$	533,487


Issuance of common stock as part of litigation settlement	$	—	$	14,000,000

See accompanying notes to unaudited condensed consolidated financial statements.

INOVIO PHARMACEUTICALS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Operations

Inovio Pharmaceuticals, Inc. (the “Company” or “INOVIO”) is a clinical-stage biotechnology company focused on developing and commercializing DNA medicines to help treat and protect people from diseases associated with human papillomavirus (HPV), cancer, and infectious diseases. INOVIO's platform harnesses the power of in vivo protein production, featuring optimized design and delivery of DNA medicines that teach the body to manufacture its own disease-fighting tools.

INOVIO uses proprietary technology to design DNA plasmids, which are small circular DNA molecules that work like software the body’s cells can download to produce specific proteins to target and fight disease. The Company's proprietary investigational CELLECTRA delivery devices are designed to optimally deliver the plasmids into the body's cells.

INOVIO's lead candidate is INO-3107 for the treatment of recurrent respiratory papillomatosis (RRP), a life-long, rare disease of the respiratory tract caused by HPV infection. In its completed Phase 1/2 clinical trial of INO-3107 for the treatment of HPV-6 and HPV-11-associated RRP, 81.3% of patients experienced a reduction in the number of surgical interventions in the year following administration of INO-3107, when compared with the year prior to treatment.

In addition to its development efforts with INO-3107, INOVIO is actively developing or planning to develop DNA medicines for other indications, including HPV-related oropharyngeal squamous cell carcinoma (OPSCC) and anal dysplasia; glioblastoma multiforme (GBM), a deadly form of brain cancer; and a potential vaccine booster to protect against the Ebola virus. The Company was previously conducting clinical trials of a DNA medicine candidate for the treatment of HPV-related cervical high-grade squamous intraepithelial lesions (HSIL) but announced in August 2023 that it was ceasing development for this indication in the United States. However, its collaborator ApolloBio Corporation continues to conduct a Phase 3 clinical trial of this candidate in China and plans to seek regulatory approval for and potentially commercialize the candidate in that jurisdiction.

The Company's partners and collaborators include Advaccine Biopharmaceuticals Suzhou Co, ApolloBio Corporation, AstraZeneca, The Bill & Melinda Gates Foundation (Gates), Coalition for Epidemic Preparedness Innovations (CEPI), Coherus Biosciences, Defense Advanced Research Projects Agency (DARPA), The U.S. Department of Defense (DoD), HIV Vaccines Trial Network, International Vaccine Institute (IVI), Kaneka Eurogentec, National Cancer Institute (NCI), National Institutes of Health (NIH), National Institute of Allergy and Infectious Diseases (NIAID), Plumbline Life Sciences, Regeneron Pharmaceuticals, Richter-Helm BioLogics, Thermo Fisher Scientific, the University of Pennsylvania, the Walter Reed Army Institute of Research, and The Wistar Institute.

INOVIO was incorporated in Delaware in June 2001 and has its principal executive offices in Plymouth Meeting, Pennsylvania.

2. Basis of Presentation, Liquidity and Risks and Uncertainties

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Inovio have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet as of June 30, 2024, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of stockholders' equity for the three and six months ended June 30, 2024 and 2023 and the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 are unaudited, but include all adjustments (consisting of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial position, results of operations, cash flows and changes in stockholders' equity for the periods presented.

The results of operations for the three and six months ended June 30, 2024 shown herein are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or for any other period. These unaudited financial statements, and notes thereto, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023, included in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 6, 2024. The balance sheet at December 31, 2023 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

Table of Contents

These unaudited condensed consolidated financial statements include the accounts of Inovio Pharmaceuticals, Inc. and its subsidiary. As of June 30, 2024 and December 31, 2023, the Company consolidated its wholly-owned subsidiary Inovio Asia LLC. All intercompany accounts and transactions were eliminated upon consolidation.

Liquidity

The Company incurred a net loss of $32.2 million and $62.7 million for the three and six months ended June 30, 2024, respectively. The Company had working capital of $91.2 million and an accumulated deficit of $1.7 billion as of June 30, 2024. The Company has incurred losses in each year since its inception and expects to continue to incur significant expenses and operating losses for the foreseeable future in connection with the research and preclinical and clinical development of its product candidates.

On April 18, 2024, the Company closed an underwritten registered direct offering (the “Offering”) relating to the issuance and sale of 2,536,258 shares (the “Shares”) of its common stock, par value $0.001 per share, at a price of $7.693 per share and pre-funded warrants to purchase up to 2,135,477 shares of common stock (the “Pre-Funded Warrants”) at a price of $7.692 per Pre-Funded Warrant, which represents the per share price for the Shares less the $0.001 per share exercise price for each Pre-Funded Warrant. The net proceeds from the Offering were $33.2 million, after deducting the underwriting discounts and commissions and offering expenses paid by the Company. The Company’s cash, cash equivalents and short-term investments of $110.4 million as of June 30, 2024 are expected to be sufficient to support the Company's planned operations for a period of at least 12 months from the date of issuance of these financial statements.

In order to continue to fund future research and development activities, the Company will need to seek additional capital. This may occur through strategic alliance and licensing arrangements, grant agreements and/or future public or private debt or equity financings including At-the-Market Equity Offering Sales Agreements (“Sales Agreements”). The Company has a history of conducting debt and equity financings, including the Offering described above, and the receipt of net proceeds of $5.2 million and $5.5 million under a Sales Agreement during the three months ended March 31, 2024 and year ended December 31, 2023, respectively. However, sufficient funding may not be available in the future, or if available, may be on terms that significantly dilute or otherwise adversely affect the rights of existing stockholders. If adequate funds are not available, the Company may need to delay, reduce the scope of or put on hold one or more of its clinical and/or preclinical programs.

The Company’s ability to continue its operations is dependent upon its ability to obtain additional capital in the future and achieve profitable operations. The Company expects to continue to rely on outside sources of financing to meet its capital needs and the Company may never achieve positive cash flow. These condensed consolidated financial statements do not include any adjustments to the specific amounts and classifications of assets and liabilities, which might be necessary should Inovio be unable to continue as a going concern. The Company's condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business for the foreseeable future. The Company has evaluated subsequent events after the balance sheet date through the date it issued these condensed consolidated financial statements.

The Company is, and from time to time may in the future be, subject to various legal proceedings and claims arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its consolidated financial statements. An estimated loss contingency is accrued in the consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal proceedings, including litigation, government investigations and enforcement actions, could result in material costs, occupy significant management resources and entail civil and criminal penalties, even if the Company ultimately prevails. Any of the foregoing consequences could result in serious harm to the Company’s business, results of operations and financial condition.

Reverse Stock Split

On January 24, 2024, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to its certificate of incorporation, as previously amended, to effect a 1-for-12 reverse stock split of its common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every 12 issued and outstanding shares of the Company's common stock were automatically combined into one issued and outstanding share of common stock. The reverse stock split was reflected on the Nasdaq Capital Market beginning with the opening of trading on January 25, 2024. Accordingly, an amount equal to the par value of the decreased shares resulting from the reverse stock split was reclassified from "Additional paid-in capital" to "Common stock" on the balance sheet and statement of changes in stockholders’ equity. Any fractional post-split shares as a result of the reverse stock split were eliminated by the payment of cash for the value of such fractional share. As a result of the Reverse Stock Split, proportionate adjustments were made to the number of shares underlying, and the exercise or conversion prices of, the Company's outstanding stock options and outstanding shares of Series C Cumulative Convertible Preferred Stock and to the number of shares of common stock issuable under the Company's equity incentive plans.

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The reverse stock split did not change the par value of the Company's common stock or the authorized number of shares of the Company's common stock. All share amounts and per share amounts disclosed in this Quarterly Report on Form 10-Q have been restated to reflect the reverse stock split on a retroactive basis for all periods presented.

3. Critical Accounting Policies

Collaboration Agreements and Revenue Recognition

The Company assesses whether its collaboration agreements are subject to Accounting Standards Codification ("ASC") Topic 808: Collaborative Arrangements (“Topic 808”) based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. To the extent that the arrangement falls within the scope of Topic 808 and the Company concludes that its collaboration partner is not a customer, the Company presents such payments as a reduction of research and development expense. If payments from the collaboration partner to the Company represent consideration from a customer, then the Company accounts for those payments within the scope of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”).

Research and Development Expenses - Clinical Trial Accruals

The Company's activities have largely consisted of research and development efforts related to developing its proprietary device technology and DNA medicine candidates. For clinical trial expenses, judgements used in estimating accruals rely on estimates of total costs incurred based on participant enrollment, completion of studies and other events. Accrued clinical trial costs are subject to revisions as trials progress. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. Historically, revisions have not resulted in material changes to research and development expense; however, a modification in the protocol of a clinical trial or cancellation of a trial could result in a charge to the Company's results of operations.

4. Short-term Investments and Fair Value Measurements

The following is a summary of available-for-sale securities as of June 30, 2024 and December 31, 2023:


		As of June 30, 2024
	Contractual Maturity (in years)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Mutual funds	---	$	45,541,438	$	—	$	(3,042,831)	$	42,498,607
U.S. treasury securities	Less than 1	29,676,056		517		(2,473)		29,674,100

Certificates of deposit	Less than 1	2,979,591		10,735		(290)		2,990,036
U.S. agency mortgage-backed securities	*	1,301,822		—		(435,449)		866,373
		$	79,498,907	$	11,252	$	(3,481,043)	$	76,029,116


		As of December 31, 2023
	Contractual Maturity (in years)	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Mutual funds	---	$	55,389,289	$	—	$	(3,522,888)	$	51,866,401
U.S. treasury securities	Less than 1	75,164,782		24,938		—		75,189,720

Certificates of deposit	Less than 1	2,978,917		11,709		(300)		2,990,326
U.S. agency mortgage-backed securities	*	1,340,439		—		(403,973)		936,466
		$	134,873,427	$	36,647	$	(3,927,161)	$	130,982,913

*No single maturity date.

During the three and six months ended June 30, 2024, the Company recorded gross realized gains on investments of $300 and $500, respectively, and gross realized losses on investments of $2,000 and $693,000, respectively. During the three and six months ended June 30, 2023, the Company recorded gross realized gains on investments of $200 and $500, respectively, and gross realized losses on investments of $1.5 million and $3.9 million, respectively. During the three and six months ended June 30, 2024, the Company recorded net unrealized (loss) gain on available-for-sale equity securities of $(21,000) and $480,000, respectively. During the three and six months ended June 30, 2023, the Company recorded net unrealized gain on available-for-sale equity securities of $923,000 and $4.1 million, respectively. No material balances were reclassified out of accumulated other comprehensive loss for the three and six months ended June 30, 2024 and 2023. Interest and dividends on investments classified as available-for-sale are included in interest income in the condensed consolidated statements of operations. As of June 30, 2024, the Company had 22 available-for-sale securities with an aggregate

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total unrealized loss of $3.5 million. Of these securities, 19 had been in a loss position for longer than 12 months as of June 30, 2024.

The Company periodically reviews its portfolio of available-for-sale debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For the debt securities where the fair value of the investment is less than the amortized cost basis, the Company has assessed at the individual security level for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale debt securities as of June 30, 2024 were primarily due to changes in interest rates, and not due to increased credit risks associated with specific securities. Based on the credit quality of the available-for-sale debt securities that are in an unrealized loss position, and the Company’s estimates of future cash flows to be collected from those securities, the Company believes the unrealized losses are not credit losses. Accordingly, at June 30, 2024, the Company has not recorded an allowance for credit losses related to its available-for-sale debt securities.

The following table presents the Company’s assets that were measured at fair value on a recurring basis, determined using the following inputs as of June 30, 2024:


	Fair Value Measurements at
	June 30, 2024
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Unobservable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Short-term investments
Mutual funds	$	42,498,607	$	42,498,607	$	—	$	—
U.S. treasury securities	29,674,100		29,674,100		—		—

Certificates of deposit	2,990,036		—		2,990,036		—
U.S. agency mortgage-backed securities	866,373		—		866,373		—
Total short-term investments	76,029,116		72,172,707		3,856,409		—

Investment in affiliated entity	2,319,975		2,319,975		—		—
Total assets measured at fair value	$	78,349,091	$	74,492,682	$	3,856,409	$	—

The following table presents the Company’s assets that were measured at fair value on a recurring basis, determined using the following inputs as of December 31, 2023:


	Fair Value Measurements at
	December 31, 2023
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Unobservable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Short-term investments
Mutual funds	$	51,866,401	$	51,866,401	$	—	$	—
U.S. treasury securities	75,189,720		75,189,720		—		—

Certificates of deposit	2,990,326		—		2,990,326		—
U.S. agency mortgage-backed securities	936,466		—		936,466		—
Total short-term investments	130,982,913		127,056,121		3,926,792		—

Investment in affiliated entity	2,780,287		2,780,287		—		—
Total assets measured at fair value	$	133,763,200	$	129,836,408	$	3,926,792	$	—

Level 1 assets at June 30, 2024 consisted of mutual funds and U.S. treasury securities held by the Company that are valued at quoted market prices, as well as the Company’s investment in its affiliated entity, PLS. The Company accounts for its investment in 597,808 common shares of PLS based on the closing price of the shares on the Korea New Exchange Market on the applicable balance sheet date. Unrealized gains and losses on the Company's equity securities are reported in the consolidated statement of operations as unrealized gain or loss on available-for-sale equity securities or as a gain or loss on investment in affiliated entity.

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Level 2 assets at June 30, 2024 consisted of certificates of deposit and U.S. agency mortgage-backed securities held by the Company that are initially valued at the transaction price and subsequently valued, at the end of each reporting period, typically utilizing market observable data. The Company obtains the fair value of its Level 2 assets from a professional pricing service, which may use quoted market prices for identical or comparable instruments, or inputs other than quoted prices that are observable either directly or indirectly. The professional pricing service gathers quoted market prices and observable inputs from a variety of industry data providers. The valuation techniques used to measure the fair value of the Company's Level 2 financial instruments were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques. The Company validates the quoted market prices provided by the primary pricing service by comparing the service's assessment of the fair values of the Company's investment portfolio balance against the fair values of the Company's investment portfolio balance obtained from an independent source.

There were no Level 3 assets held as of June 30, 2024 or December 31, 2023.

5. Certain Balance Sheet Items

Prepaid and other current assets consisted of the following:


	June 30, 2024		December 31, 2023

Prepaid clinical expenses (a)	2,341,285		3,410,442
Other prepaid expenses	3,024,575		1,983,223
	$	5,365,860	$	5,393,665

Accounts payable and accrued expenses consisted of the following:


	June 30, 2024		December 31, 2023
Trade accounts payable	$	4,487,282	$	3,577,826
Accrued compensation	8,642,497		9,837,104


Other accrued expenses (b)	3,504,982		6,432,814
	$	16,634,761	$	19,847,744

(a) As of June 30, 2024 and December 31, 2023, balance includes $22,000 and $1.5 million, respectively, of prepaid manufacturing expenses.

(b) As of June 30, 2024 and December 31, 2023, balance includes $2.3 million and $4.3 million, respectively, of liability for unused grant funding.

6. Convertible Debt

Convertible Senior Notes

On February 19, 2019 and March 1, 2019, the Company completed a private placement of $78.5 million aggregate principal amount of its 6.50% convertible senior notes due 2024 (the “Notes”). The Notes were sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Net proceeds from the offering were $75.7 million.

The Notes were senior unsecured obligations of the Company and accrued interest payable in cash semi-annually in arrears on March 1 and September 1 of each year at a rate of 6.50% per annum. The Notes matured on March 1, 2024 and the Company paid the then remaining $16.9 million obligation in full, including accrued interest.

For the six months ended June 30, 2024, the Company recognized $178,000 of interest expense related to the Notes, all of which related to the contractual interest coupon. For the three and six months ended June 30, 2023, the Company recognized $313,000 and $627,000, respectively, of interest expense related to the Notes, of which $267,000 and $533,000, respectively, related to the contractual interest coupon.

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7. Stockholders’ Equity

The following is a summary of the Company's authorized and issued common and preferred stock as of June 30, 2024 and December 31, 2023:


			Outstanding as of
	Authorized	Issued	June 30, 2024	December 31, 2023
Common Stock, par value $0.001 per share	600,000,000	25,963,544	25,963,544	22,793,075


Series C Preferred Stock, par value $0.001 per share	1,091	1,091	9	9

Issuances of Common Stock and Pre-Funded Warrants

On April 18, 2024, the Company closed the Offering of Shares and Pre-Funded Warrants (see “Liquidity” in Note 2 above). As the Pre-Funded Warrants are indexed to the Company's own shares of common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the Pre-Funded Warrants as additional paid-in capital on the Company's condensed consolidated balance sheet as of June 30, 2024.

Each Pre-Funded Warrant has an initial exercise price per share of $0.001, subject to certain adjustments. The Pre-Funded Warrants may be exercised at any time until exercised in full. A holder (together with its affiliates and other attribution parties) may not exercise any portion of a Pre-Funded Warrant to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 9.99% of the Company’s outstanding Common Stock immediately after exercise, which percentage may be changed at the holder’s election to a lower or higher percentage not in excess of 19.99% upon 61 days’ notice to the Company subject to the terms of the Pre-Funded Warrants. As of June 30, 2024, no Pre-Funded Warrants had been exercised.

On November 9, 2021, the Company entered into an ATM Equity OfferingSM Sales Agreement (the “2021 Sales Agreement”) with outside sales agents (collectively, the “Sales Agents”) for the offer and sale of its common stock for an aggregate offering price of up to $300.0 million. The 2021 Sales Agreement provides that the Sales Agents were entitled to compensation in an amount equal to up to 3.0% of the gross sales proceeds of any common stock sold through the Sales Agents under the 2021 Sales Agreement. During the three months ended March 31, 2024, the Company sold 543,620 shares of its common stock under the 2021 Sales Agreement at a weighted average price of $9.76 per share, resulting in aggregate net proceeds of $5.2 million. During the year ended December 31, 2023, the Company sold 875,305 shares of its common stock under the 2021 Sales Agreement at a weighted average price of $6.33 per share, resulting in aggregate net proceeds of $5.5 million. The registration statement relating to the shares of common stock issuable under the 2021 Sales Agreement has expired, and in August 2024 we terminated the 2021 Sales Agreement.

During the three months ended March 31, 2023, the Company issued 760,083 shares of common stock pursuant to the securities class action settlement, as described in Note 11.

Stock Options and Restricted Stock Units

The Board of Directors adopted the 2023 Omnibus Incentive Plan (the “2023 Plan”) on March 24, 2023, pursuant to which the Company may grant stock options, restricted stock awards, restricted stock units ("RSUs") and other stock-based awards or short-term cash incentive awards to employees, directors and consultants.

The 2023 Plan was approved by stockholders on May 16, 2023. The aggregate number of shares of the Company’s common stock that may be issued under the 2023 Plan will not exceed the sum of 1,166,666 shares plus any shares that may return from time to time from the 2016 Omnibus Incentive Plan (as amended, the “2016 Plan”) as a result of expirations, terminations or forfeitures of awards outstanding under the 2016 Plan as of May 16, 2023. At June 30, 2024, the Company had 800,051 shares of common stock available for future grant under the 2023 Plan, 188,804 shares underlying outstanding RSUs and 276,163 shares underlying options outstanding to purchase common stock under the 2023 Plan. The awards granted and available for future grant under the 2023 Plan generally vest over three years and have a maximum contractual term of ten years. The 2023 Plan terminates by its terms on March 24, 2033.

At June 30, 2024, the Company had 142,295 shares underlying outstanding but unvested RSUs and options outstanding to purchase 947,606 shares of common stock under the 2016 Plan. The outstanding awards granted under the 2016 Plan generally vest over three years and have a maximum contractual term of ten years. Following adoption of the 2023 Plan, no further awards may be made under the 2016 Plan, but outstanding awards continue to be governed by their existing terms.

On June 24, 2022, the Company's board of directors adopted a stock-based incentive plan (the "2022 Inducement Plan"), which provides for the discretionary grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, RSU awards, performance awards, and other awards to individuals as a material inducement to entering into employment with the Company. The aggregate number of shares of the Company’s common stock that may be issued under the 2022 Inducement

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Plan will not exceed 166,666 shares. At June 30, 2024, the Company had 110,527 shares of common stock available for future grant under the 2022 Inducement Plan, 10,274 shares underlying outstanding but unvested RSUs and options outstanding to purchase 38,318 shares of common stock under the 2022 Inducement Plan. The 2022 Inducement Plan can be terminated by the Company's board of directors at any time.

The Amended and Restated 2007 Omnibus Incentive Plan (the "2007 Incentive Plan") was adopted on March 31, 2007 and terminated by its terms on March 31, 2017. At June 30, 2024, the Company had options outstanding to purchase 97,618 shares of common stock under the 2007 Incentive Plan. The outstanding awards granted under the 2007 Incentive Plan are fully vested and generally have a maximum contractual term of ten years.

8. Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. The outstanding Pre-Funded Warrants (see Note 7) are included in the weighted-average common shares outstanding in the basic net loss per share calculation for the three and six months ended June 30, 2024 given their nominal exercise price.

Diluted net loss per share is calculated in accordance with the treasury stock method for the outstanding stock options and RSUs and reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted to common stock. The dilutive impact of the Notes previously issued by the Company (discussed in Note 6) was considered using the "if-converted" method. The calculation of diluted net loss per share requires that, to the extent the average market price of the underlying shares for the reporting period exceeds the exercise price of the options or other securities and the presumed exercise of such securities are dilutive to net loss per share for the period, an adjustment to the net loss used in the calculation is required to remove the change in fair value of such securities from the numerator for the period. Likewise, an adjustment to the denominator is required to reflect the related dilutive shares, if any. For the three and six months ended June 30, 2024 and 2023, basic and diluted net loss per share were the same, as the assumed exercise or settlement of stock options, service-based RSUs, performance-and market-based RSUs and the potentially dilutive shares issuable upon conversion of the Notes prior to their repayment on March 1, 2024 would have been anti-dilutive.

Basic and diluted net loss per share for the three and six months ended June 30, 2024 and 2023 are calculated as follows:


	Three Months Ended June 30,
	2024		2023
Numerator:
Net loss	$	(32,237,098)	$	(35,534,533)
Denominator:
Shares used to compute net loss per share, basic and diluted
Weighted-average common shares outstanding	25,461,260		22,029,486
Weighted-average pre-funded warrants	1,736,542		—
Weighted-average common shares outstanding used to compute basic and diluted net loss per share	27,197,802		22,029,486
Net loss per share
Basic and diluted	$	(1.19)	$	(1.61)

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	Six Months Ended June 30,
	2024		2023
Numerator:
Net loss	$	(62,706,969)	$	(76,183,850)
Denominator:
Shares used to compute net loss per share, basic and diluted
Weighted-average common shares outstanding	24,376,386		21,784,343
Weighted-average pre-funded warrants	868,271		—
Weighted-average common shares outstanding used to compute basic and diluted net loss per share	25,244,657		21,784,343
Net loss per share
Basic and diluted	$	(2.48)	$	(3.50)

The following table summarizes potential shares of common stock that were excluded from the diluted net loss per share calculation because of their anti-dilutive effect:


	Three and Six Months Ended June 30
	2024	2023
Options to purchase common stock	1,359,705	1,263,891
Service-based restricted stock units	341,373	305,434
Performance-and market-based restricted stock units	82,000	—
Convertible preferred stock	275	275
Convertible notes	—	254,165


Total	1,783,353	1,823,765

9. Stock-Based Compensation

The Company incurs stock-based compensation expense related to service-based RSUs, performance-based RSUs and stock options. The fair value of restricted stock is determined by the closing price of the Company's common stock reported on the Nasdaq Capital Market on the date of grant. The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions, including the expected stock price volatility and expected option life. The Company amortizes the fair value of the awards on a straight-line basis over the requisite vesting period of the awards. Expected volatility is based on historical volatility. The expected life of options granted is based on historical expected life. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield is based on the fact that no dividends have been paid historically and none are currently expected to be paid in the foreseeable future. The Company recognizes forfeitures as they occur.

The weighted average assumptions used in the Black-Scholes model for option grants to employees and directors are presented below:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Risk-free interest rate	4.42%	3.45%	4.23%	4.05%
Expected volatility	106%	101%	105%	100%
Expected life in years	5.5	5.6	5.5	5.5
Dividend yield	—	—	—	—

Total employee and director stock-based compensation expense recognized in the condensed consolidated statements of operations for the three and six months ended June 30, 2024 was $1.5 million and $3.9 million, respectively, of which $581,000

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and $1.6 million, respectively, was included in research and development expenses, and $890,000 and $2.3 million, respectively, was included in general and administrative expenses. Total employee and director stock-based compensation expense recognized in the condensed consolidated statements of operations for the three and six months ended June 30, 2023 was $2.8 million and $6.4 million, respectively, of which $1.3 million and $2.7 million, respectively, was included in research and development expenses, and $1.5 million and $3.7 million, respectively, was included in general and administrative expenses.

At June 30, 2024, there was $3.7 million of total unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.6 years.

The weighted average grant date fair value per share, calculated using the Black-Scholes option pricing model, was $8.80 and $6.96 for employee and director stock options granted during the three and six months ended June 30, 2024, respectively, and $7.20 and $11.28 for the three and six months ended June 30, 2023, respectively.

At June 30, 2024, there was $3.4 million of total unrecognized compensation expense related to unvested service-based RSUs, which is expected to be recognized over a weighted-average period of 1.7 years.

The weighted average grant date fair value per share was $11.00 and $8.61 for service-based RSUs granted during the three and six months ended June 30, 2024, respectively and $9.24 and $10.32 for the three and six months ended June 30, 2023, respectively.

The fair value of stock options granted to non-employees was estimated using the Black-Scholes pricing model. Total stock-based compensation expense for stock options and RSUs granted to non-employees for the three and six months ended June 30, 2024 was $43,000 and $146,000, respectively. Total stock-based compensation expense for stock options and RSUs granted to non-employees for the three and six months ended June 30, 2023 was $146,000 and $366,000, respectively.

Performance-and Market-Based RSUs

On May 23, 2024, the Company granted 82,000 performance-and market-based RSUs (such performance-based grants, the "PSU Awards") to key employees under the 2023 Plan. Each PSU was expressed as a target number of RSUs. With respect to the PSU Awards, the Company's Board of Directors established specified performance goals and corresponding performance periods over which the goals must be attained, the satisfaction of which are conditions to earning the PSU Awards and vesting of the underlying RSUs.

Of the target number of RSUs underlying each PSU Award, up to 70% (the "Milestone-based RSUs") will vest based on the achievement of specified milestones relating to the development, regulatory status and commercialization of the Company’s lead product candidate INO-3107 (each, a "Milestone," and collectively, the "Milestones"). Each Milestone has a specified deadline for achievement ranging between the end of 2025 and the end of 2027.

The remaining 30% of the target number of RSUs underlying each PSU Award (the "Market-based RSUs") will be eligible to vest based on the Company’s achievement of total stockholder return relative to a peer group consisting of companies in the Russell 2000 Biotechnology Subsector index (the “Relative TSR”) over the period beginning on June 1, 2024 and ending on December 31, 2027 (the “Performance Period”), expressed as a percentile ranking.

The number of Marked-based RSUs, if any, actually earned based on the achievement of the Relative TSR goal may range from 50% of the target number of RSUs for performance at a specified threshold percentile, to 100% of the target number of RSUs for performance at the target percentile, and up to 150% of the target number of RSUs for performance at or above a specified maximum percentile. In the event that actual Relative TSR performance is between the threshold and target levels or between the target and maximum levels, the number of RSUs earned based on Relative TSR will be determined based on linear interpolation between the specified percentiles. If the Company’s actual Relative TSR performance is below the threshold percentile, then no RSUs would be earned based on Relative TSR. The number of RSUs earned based on Relative TSR may not exceed the target number of RSUs eligible to vest based on Relative TSR if the Company’s total stockholder return is negative for the Performance Period.

The Company values the Milestone-based RSUs based on the grant date closing price per share. The Company recognizes stock-based compensation expense over the performance period, if it is probable that the performance condition will be achieved. Adjustments to stock-based compensation expense are made, as needed, each reporting period based on changes in the Company's estimate of the number of units that are probable of vesting.

The Company values the Market-based RSUs on the grant date using the Monte Carlo simulation method, a generally accepted statistical technique used to simulate a range of possible future stock prices for the Company and the peer group. The determination of fair value is affected by the Company's stock price and a number of assumptions including the expected volatility and the risk-free interest rate. The Company will recognize stock-based compensation expense ratably over the performance period of the award. The market-based RSUs will cliff-vest at the end of the three-year period ranging from 0 percent to 150 percent of the target number of awards granted.

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The significant assumptions used in the Monte Carlo simulation method were as follows:


Risk-free interest rate			4.60%
Expected volatility			90%
Expected life in years			3.61
Dividend yield			—

The grant date fair value of the Milestone-based RSUs was $629,000 based on the grant date closing price per share of $10.96. As of June 30, 2024, the underlying performance milestones of the Milestone-based RSUs were determined to be not probable of achievement, and no stock-based compensation expense was recognized for the three and six months then ended.

The grant date fair value of the Market-based RSUs was $263,000 based on the fair value of $10.69 per share as determined using the Monte Carlo simulation method. For both the three and six months ended June 30, 2024, the Company recognized $8,000 in stock-based compensation for the Market-based RSUs.

10. Related Party Transactions

Plumbline Life Sciences, Inc.

The Company owned 597,808 shares of common stock in PLS as of June 30, 2024, representing an ownership interest of 17.8%, and one of the Company's directors, Dr. David B. Weiner, acts as a consultant to PLS.

The Wistar Institute

Dr. Weiner is a director of the Vaccine Center of The Wistar Institute ("Wistar") and an Executive Vice President of Wistar.

In March 2016, the Company entered into collaborative research agreements with Wistar for preventive and therapeutic DNA-based immunotherapy applications and products developed by Dr. Weiner and Wistar for the treatment of cancers and infectious diseases. Under the terms of the agreement, the Company reimbursed Wistar for all direct and indirect costs incurred in the conduct of the collaborative research, not to exceed $3.1 million during the five-year term of the agreements. In March 2021, upon expiration of the March 2016 agreements, the Company entered into new collaborative research agreements with Wistar with the same terms. The Company has the exclusive right to in-license new intellectual property developed under this agreement.

In 2020, the Company received a $10.7 million sub-grant through Wistar, which was amended in 2021 to $13.6 million, for the preclinical development and translational studies of DMAbs as countermeasures for COVID-19, with funding extended through August 2024. The sub-grant also includes an option for an additional $1.6 million in funding through September 2025.

In December 2022, the Company received a $1.2 million sub-grant through Wistar, which was amended in 2024 to $2.4 million with funding through November 2024, with an option for an additional $4.2 million in funding that extends the sub-grant through November 2027. The Company will support the Wistar lead consortium in the research and development of synthetic DNA-launched nanoparticles (dLNPs) for vaccination against HIV infection.

Deferred grant funding recognized from Wistar and recorded as contra-research and development expense is related to work performed by the Company on the research sub-contract agreements. For the three and six months ended June 30, 2024, the Company recorded $9,000 and $149,000, respectively, and for the three and six months ended June 30, 2023, the Company recorded $179,000 and $390,000, respectively, as contra-research and development expense from Wistar.

Research and development expenses recorded from Wistar relate primarily to collaborative research agreements. Research and development expenses recorded from Wistar for the three and six months ended June 30, 2024 were $455,000 and $1.0 million, respectively. Research and development expenses recorded from Wistar for the three and six months ended June 30, 2023 were $510,000 and $932,000, respectively. At June 30, 2024 and December 31, 2023, the Company had an accounts receivable balance of $1.8 million and $2.4 million, respectively, and an accounts payable and accrued liability balance of $1.9 million and $1.1 million, respectively, related to Wistar. At each of June 30, 2024 and December 31, 2023, the Company recorded $22,000 as deferred grant funding on its condensed consolidated balance sheet related to Wistar.

11. Commitments and Contingencies

Leases

The Company leases approximately 56,600 square feet of office, laboratory, and manufacturing space in San Diego, California and approximately 57,400 square feet of office space in Plymouth Meeting, Pennsylvania under various non-cancellable operating lease agreements with remaining lease terms as of June 30, 2024 of 2.9 to 5.5 years, which represent the

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non-cancellable periods of the leases. The Company has excluded the extension options from its lease terms in the calculation of future lease payments as they are not reasonably certain to be exercised. The Company's lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms as well as payments for common area maintenance and administrative services. The Company has received customary incentives from its landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases.

In November 2023, the Company entered into a lease agreement for research and development laboratory space in San Diego, California. The total space under the lease is approximately 5,600 square feet. The term of the lease commenced on February 10, 2024 and the initial term is 4.3 years.

The base rent adjusts periodically throughout the term of the lease. Rent payments under the lease will include base rent with an annual increase of approximately three percent, and additional monthly fees to cover the Company's share of certain facility expenses, including utilities, property taxes, insurance and maintenance.

The Company performed an evaluation of its contracts with customers and suppliers in accordance with ASC Topic 842 and determined that, except for the real estate leases described above and various copier leases, none of its other contracts contain a right-of-use asset.

Operating lease right-of-use assets and liabilities on the condensed consolidated balance sheet represents the present value of the remaining lease payments over the remaining lease terms. Payments for additional monthly fees to cover the Company's share of certain facility expenses are not included in operating lease right-of-use assets and liabilities. The Company uses its incremental borrowing rate to calculate the present value of its lease payments, as the implicit rates in the leases are not readily determinable.

As of June 30, 2024, the maturities of the Company's operating lease liabilities were as follows:


Remainder of 2024	$	1,696,000
2025	3,467,000
2026	3,555,000
2027	2,955,000
2028	2,310,000
Thereafter	2,132,000
Total remaining lease payments	16,115,000
Less: present value adjustment	(3,135,000)
Total operating lease liabilities	12,980,000
Less: current portion	(2,322,000)
Long-term operating lease liabilities	$	10,658,000

Weighted-average remaining lease term	4.8 years
Weighted-average discount rate	9.0%

Lease costs included in operating expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2024 were $521,000 and $1.4 million, respectively. Lease costs included in operating expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2023 were $856,000 and $1.7 million, respectively. Operating lease costs consisting of the fixed lease payments included in operating lease liabilities are recorded on a straight-line basis over the lease terms. Variable lease costs are recorded as incurred.

In the third and fourth quarters of 2023, the Company entered into agreements to sublease a total of approximately 4,400 and 7,000 square feet, respectively, in its Plymouth Meeting headquarters, in each case with sublease terms through December 31, 2026.

In the fourth quarter of 2019, the Company entered into two agreements to sublease a total of approximately 13,500 square feet in its Plymouth Meeting headquarters, with one sublease term through March 31, 2025 and the other month-to-month.

In the normal course of business, the Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of the Company's obligations and the unique facts and circumstances

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involved in each particular agreement. Historically, payments made by the Company under these types of agreements have not had a material effect on its business, consolidated results of operations or financial condition.

Legal Proceedings

Securities Litigation

In March 2020, a purported shareholder class action complaint, McDermid v. Inovio Pharmaceuticals, Inc. and J. Joseph Kim, was filed in the United States District Court for the Eastern District of Pennsylvania, naming the Company and its former President and Chief Executive Officer as defendants. The lawsuit alleged that the Company made materially false and misleading statements in violation of certain federal securities laws. The plaintiffs sought unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including reasonable attorneys’ fees. The plaintiffs’ complaint was later amended to include certain of the Company’s other officers as defendants. After additional motions were filed in the case, in June 2022 the parties negotiated an agreement in principle to settle the shareholder class action complaint, which was approved by the court in January 2023. Under the settlement, the Company agreed to pay $30.0 million in cash and $14.0 million in shares of its common stock to settle all outstanding claims. The Company's insurance carriers paid the $30.0 million cash component of the settlement. During the three months ended March 31, 2023, the Company issued 760,083 shares of common stock pursuant to the securities class action settlement.

Shareholder Derivative Litigation

In April 2020, a purported shareholder derivative complaint, Behesti v. Kim, et al., was filed in the United States District Court for the Eastern District of Pennsylvania, naming eight current and former directors of the Company as defendants. The lawsuit asserted state and federal claims and was based on the same alleged misstatements as the shareholder class action complaint described above. The lawsuit accused the Company’s board of directors of failing to exercise reasonable and prudent supervision over the Company’s management, policies, practices, and internal controls. The plaintiff sought unspecified monetary damages on behalf of the Company as well as governance reforms. Between June 2020 and August 2020, additional shareholder derivative complaints were filed and later consolidated by the court.

In March 2022, an additional shareholder derivative complaint was filed in the Delaware Court of Chancery, asserting substantially similar claims as those in the consolidated derivative action. In May 2022, the Delaware Court of Chancery entered a stay of the litigation.

In March 2023, the parties submitted a joint status report to the Court of Chancery reporting that the parties agreed to a settlement in principle, which also provided for the resolution of the consolidated derivative action and certain stockholder demands.

In April 2023, the plaintiffs in the consolidated derivative action filed a motion for preliminary approval of settlement with the United States District Court for the Eastern District of Pennsylvania. The proposed settlement provided for resolution of the consolidated derivative action, the derivative action pending in the Delaware Court of Chancery, and certain stockholder demands.

In June 2023, the court entered an order preliminarily approving the proposed settlement of the derivative claims, in accordance with a Stipulation of Settlement. The Stipulation of Settlement contemplated that, following the settlement hearing and the final approval of the settlement by the court, the Company would implement certain corporate governance reforms described in the Stipulation of Settlement. The preliminary order also approved the form and manner of the notice of the Settlement. As part of the Settlement, in July 2023 the Company paid $1.2 million to plaintiffs’ counsel for their fees and expenses. In October 2023, the court entered an order and final judgment approving the Settlement, which became effective in November 2023. The Company has implemented the corporate governance reforms in response to the provisions of the Stipulation of Settlement.

VGXI Litigation

In June 2020, the Company filed a complaint in the Court of Common Pleas of Montgomery County, Pennsylvania against VGXI, Inc. and GeneOne Life Science, Inc., or GeneOne, and together with VGXI, Inc. collectively referred to as VGXI, alleging that VGXI had materially breached the Company’s supply agreement with them. The complaint seeks declaratory judgments, specific performance of the agreement, injunctive relief, an accounting, damages, attorneys’ fees, interest, costs and other relief from VGXI. In June 2020, the Company filed a petition for preliminary injunction, which was denied.

Following an appeal by the Company, in July 2020, VGXI filed counterclaims against the Company, alleging that the Company had breached the supply agreement, as well as misappropriation of trade secrets and unjust enrichment. The counterclaims seek injunctive relief, damages, attorneys’ fees, interest, costs and other relief from the Company. VGXI also filed a third-party complaint against Ology Bioservices, Inc., a contract manufacturing organization that the Company had engaged to provide services similar to those that were being provided by VGXI. The Company filed an answer to VGXI’s

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counterclaims, disputing the allegations and the claims raised in VGXI’s filing. In October 2020, the Company filed a notice of discontinuance of appeal with the Pennsylvania Superior Court. A trial date for the litigation has not been set.

The Company intends to aggressively prosecute the claims set forth in its complaint against VGXI and to vigorously defend itself against VGXI’s counterclaims.

GeneOne Litigation

In December 2020, GeneOne filed a complaint in the Court of Common Pleas of Montgomery County, Pennsylvania against the Company, alleging that the Company had breached the CELLECTRA Device License Agreement, or the Agreement, between the Company and GeneOne. The Company terminated the Agreement in October 2020. The complaint asserts claims for breach of contract, declaratory judgment, unfair competition, and unjust enrichment. The complaint seeks injunctive relief, an accounting, damages, disgorgement of profits, attorneys’ fees, interest, and other relief from the Company. The Company filed preliminary objections to the complaint, which were overruled by the court. In September 2021, the Company filed an answer to the complaint, new matter, and counterclaims. The Company’s counterclaims allege that GeneOne breached the Agreement and assert claims for breach of contract and declaratory judgment. The counterclaims seek damages, interest, expenses, attorney’s fees, and costs. In October 2021, GeneOne filed its answer to the Company’s counterclaims and new matter. On February 29, 2024, the Company filed a motion for summary judgment. On April 1, 2024, GeneOne filed an opposition to the Company’s motion for summary judgment. On June 28, 2024, the court denied the motion for summary judgment. A trial date for this litigation has not been set.

The Company intends to aggressively prosecute the claims set forth in its counterclaims against GeneOne and to vigorously defend itself against the claims in GeneOne’s complaint.

Other Matters

From time to time, the Company may be involved in disputes, including litigation, relating to claims arising out of operations in the normal course of its business. Any of these claims could subject the Company to costly legal expenses and, while the Company generally believes that it has adequate insurance to cover many different types of liabilities, its insurance carriers may deny coverage or its policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on the Company's consolidated results of operations and financial position. Additionally, any such claims, whether or not successful, could damage the Company's reputation and business. Except as described above, the Company is not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would be reasonably expected to have a material adverse effect on the Company’s consolidated results of operations or financial position.

12. Collaborative Agreements

Advaccine Biopharmaceuticals Suzhou Co., Ltd.

On December 31, 2020, the Company entered into a Collaboration and License Agreement with Advaccine Biopharmaceuticals Suzhou Co., Ltd. (“Advaccine”), which was amended and restated on June 7, 2021 (as amended and restated, the “Advaccine Agreement”). Under the terms of the Advaccine Agreement, the Company granted to Advaccine the exclusive right to develop, manufacture and commercialize the Company’s vaccine candidate INO-4800 within the territories of China, Taiwan, Hong Kong and Macau (referred to collectively as “Greater China”) and 33 additional countries in Asia. The June 2021 amendment related to a collaboration between the Company and Advaccine to jointly conduct a global Phase 3 segment of the Company’s clinical trial of INO-4800 that was planned. The parties were jointly participating in the trial and were to equally share the global development costs for the trial, including the Company’s manufacturing costs to supply INO-4800. Advaccine agreed to be fully responsible for conducting the trial in Greater China, including its costs and expenses incurred. In the fourth quarter of 2022, the Company discontinued its internally funded efforts to develop INO-4800 as a COVID-19 heterologous booster vaccine. Advaccine continues to develop INO-4800 with its own resources under the terms of the Advaccine Agreement.

In connection with the June 2021 amendment, the Company determined that the global Phase 3 trial component of the agreement was a collaboration and not a contract with a customer and therefore accounted for the June 2021 amendment under ASC Topic 808. Reimbursements from Advaccine were recognized as contra-research development expense on the condensed consolidated statement of operations once earned and collectibility was assured. For the three and six months ended June 30, 2023, the Company received funding of $1.2 million and $2.4 million, respectively, from Advaccine that was recorded as contra-research and development expense. No funding was received during the three and six months ended June 30, 2024.

ApolloBio Corporation

On December 29, 2017, the Company entered into an Amended and Restated License and Collaboration Agreement (the "ApolloBio Agreement"), with ApolloBio Corporation ("ApolloBio"), which was amended on June 14, 2023. Under the terms of the ApolloBio Agreement, the Company granted to ApolloBio the exclusive right to develop and commercialize VGX-3100,

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its DNA immunotherapy product candidate designed to treat pre-cancers caused by HPV, within the agreed upon territories.

The Company is entitled to receive up to an aggregate of $20.0 million, less required income, withholding or other taxes, upon the achievement of specified milestones related to the regulatory approval of VGX-3100 in accordance with the ApolloBio Agreement. In the event that VGX-3100 is approved for marketing, the Company will be entitled to receive royalty payments based on a tiered percentage of annual net sales, with such percentage being in the low- to mid-teens, subject to reduction in the event of generic competition in a particular territory. ApolloBio’s obligation to pay royalties will continue for 10 years after the first commercial sale in a particular territory or, if later, until the expiration of the last-to-expire patent covering the licensed products in the specified territory.

During the three and six months ended June 30, 2024, the Company received funding of $101,000 from the ApolloBio Agreement that was recorded as revenue. There were no significant reimbursable program costs under the ApolloBio Agreement during the three and six months ended June 30, 2023.

Coalition for Epidemic Preparedness Innovations

The Company previously entered into agreements with CEPI, pursuant to which the Company intended to develop vaccine candidates against Lassa fever and MERS. As part of the arrangement between the parties, CEPI agreed to fund up to an aggregate of $56 million of costs over a five-year period for preclinical studies, as well as planned Phase 1 and Phase 2 clinical trials, to be conducted by the Company and collaborators, with funding from CEPI based on the achievement of identified milestones. In November 2022, the Company announced that it and CEPI would discontinue the development of these product candidates targeting Lassa fever and MERS, following the initial analysis of data from the studies conducted by the Company and funded by CEPI. For both the three and six months ended June 30, 2024, the Company received no funding related to these grants. During the three and six months ended June 30, 2023, the Company received funding of $303,000 and $1.9 million, respectively, related to these grants and recorded those payments as contra-research and development expense. As of each of June 30, 2024 and December 31, 2023, the Company had $2.2 million recorded as an accrued liability on the condensed consolidated balance sheet related to these CEPI grants.

In January 2020, CEPI awarded the Company a grant of up to $9.0 million to support preclinical and clinical development of INO-4800 through Phase 1 human testing in the United States. In April 2020, CEPI awarded the Company a grant of $6.9 million to work with the International Vaccine Institute ("IVI") and the Korea National Institute of Health ("KNIH") to conduct clinical trials of INO-4800 in South Korea, a grant of $5.0 million to accelerate development of the Company's next-generation intradermal electroporation device, known as CELLECTRA 3PSP, for the intradermal delivery of INO-4800, and a grant of $1.3 million to support large-scale manufacturing of INO-4800. For both the three and six months ended June 30, 2024 the Company received no funding from CEPI related to these grants for INO-4800. During the three and six months ended June 30, 2023, the Company received funding of $135,000 and $188,000, respectively, from CEPI related to these grants for INO-4800 and recorded such amounts as contra-research and development expense.

Bill & Melinda Gates Foundation

In October 2018, Gates awarded and funded the Company a grant of $2.2 million to advance the development of DMAbs to address issues in infectious disease prevention and therapy. This technology has high relevance for the control of influenza and HIV. This next-generation approach to the delivery of monoclonal antibodies would make the technology accessible to low and middle-income countries. In August 2019, Gates funded an additional $1.1 million for the project. During the three and six months ended June 30, 2024, the Company recorded $0 and $39,000, respectively, as contra-research and development expense related to the Gates DMAb grant. During the three and six months ended June 30, 2023, the Company recorded $12,000 and $70,000, respectively, as contra-research and development expense related to the Gates dMAb grant. As of June 30, 2024, the Company had $49,000 recorded as an accrued liability on the condensed consolidated balance sheet related to the grant.

13. Income Taxes

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. Due to the adoption of ASU 2019-12 which removes the exception under ASC 740-20-45-7 to consider all sources of income in order to determine the tax benefit resulting from a loss from continuing operations, ASC 740-20-45-7 no longer applies.

For the six months ended June 30, 2024 and 2023, the Company did not record any income tax provision/(benefit) due to the Company’s history of net operating losses generated and the maintenance of a full valuation allowance against its net deferred tax assets.

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14. Geneos Therapeutics, Inc.

In 2016, the Company formed Geneos Therapeutics to develop and commercialize neoantigen-based personalized cancer therapies. Geneos was considered a variable interest entity (VIE) for which the Company was the primary beneficiary. The Company's Chief Scientific Officer Dr. Laurent Humeau is on the Board of Directors of Geneos. The Company's director Dr. David B. Weiner is the Chairman of the Scientific Advisory Board of Geneos.

Following a series of financing transactions through June 2020, the Company held less than a majority of the outstanding equity of Geneos on an as-converted to common stock basis, which triggered a VIE reconsideration, as the Company no longer held a controlling financial interest. Based on the Company’s assessment, Geneos continued to be a VIE as it did not have sufficient equity at risk to finance its activities without additional subordinated financial support. However, the Company was not the primary beneficiary of Geneos, as it did not have the power to direct the activities that most significantly impact Geneos’ economic performance. Accordingly, the Company deconsolidated its investment in Geneos in 2020.

Following the deconsolidation, the Company accounts for its common stock investment in Geneos, in which the Company lacks control but does have the ability to exercise significant influence over operating and financial policies, using the equity method. Generally, the ability to exercise significant influence is presumed when the investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. The Company's equity method investments are reviewed for indicators of impairment at each reporting period and are written down to fair value if there is evidence of a loss in value that is other-than-temporary. Any difference between the carrying amount of the Company’s investment and the amount of underlying equity in Geneos’ net assets is amortized into income or expense accordingly. There were no basis differences identified as of the deconsolidation date that would need to be amortized.

Upon deconsolidation, the Company recorded its investment at fair value. The Company determined that its investment in Geneos did not have a readily determinable fair value and therefore elected the measurement alternative in ASC 321 to subsequently record the investment at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. When fair value becomes determinable, from observable price changes in orderly transactions, the Company’s investment is marked to fair value. There have been no observable price changes or impairments identified since the deconsolidation date.

The Company’s share of net losses of Geneos for the three months ended March 31, 2021 was $1.5 million; however, only $434,000 was recorded, reducing the Company's total investment in Geneos to $0. Of the total amount, $819,000 was allocated to the equity method investment, reducing the balance to $0 as of March 31, 2021. The remaining $4.2 million loss was allocated to the Company’s Series A and Series A-1 preferred stock investment in Geneos, on a ratable basis, reducing the balance to $0 as of March 31, 2021.

In February 2021, Geneos completed a second closing of its Series A-1 preferred stock financing, in which the Company did not participate. Following this transaction, the Company held approximately 35% of the outstanding equity, on an as-converted to common stock basis.

In March 2022, Geneos completed the closing of a Series A-2 preferred stock financing. The Company invested $2.0 million in the Series A-2 preferred stock financing, which was led by outside investors. The closing date of this transaction was determined to be a VIE reconsideration event; based on the Company’s assessment, Geneos continued to be a VIE as it did not have sufficient equity at risk to finance its activities without additional subordinated financial support. The Company continued to not be the primary beneficiary of Geneos, as it did not have the power to direct the activities that most significantly impact Geneos’s economic performance and should not consolidate Geneos. Following this transaction, the Company held approximately 28% of the outstanding equity, on an as-converted to common stock basis. Accordingly, the Company continued to account for its common stock investment in Geneos as an equity method investment under ASC 323 and its preferred stock investments as equity securities under ASC 321.

The fair value of Geneos’s Series A-2 preferred stock was based on the per share price paid by third-party investors. The Company concluded that its Series A-2 preferred stock investment was a similar financial instrument as its Series A-1 preferred stock, and therefore remeasured the carrying value of the Series A-1 preferred stock investment at the Series A-2 preferred stock price, resulting in a gain on remeasurement of $165,000.

The Company recorded its current and accumulated share of net losses of Geneos of $2.2 million, which was allocated to the Series A-1 and Series A-2 preferred stock investment in Geneos, thereby reducing the balance to $0 as of March 31, 2022.

The Company has not made any further investment in Geneos subsequent to March 31, 2022. The Company will not reduce its investment below $0 and will not record its share of further net losses of Geneos as the Company has no obligation to fund Geneos.

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In 2023, Geneos completed the closing of its Series A-3 preferred stock financing, in which the Company did not participate. Following this transaction, the Company held approximately 23% of the outstanding equity of Geneos on an as-converted to common stock basis.

The Company continues to exclusively license its SynCon® immunotherapy and CELLECTRA technology platform to Geneos to be used in the field of personalized, neoantigen-based therapy for cancer. The license agreement provides for potential royalty payments to the Company in the event that Geneos commercializes any products using the licensed technology. The Company is not obligated to use any of its assets to fund the future operations of Geneos.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report contains forward-looking statements, as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

Although we believe that the expectations reflected in the forward-looking statements are reasonable based on our current expectations and projections, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We are under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report to conform such statements to actual results or to changes in our expectations.

The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report and our audited consolidated financial statements and related notes for the year ended December 31, 2023 included in our Annual Report on Form 10-K, or 2023 Annual Report, filed with the U.S. Securities and Exchange Commission, or SEC, on March 6, 2024. Readers are also urged to carefully review and consider the various disclosures made by us that attempt to advise interested parties of the factors that affect our business, including without limitation the disclosures made in Item 1A of Part II of this Quarterly Report under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and the disclosures made in our 2023 Annual Report under the caption “Risk Factors” and in our audited consolidated financial statements and related notes.

Risk factors that could cause actual results to differ from those contained in the forward-looking statements include but are not limited to: our history of losses; our lack of products that have received regulatory approval; uncertainties inherent in clinical trials and product development programs, including but not limited to the fact that preclinical and clinical results may not be indicative of results achievable in other trials or for other indications, that the studies or trials may not be successful or achieve desired results, that preclinical studies and clinical trials may not commence, have sufficient enrollment or be completed in the time periods anticipated, that results from one study may not necessarily be reflected or supported by the results of other similar studies, that results from an animal study may not be indicative of results achievable in human studies, that clinical testing is expensive and can take many years to complete, that the outcome of any clinical trial is uncertain and failure can occur at any time during the clinical trial process, and that our proprietary smart device technology and DNA medicine candidates may fail to show the desired safety and efficacy traits in clinical trials; the availability of funding; the ability to manufacture our DNA medicine candidates; the availability or potential availability of alternative therapies or treatments for the conditions targeted by us or our collaborators, including alternatives that may be more efficacious or cost-effective than any therapy or treatment that we and our collaborators hope to develop; our ability to receive development, regulatory and commercialization event-based payments under our collaborative agreements; whether our proprietary rights are enforceable or defensible or infringe or allegedly infringe on rights of others or can withstand claims of invalidity; and the impact of government healthcare laws and proposals.

INOVIO, CELLECTRA, the INOVIO logo, and our other trademarks or service marks appearing in this Quarterly Report are our property. Solely for convenience, the trademarks and trade names in this report are referred to without the ® and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. Products or service names of other companies mentioned in this Quarterly Report may be trademarks, trade names or service marks of their respective owners.

References herein to “we,” “our,” “us,” “INOVIO” or the “Company” refer to INOVIO Pharmaceuticals, Inc. and its consolidated subsidiaries. References herein to “DNA medicines” refers to our product candidates in development for diseases associated with human papillomavirus (HPV), cancer, and infectious diseases.

Overview

We are a clinical-stage biotechnology company focused on developing and commercializing DNA medicines to help treat and protect people from diseases associated with human papillomavirus (HPV), cancer, and infectious diseases. Our platform harnesses the power of in vivo protein production, featuring optimized design and delivery of DNA medicines that teach the body to manufacture its own disease-fighting tools.

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We use proprietary technology to design DNA plasmids which are small circular DNA molecules that work like software the body’s cells can download to produce specific proteins to target and fight disease. Our proprietary investigational CELLECTRA delivery devices are designed to optimally deliver the plasmids into the body's cells.

Our lead candidate is INO-3107 for the treatment of recurrent respiratory papillomatosis, or RRP, a life-long, rare disease characterized by the growth of small tumors, or papillomas, in the respiratory tract primarily caused by HPV-6 and/or HPV-11 genotypes. Although mostly benign, these papillomas can cause severe, sometimes life-threatening airway obstruction and respiratory complications. The standard of care for RRP is surgery. The most widely cited U.S. epidemiology data, published in 1995, estimated that there were 14,000 active cases for both adults and juveniles, and about 1.8 new cases per 100,000 adults each year.

In our completed Phase 1/2 clinical trial of INO-3107 for the treatment of HPV-6 and HPV-11-associated RRP, 81.3% (26/32) of patients experienced a reduction in the number of surgical interventions in the year following administration of INO-3107, when compared with the year prior to treatment. Of these 32 patients, nine did not require surgical intervention during or after the dosing window. Patients in the trial had a median range of 4 surgeries (2-8) in the year prior to dosing. There was a statistically significant median decrease of three surgical interventions when comparing the year following treatment to the year prior to treatment. Treatment with INO-3107 generated a strong immune response in the trial, inducing activated CD4 T cells and activated CD8 T cells with lytic potential. T-cell responses were also observed at Week 52, indicating a persistent cellular memory response. INO-3107 was well tolerated by participants in the trial, resulting in mostly low-grade (Grade 1) treatment-emergent adverse effects such as injection site pain and fatigue.

In the fourth quarter of 2023, we received feedback from the U.S. Food and Drug Administration, or FDA, that the data from this completed trial could be used to support the submission of a Biologic License Application, or BLA, for review under the FDA’s accelerated approval program. As part of submitting our BLA under the accelerated program, we will need to satisfy all FDA filing requirements and initiate a confirmatory clinical trial prior to BLA submission. We previously expected to be able to submit our BLA by the end of 2024; however, during our device testing process we have recently identified a manufacturing issue involving the single use disposable administration component of the CELLECTRA 5PSP device that we plan to use in the confirmatory trial. We are currently working to resolve the manufacturing issue, but we now expect that the timing for submission of the BLA will likely be delayed until mid-2025.

We are developing INO-3112, a DNA medicine candidate targeting HPV 16/18 combined with a DNA plasmid encoding for human IL-12 as an immune activator, for the treatment of oropharyngeal squamous cell carcinoma, or OPSCC, a type of head and neck cancer commonly known as throat cancer. The incidence of HPV-related throat cancer has increased rapidly in recent years in the United States, with an estimated 20,000 new cases each year. HPV-related throat cancer has surpassed cervical cancer as the most common HPV-related cancer. In the United States, men are four to five times more likely to be diagnosed with HPV-associated oropharyngeal cancers than women.

In January 2024, we announced a clinical collaboration and supply agreement with Coherus BioSciences, Inc. to evaluate the combination of INO-3112 and LOQTORZI (toripalimab-tpzi) in a clinical trial for patients with locoregionally advanced, high-risk, HPV16/18 positive OPSCC. Under the terms of the supply agreement, Coherus will provide LOQTORZI for a planned Phase 3 clinical trial. The manufacturing issue with the single use disposable administration component of the CELLECTRA 5PSP device that is impacting INO-3107 will also need be resolved before we can commence the Phase 3 trial with INO-3112.

We are developing INO-5401, an immunotherapy consisting of three DNA plasmids encoding for three tumor associated antigens, for the treatment of glioblastoma multiforme, or GBM, an aggressive type of brain cancer that accounts for more than 50% of all primary malignant brain tumors. GBM is one of the most complex, deadly, and treatment-resistant cancers. In the United States, nearly 15,000 people were expected to receive a GBM diagnosis in 2023, and it is estimated that more than 10,000 individuals will succumb to the disease each year.

In addition to our development efforts with the product candidates described above, we are actively developing or planning to develop DNA medicines for other indications, including HPV-related anal dysplasia; cancers in people with certain gene mutations; and a potential vaccine booster to protect against the Ebola virus. We were previously conducting clinical trials of a DNA medicine candidate for the treatment of HPV-related cervical high-grade squamous intraepithelial lesions, or HSIL, but announced in August 2023 that we were ceasing development for this indication in the United States. However, our collaborator ApolloBio Corporation continues to conduct a Phase 3 clinical trial of this candidate in China and plans to seek regulatory approval for and potentially commercialize the candidate in that jurisdiction.

Our partners and collaborators include Advaccine Biopharmaceuticals Suzhou Co, ApolloBio Corporation, AstraZeneca, The Bill & Melinda Gates Foundation (Gates), Coalition for Epidemic Preparedness Innovations (CEPI), Coherus Biosciences, Defense Advanced Research Projects Agency (DARPA), The U.S. Department of Defense (DoD), HIV Vaccines Trial Network, International Vaccine Institute (IVI), Kaneka Eurogentec, National Cancer Institute (NCI), National Institutes of Health (NIH), National Institute of Allergy and Infectious Diseases (NIAID), Plumbline Life Sciences, Regeneron

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Pharmaceuticals, Richter-Helm BioLogics, Thermo Fisher Scientific, the University of Pennsylvania, the Walter Reed Army Institute of Research, and The Wistar Institute.

All of our DNA medicine candidates are in the research and development phase. We have not generated any revenues from the sale of any products, and we do not expect to generate any material revenues unless and until we obtain marketing approval for and successfully commercialize INO-3107 and our other product candidates. We earn revenue from license fees and milestone revenue and collaborative research and development agreements and contracts. Our DNA medicine candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All DNA medicine candidates that we advance to clinical testing will require regulatory approval prior to commercial use, and will require significant costs for commercialization. We may not be successful in our research and development efforts, and we may never generate sufficient product revenue to be profitable.

As of June 30, 2024, we had an accumulated deficit of $1.7 billion. We expect to continue to incur substantial operating losses in the future due to our commitment to our research and development programs, the funding of preclinical studies, clinical trials and regulatory activities and the costs of general and administrative activities.

Critical Accounting Policies and Estimates

There have been no significant changes to our critical accounting estimates since December 31, 2023. For a description of our critical accounting estimates and significant judgments used in the preparation of our condensed consolidated financial statements, refer to Note 3 to our Condensed Consolidated Financial Statements included in this Quarterly Report, as well as Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report and Note 2 to our audited Consolidated Financial Statements contained in our 2023 Annual Report.

Results of Operations

Revenue. Total revenue was $101,000 for both the three and six months ended June 30, 2024, respectively, as compared to $226,000 and $341,000 for the three and six months ended June 30, 2023, respectively, all of which was derived under collaborative arrangements and other contracts.

Research and development expenses. Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, facilities expenses, overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to contract research organizations and other consultants, and outside expenses. We utilize a labor reporting system to record employee compensation on a project-by-project basis. Unallocated research and development expenses include engineering and device-related expenses that are not allocable to a specific project, as well as stock-based compensation, other employee-related expenses that are not related to a specific project, and facilities and depreciation expenses.

Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

The following table summarizes our research and development expense by product candidate for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,				Increase (Decrease)
(dollars in thousands)	2024		2023		$		%


INO-3107	$	11,043	$	4,569	$	6,474	142	%
INO-5401 and other Immuno-oncology	1,563		6,414		(4,851)		(76)	%
Other research and development programs (a)	397		2,955		(2,558)		(87)	%

Engineering and device-related	4,839		1,775		3,064		173	%
Stock-based compensation	590		1,272		(682)		(54)	%
Other unallocated expenses (b)	4,659		6,758		(2,099)		(31)	%
Research and development expense	$	23,091	$	23,743	$	(652)	(3)	%

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	Six Months Ended June 30,				Increase (Decrease)
(dollars in thousands)	2024		2023		$		%


INO-3107	$	18,689	$	7,881	$	10,808	137	%
INO-5401 and other Immuno-oncology	3,584		7,613		(4,029)		(53)	%

Other research and development programs (a)	1,020		17,744		(16,724)		(94)	%
Engineering and device-related	8,590		4,213		4,377		104	%
Stock-based compensation	1,650		2,753		(1,103)		(40)	%
Other unallocated expenses (b)	10,468		13,717		(3,249)		(24)	%
Research and development expense	$	44,001	$	53,921	$	(9,920)	(18)	%

(a) Net of contributions received from grant agreements and recorded as contra- research and development expense.

(b) Includes impairment of intangible assets of $2.0 million recorded in the second quarter of 2023.

The decrease in research and development expenses for the three and six-month periods year over year was primarily the result of:

•$733,000 and $7.4 million, respectively, in lower drug manufacturing and clinical study expenses related to INO-4800 after we discontinued this program in the fourth quarter of 2022;

•$1.4 million and $7.2 million, respectively, in lower employee and consultant compensation, including stock-based compensation, due to lower headcount;

•$1.1 million and $3.2 million, respectively, in lower drug manufacturing and engineering services related to other COVID-19 studies that we ceased after we discontinued development of INO-4800;

•$4.7 million and $4.7 million, respectively, in lower drug manufacturing expenses for other programs;

•$2.0 million related to the impairment charge on intangible assets in the second quarter of 2023 which did not recur during 2024;

•$712,000 and $1.7 million, respectively, in lower clinical study expenses related to VGX-3100 as we discontinued development of this product candidate in the third quarter of 2023;

•$183,000 and $1.5 million, respectively, in lower clinical study and subcontractor expenses related to our CEPI LASSA and MERS grants; and

•$490,000 and $745,000, respectively, in lower immunology and clinical study expenses related to INO-3107.

These decreases were offset by:

•$5.3 million and $8.5 million, respectively, in higher drug manufacturing related to INO-3107;

•$1.9 million and $3.0 million, respectively in higher engineering professional and outside services related to our device development;

•$1.8 million and $2.9 million, respectively, of higher expensed inventory; and

•$1.8 million and $4.7 million, respectively, of lower contra-research and development expense recorded from grant agreements.

Contributions received from current grant agreements and recorded as contra-research and development expense were $9,000 and $188,000 for the three and six months ended June 30, 2024, respectively, as compared to $1.8 million and $4.9 million for the three and six months ended June 30, 2023, respectively. The decrease for the three- and six-month periods year over year was primarily due to a decrease of $303,000 and $1.9 million, respectively, earned under the CEPI LASSA and MERS grants and $1.2 million and $2.4 million, respectively, in reimbursements from Advaccine.

General and administrative expenses. General and administrative expenses, which include business development expenses and patent expenses, were $10.2 million and $20.8 million for the three and six months ended June 30, 2024, respectively, as compared to $13.5 million and $27.4 million for the three and six months ended June 30, 2023, respectively. Decreases for the three- and six-month periods year over year included:

•$1.9 million and $3.9 million, respectively, in employee compensation, including employee and consultant stock-based compensation, due to lower headcount; and

•$1.2 million and $2.3 million, respectively, in legal expenses related to litigation matters settled in 2023 that did not recur in 2024.

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Stock-based compensation. Stock-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite vesting period. Total employee and director stock-based compensation expense for the three and six months ended June 30, 2024 was $1.5 million and $3.9 million, of which $581,000 and $1.6 million was included in research and development expenses and $890,000 and $2.3 million was included in general and administrative expenses, respectively. Total employee and director stock-based compensation expense for the three and six months ended June 30, 2023 was $2.8 million and $6.4 million, respectively. Of these amounts, $1.3 million and $2.7 million, respectively, was included in research and development expenses, and $1.5 million and $3.7 million, respectively, was included in general and administrative expenses. The decrease was due to a lower weighted average grant date fair value for the awards granted during 2024.

Interest income. Interest income for the three and six months ended June 30, 2024 was $1.3 million and $2.8 million, respectively, as compared to $2.2 million and $4.4 million for the three and six months ended June 30, 2023, respectively. The decrease for the three- and six-month periods year over year was primarily due to a lower short-term investment balance.

Interest expense. Interest expense for the three and six months ended June 30, 2024 was $0 and $178,000, respectively, as compared to $313,000 and $627,000 for the three and six months ended June 30, 2023, respectively. The decrease was primarily due to lower interest expense on our senior convertible promissory notes that were repaid in full on March 1, 2024.

(Loss) gain on investment in affiliated entities. The (loss) gain resulted from the change in the fair market value of our investment in PLS of $(334,000) and $(460,000) for the three and six months ended June 30, 2024, respectively, as compared to $157,000 and $773,000 for the three and six months ended June 30, 2023, respectively. We record our investment in PLS at its market value based on the closing price of the shares on the Korea New Exchange Market at each balance sheet date, with changes in fair value reflected in the condensed consolidated statements of operations.

Net unrealized (loss) gain on available-for-sale equity securities. The net unrealized (loss) gain on available-for-sale equity securities for the three and six months ended June 30, 2024 of $(21,000) and $480,000, respectively, as compared to $923,000 and $4.1 million for the three and six months ended June 30, 2023, respectively, resulted from a change in the fair market value of the investments.

Other income (expense), net. Other income (expense), net, for the three and six months ended June 30, 2024 of $8,000 and $(675,000), respectively, as compared to $(1.4) million and $(3.9) million for the three and six months ended June 30, 2023, respectively, related primarily to the realized loss on short-term investments sold during the periods.

Liquidity and Capital Resources

Historically, our primary uses of cash have been to finance research and development activities including clinical trial activities for the advancement of DNA medicine candidates. Since inception, we have satisfied our cash requirements principally from proceeds from the sale of equity securities, indebtedness and grants and government contracts.

Working Capital and Liquidity

As of June 30, 2024, we had cash, cash equivalents and short-term investments of $110.4 million and working capital of $91.2 million, as compared to $145.3 million and $110.5 million, respectively, as of December 31, 2023.

Cash Flows

Operating Activities

Net cash used in operating activities was $57.0 million and $69.0 million for the six months ended June 30, 2024 and 2023, respectively. The variance was primarily due to the timing and changes in working capital balances, offset by decreased operating expenses.

Investing Activities

Net cash provided by investing activities was $55.3 million and $72.9 million for the six months ended June 30, 2024 and 2023, respectively. The variance was primarily the result of timing differences in short-term investment purchases, sales and maturities.

Financing Activities

Net cash provided by financing activities was $21.7 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively. The variance was primarily due to the net proceeds from the April 2024 Offering (defined below) of $33.2 million and net proceeds of $5.2 million from the sale of common stock under the 2021 Sales Agreement (defined below), offset by the repayment of our convertible senior notes of $16.4 million.

Issuances of Common Stock and Pre-Funded Warrants

On April 18, 2024, we closed an underwritten registered direct offering, or the Offering, relating to the issuance and sale of 2,536,258 shares at a price of $7.693 per share and pre-funded warrants to purchase up to 2,135,477 shares of common stock, or the Pre-Funded Warrants, at a price of $7.692 per Pre-Funded Warrant, which represents the per share price for the shares less the $0.001 per share exercise price for each Pre-Funded Warrant. The net proceeds from the Offering were $33.2 million, after deducting the underwriting discounts and commissions and offering expenses paid by us.

On November 9, 2021, we entered into an ATM Equity OfferingSM Sales Agreement, or the 2021 Sales Agreement, with outside sales agents, or collectively, the Sales Agents, under which we were able to offer and sell shares of our common stock with aggregate gross proceeds of up to $300.0 million, through the Sales Agents.

During the three months ended March 31, 2024, we sold 543,620 shares of our common stock under the 2021 Sales Agreement at a weighted average price of $9.76 per share, resulting in aggregate net proceeds of $5.2 million. During the year ended December 31, 2023, we sold 875,305 shares of our common stock under the 2021 Sales Agreement at a weighted average price of $6.33 per share, resulting in aggregate net proceeds of $5.5 million. The registration statement relating to the shares of common stock issuable under the 2021 Sales Agreement has expired, and in August 2024 we terminated the 2021 Sales Agreement.

During the six months ended June 30, 2024, stock options to purchase 8,159 shares of common stock were exercised for aggregate net proceeds to us of $68,000, which proceeds were offset by tax payments made related to net share settlement of RSU awards of $414,000. During the six months ended June 30, 2023, no stock options were exercised and tax payments of $457,000 were made related to net share settlement of RSU awards.

During the three months ended March 31, 2023, we issued 760,083 shares of common stock pursuant to a securities class action settlement, as described in Note 11 to our condensed consolidated financial statements included in this report.

Funding Requirements

As of June 30, 2024, we had an accumulated deficit of $1.7 billion, and we expect to continue to operate at a loss for the near term. The amount of our accumulated deficit will continue to increase, as it will be expensive to continue research and development efforts. Our current cash resources will not be sufficient to complete the clinical development of our product candidates beyond INO-3107, and we anticipate that additional financing will be required in order to complete the development of and to commercialize and generate revenues from the sale of INO-3107 or any other product candidates that may receive regulatory approval. If these activities are successful and if we receive approval from the FDA to market our DNA medicine candidates, then we will need to raise additional funding to market and sell the approved products and equipment. In addition to the potential issuance of equity or debt securities in order to raise capital, we are also evaluating potential collaborations as an additional way to fund our operations. We believe that our current cash and short-term investments are sufficient to meet our planned working capital requirements for at least the next twelve months from the date of this report.

We expect our cash runway to extend into the third quarter of 2025, without giving effect to any further capital raising activities that we may undertake.

We have existing supply agreements with contract manufacturers to manufacture drug substance. At June 30, 2024, we had approximately $5.1 million in minimum purchase obligations in connection with these agreements. We expect to satisfy these obligations from existing cash over the next twelve months.

During the six months ended June 30, 2024, except for the repayment in full of our convertible senior notes as described above, there have been no other significant changes to our contractual obligations and commitments described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We attempt to increase the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in short-term investment-grade securities. During much of 2022 and 2023, there was a pronounced overall increase in prevailing interest rates in the United States compared to the first half of 2022, which has contributed to the unrealized loss of $3.5 million in the market value of our investment portfolio as of June 30, 2024.

Foreign Currency Risk

We operate primarily in the United States and most transactions during the six months ended June 30, 2024 were made in United States dollars. Accordingly, we do not have any material exposure to foreign currency rate fluctuations, with the exception of certain cash and cash equivalents held in South Korea that are denominated in South Korean Won and the

valuation of our equity investment in PLS, which is denominated in South Korean Won and then translated into United States dollars.

Certain transactions are denominated primarily in foreign currencies, including South Korean Won, Euros, British Pounds and Canadian Dollars. These transactions give rise to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. The value of these monetary assets and liabilities are subject to changes in currency exchange rates from the time the transactions are originated until settlement in cash. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets where we conduct business.

We do not use derivative financial instruments for speculative purposes and do not engage in exchange rate hedging or hold or issue foreign exchange contracts for trading purposes.

Inflation Risk

Inflation generally affects us by increasing our cost of labor. Although inflation has increased generally in the United States in recent years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations during the six months ended June 30, 2024.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, which are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, as appropriate to allow timely decisions regarding required disclosures.

In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Based on an evaluation carried out as of the end of the period covered by this Quarterly Report, under the supervision and with the participation of our management, including our CEO and CFO, our CEO and CFO have concluded that, as of the end of such period, our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of June 30, 2024 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

ITEM 1. LEGAL PROCEEDINGS

VGXI Litigation

In June 2020, we filed a complaint in the Court of Common Pleas of Montgomery County, Pennsylvania against VGXI, Inc. and GeneOne Life Science, Inc., or GeneOne, and together with VGXI, Inc. collectively referred to as VGXI, alleging that VGXI had materially breached our supply agreement with them. The complaint seeks declaratory judgments, specific performance of the agreement, injunctive relief, an accounting, damages, attorneys’ fees, interest, costs and other relief from VGXI. In June 2020, the Company filed a petition for preliminary injunction, which was denied.

Following our appeal, in July 2020 VGXI filed counterclaims against us, alleging that we had breached the supply agreement, as well as misappropriation of trade secrets and unjust enrichment. The counterclaims seek injunctive relief, damages, attorneys’ fees, interest, costs and other relief from us. VGXI also filed a third-party complaint against Ology Bioservices, Inc., a contract manufacturing organization that we had engaged to provide services similar to those that were being provided by VGXI. We filed an answer to VGXI’s counterclaims, disputing the allegations and the claims raised in VGXI’s filing. In October 2020, we filed a notice of discontinuance of appeal with the Pennsylvania Superior Court. A trial date for the litigation has not been set.

We intend to aggressively prosecute the claims set forth in its complaint against VGXI and to vigorously defend ourselves against VGXI’s counterclaims.

GeneOne Litigation

In December 2020, GeneOne filed a complaint in the Court of Common Pleas of Montgomery County, Pennsylvania against us, alleging that we had breached the CELLECTRA Device License Agreement, or the Agreement, between us and GeneOne. We terminated the Agreement in October 2020. The complaint asserts claims for breach of contract, declaratory judgment, unfair competition, and unjust enrichment. The complaint seeks injunctive relief, an accounting, damages, disgorgement of profits, attorneys’ fees, interest, and other relief from us. We filed preliminary objections to the complaint, which were overruled. In September 2021, we filed an answer to the complaint, new matter, and counterclaims. Our counterclaims allege that GeneOne breached the Agreement and assert claims for breach of contract and declaratory judgment. The counterclaims seek damages, interest, expenses, attorney’s fees, and costs. On October 18, 2021, GeneOne filed its answer to our counterclaims and new matter. On February 29, 2024, we filed a motion for summary judgment. On April 1, 2024, GeneOne filed an opposition to our motion for summary judgment. On June 28, 2024, the court denied the motion for summary judgment. A trial date for this litigation has not been set.

We intend to aggressively prosecute the claims set forth in our counterclaims against GeneOne and to vigorously defend ourselves against the claims in GeneOne’s complaint.

ITEM 1A. RISK FACTORS

Our business is subject to numerous risks. You should carefully consider and evaluate each of the following factors as well as the other information in this Quarterly Report on Form 10-Q, including our financial statements and the related notes, the risk factors discussed in our 2023 Annual Report, which we filed with the SEC on March 6, 2024, in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of the following risks actually occur, our business and financial results could be harmed. In that case, the trading price of our common stock could decline. You should also consider the more detailed description of our business contained in our 2023 Annual Report.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses in recent years, expect to incur significant net losses in the foreseeable future and may never become profitable.

We have experienced significant operating losses over the last several years. As of June 30, 2024, our accumulated deficit was $1.7 billion. We have generated limited revenues, primarily consisting of license revenue, grant funding and interest income. We expect to continue to incur substantial additional operating losses for at least the next several years as we advance our clinical trials and research and development activities. We may never successfully commercialize our DNA medicine candidates or proprietary smart device technology and thus may never have any significant future revenues or achieve and sustain profitability.

We have limited sources of revenue and our success is dependent on our ability to develop our DNA medicines and proprietary device technology.

We do not currently generate any revenue from the commercial sale of products. Our ability to generate future revenues depends heavily on our success in:

•developing and securing United States and/or foreign regulatory approvals for our DNA medicine candidates, including securing regulatory approval for conducting clinical trials with DNA medicine candidates;

•developing our proprietary device technology; and

•commercializing any products for which we receive approval from the FDA and foreign regulatory authorities.

Our proprietary device and DNA medicine candidates will require extensive additional clinical study and evaluation, regulatory approval in multiple jurisdictions, substantial investment and significant marketing efforts before we generate any revenues from product sales. We are not permitted to market or promote our proprietary device and DNA medicine candidates as combination products before we receive regulatory approval from the FDA or comparable foreign regulatory authorities. If we do not receive regulatory approval for and successfully commercialize any products, we will not generate any revenues from sales of proprietary devices and DNA medicine products, and we may not be able to continue our operations.

A small number of licensing partners and government contracts have accounted for a substantial portion of our revenue.

In the past we have derived a significant portion of our revenue from a limited number of licensing partners and government grants and contracts, and we expect that a significant portion of our revenue will continue to be derived from a limited number of licensing partners and/or government grants and contracts unless and until we are able to commercialize our product candidates. Revenue can fluctuate significantly depending on the timing of upfront and event-based payments and work performed. If we fail to sign additional future contracts with major licensing partners and the government, if a contract is delayed or deferred, or if an existing contract expires or is canceled and we fail to replace the contract with new business, our revenue would be adversely affected.

We will need substantial additional capital to develop our DNA medicines and proprietary device technology, which may prove difficult or costly to obtain.

Conducting the costly and time-consuming research, pre-clinical studies and clinical testing necessary to obtain regulatory approvals and bring our DNA medicine candidates and proprietary device technology to market will require a commitment of substantial funds in excess of our current capital. Our future capital requirements will depend on many factors, including, among others:

•the progress of our current and new product development programs;

•the progress, scope and results of our pre-clinical and clinical testing;

•the time and cost involved in obtaining regulatory approvals;

•the cost of manufacturing our DNA medicine candidates;

•the cost of prosecuting, enforcing and defending against patent infringement claims and other intellectual property rights;

•debt service obligations;

•competing technological and market developments; and

•our ability and the related costs to establish and maintain collaborative and other arrangements with third parties to assist in potentially bringing our products to market.

Additional financing may not be available on acceptable terms, or at all. Domestic and international capital markets have from time to time experienced heightened volatility, particularly in light of geopolitical turmoil, inflation and rising interest rates, making it more difficult in many cases to raise capital through the issuance of equity securities. Volatility in the capital markets can also negatively impact the cost and availability of credit, creating illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases cease to provide, funding to borrowers. To the extent we are able to raise additional capital through the sale of equity securities, or we issue securities in connection with another transaction in the future, the ownership position of existing stockholders could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt securities, these securities are likely to have rights, preferences and privileges senior to our common stock and may invo