Therapeutic DNA Vaccine Company Inovio Biomedical Reports First Quarter 2008 Financial Results

Inovio Biomedical Corporation (AMEX: INO) ("Inovio”) today reported financial results for the quarter ended March 31, 2008. Total revenue for the quarter ended March 31, 2008, was $653,000, compared with $504,000 for the same period in 2007. For the first quarter, revenue consisted of license fees and milestone payments, and amounts earned from collaborative research and development arrangements. Total operating expenses for the quarter ended March 31, 2008, was $4.0 million, compared with $4.8 million for the same period in 2007. The net loss attributable to common stockholders for the quarter ended March 31, 2008, was $3.0 million, or $0.07 per share, compared with a net loss attributable to common stockholders of $3.8 million, or $0.10 per share for the same period in 2007. Revenue Revenue from license fees and milestone payments for the quarter ended March 31, 2008, was $193,000, compared with $234,000 for the same period in 2007. The decrease in license fees and milestone payments for the three months ended March 31, 2008, compared with the same period in 2007, was primarily due to less revenue recognized from the Merck licensing agreement as this agreement was fully amortized during 2007, offset by higher revenue recognized from license agreements for our GeneSwitch® technology. Revenue recorded under collaborative research and development arrangements for the quarter ended March 31, 2008, was $460,000, compared with $248,000 for the same period in 2007. The increase in revenue under collaborative research and development arrangements during the three months ended March 31, 2008, compared with the same period in 2007, was primarily due to an increase in Wyeth billings based on our collaborative agreement related to the commercialization of the Elgen® device, offset by slightly lower Merck collaborative research billings. Billings from research and development work performed pursuant to the Wyeth and Merck agreements are recorded as revenue when the related research expenditures are incurred. There was no grant and miscellaneous revenue for the three months ended March 31, 2008, compared with $21,000 for the same period in 2007. The decrease in grant and miscellaneous revenue was mainly due to no revenue being recognized from the U.S. Army grant due to completion of the defined project. Operating Expenses Research and development expenses for the quarter ended March 31, 2008, were $1.6 million compared with $2.5 million for the same period in 2007. The decrease in research and development expenses for the three months ended March 31, 2008, compared with the same period in 2007, was primarily due to a decrease in clinical trial expenses associated with patient enrollment, clinical site costs, data collection and monitoring costs, and costs related to the use of outside Clinical Research Organizations ("CROs”) and Clinical Research Associates ("CRAs”). These decreases were offset by higher costs associated with the expansion of our in-house engineering and research expertise. General and administrative expenses, which include business development expenses and amortization of intangible assets, for the quarter ended March 31, 2008, were $2.4 million compared with $2.3 million for the same period in 2007. The increase in general and administrative expenses for the three months ended March 31, 2008, compared to the same period in 2007, was primarily due to an increase in outside consulting services related to the effort to partner our SECTA therapy program and other corporate advisory services, and an increase in legal fees associated with intellectual property, business development efforts and other corporate legal matters, offset by lower employee share-based compensation expense. Net Loss Attributable to Common Stockholders The decrease in net loss attributable to common stockholders for the three months ended March 31, 2008, compared with the same period in 2007, resulted primarily from the increase in collaborative research and development revenue and the decrease in research and development operating expenses, as described above. Capital Resources We ended the first quarter of 2008 with cash and short-term investments of $11.3 million and working capital of $9.5 million, compared with $27.3 million in cash and short-term investments and $25.6 million in working capital as of December 31, 2007. The decrease in working capital during the three months ended March 31, 2008, was primarily due to the reclassification of $12.7 million of auction rate security ("ARS”) investments from short-term to long-term assets. The remaining decrease in working capital was primarily due to expenditures related to our research and development and clinical trial activities, as well as various general and administrative expenses related to consultants, legal, accounting and audit, corporate development, and investor relations activities. With respect to the reclassification of ARS investments, we originally purchased six high-grade ARSs, issued primarily by municipalities, for approximately $13.6 million. In March 2008, our investment advisor informed us that decreased market liquidity for this type of security caused the valuation of these investments to fall below par. At March 31, 2008, we recorded on our consolidated balance sheet an unrealized loss of $829,000 on these investments and reclassified $12.7 million as a long-term asset. These securities retain the AAA/AA ratings they had when we purchased them, and have yielded uninterrupted interest payments that we receive on a monthly basis directly from the issuers. The lack of liquidity may require us to hold the ARSs until they are redeemed by the issuer or to maturity, but we believe the decline in their liquidity and fair value is temporary. We expect that liquidity of these investments is not required to fund our operations during the next twelve months. Corporate Update The operational highlights for the first quarter included the results reported by our partners from ongoing DNA vaccine clinical studies, adding further positive interim results to data reported in 2007. A summary of these results follows, covering clinical studies using Inovio's electroporation delivery technology. First, interim data from a phase I clinical trial at the Moffitt Cancer Center demonstrated that a DNA-based immunotherapy (plasmid IL-12) against metastatic melanoma, delivered using Inovio's electroporation delivery technology, was safe and well-tolerated. Despite starting from nominal dose levels and without reaching dose-limiting toxicity, this therapy achieved evidence of durable local and systemic tumor regression. Of 19 patients with both treated and untreated distal lesions, two (10%) showed complete regression of all lesions (including distal untreated lesions), suggesting a systemic effect of the therapy. Additional patients (42%) showed a systemic response resulting in stable disease or objective regression of untreated lesions. Second, Tripep AB reported preliminary results from the first patient to complete treatment with Tripep's therapeutic hepatitis C virus (HCV) vaccine, ChronVac-C(R), which was delivered using Inovio's electroporation-based DNA delivery system. In this phase I/II clinical study, the treatment was shown to be tolerable and safe. Samples taken before, during and after treatment showed that before vaccination the patient did not have a detectable cell-mediated immune response against HCV but such an immune response became detectable after treatment was completed. It is known that patients who spontaneously clear their infection have also developed this type of immune response. Five patients had been treated as of the reporting date and no unexpected side effects had been observed. Third, the University of Southampton presented interim data from its phase I/II clinical study of an experimental DNA-based prostate cancer vaccine, indicating that the combination of this DNA vaccine and electroporation DNA delivery was safe and well-tolerated. The study had completed recruitment of 30 patients and vaccination was ongoing at the third (highest) dose level. Monitoring of antibody responses had been completed for the 20 patients at the first and second dose levels to week 16. Monitoring of CD4 cellular immunity had been completed for the 10 patients at the lowest dose. Patients treated using electroporation displayed higher levels of antibody and cellular immune responses: 13 of 20 patients developed increases in anti-DOM (the immunostimulant sequence from tetanus) antibody by week 16 after three vaccinations. Of these increased responses, 4 of 10 were in the arm without electroporation; 9 of 10 were in the electroporation arm. Antibody responses were generally higher in patients treated using electroporation compared to those treated with the DNA vaccine alone (without electroporation). In 9 of 10 patients in the low dose cohort, increases in CD4 responses (cellular immunity) were observed. The use of electroporation-based DNA delivery appears to increase the level of anti-DOM CD4 responses. We are pleased with the positive additional results reported from multiple DNA vaccine clinical studies and look forward to additional data being reported through 2008. About Inovio Biomedical Corporation Inovio Biomedical (AMEX: INO) is focused on developing multiple DNA-based immunotherapies and DNA vaccines. Inovio is a leader in developing human applications of electroporation using brief, controlled electrical pulses to increase cellular uptake of a useful biopharmaceutical. Human data has shown that Inovio’s electroporation-based DNA delivery technology can significantly increase gene expression and immune responses from DNA vaccines. Immunotherapy partners include Merck, Wyeth, Vical, University of Southampton, Moffitt Cancer Center, the U.S. Army, National Cancer Institute, and International Aids Vaccine Initiative. Inovio’s technology is protected by an extensive patent portfolio covering in vivo electroporation. More information is available at www.inovio.com. This press release contains certain forward-looking statements relating to our plans to develop our electroporation drug and gene delivery technology. Actual events or results may differ from our expectations as a result of a number of factors, including the uncertainties inherent in clinical trials and product development programs (including, but not limited to, the fact that pre-clinical and clinical results referenced in this release may not be indicative of results achievable in other trials or for other indications and that results from one study may necessarily not be reflected or supported by the results of other similar studies), the availability of funding to support continuing research and studies in an effort to prove safety and efficacy of Inovio’s technology as a delivery mechanism, the availability or potential availability of alternative therapies or treatments for the conditions targeted by Inovio or its collaborators, including alternatives that may be more efficacious or cost-effective than any therapy or treatment that Inovio and its collaborators hope to develop, evaluation of potential opportunities, issues involving patents and whether they or licenses to them will provide Inovio with meaningful protection from others using the covered technologies, whether such proprietary rights are enforceable or defensible or infringe or allegedly infringe on rights of others or can withstand claims of invalidity and whether Inovio can finance or devote other significant resources that may be necessary to prosecute, protect or defend them, the level of corporate expenditures, assessments of our technology by potential corporate or other partners or collaborators, capital market conditions, and other factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2007, our 10-Q for the three months ended March 31, 2008 and other regulatory filings from time to time. There can be no assurance that any product in our product pipeline will be successfully developed or manufactured, that final results of clinical studies will be supportive of regulatory approvals required to market licensed products, or that any of the forward-looking information provided herein will be proved accurate. INOVIO BIOMEDICAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS     March 31,2008   December 31,2007 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 8,282,208 $ 10,250,929 Short-term investments 2,991,300 16,999,600 Accounts receivable 476,844 1,139,966 Prepaid expenses and other current assets 618,738 613,656   Total current assets 12,369,090 29,004,151   Investments 12,720,720 — Fixed assets, net 378,113 401,727 Intangible assets, net 6,066,315 6,186,430 Goodwill 3,900,713 3,900,713 Other assets 282,000 282,000   Total assets $ 35,716,951 $ 39,775,021   LIABILITIES AND STOCKHOLDERS’ EQUITY   Current liabilities: Accounts payable and accrued expenses $ 1,364,551 $ 1,807,305 Accrued clinical trial expenses 617,222 573,767 Common stock warrants 340,626 367,071 Deferred revenue 468,309 544,410 Deferred rent 64,234 61,946   Total current liabilities 2,854,942 3,354,499   Deferred revenue, net of current portion 4,246,508 4,335,806 Deferred rent, net of current portion 81,938 99,712 Deferred tax liabilities 934,500 950,250   Total liabilities 8,117,888 8,740,267   Stockholders’ equity: Preferred stock 113 113 Common stock 43,875 43,815 Additional paid-in capital 171,098,210 170,730,621 Receivables from stockholders (50,000 ) (50,000 ) Accumulated deficit (142,869,035 ) (139,847,326 ) Accumulated other comprehensive (loss) income (624,100 ) 157,531   Total stockholders’ equity 27,599,063 31,034,754   Total liabilities and stockholders’ equity $ 35,716,951 $ 39,775,021 INOVIO BIOMEDICAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)     Three Months EndedMarch 31, 2008   2007 Revenue: License fee and milestone payments $ 192,829 $ 234,489 Revenue under collaborative research and development arrangements 460,185 247,990 Grant and miscellaneous revenue — 21,423   Total revenue 653,014 503,902   Operating expenses: Research and development 1,597,388 2,516,411 General and administrative 2,401,505 2,291,161   Total operating expenses 3,998,893 4,807,572   Loss from operations (3,345,879 ) (4,303,670 )   Interest income 298,749 223,068 Other income (expense) 25,421 339,305   Net loss (3,021,709 ) (3,741,297 )   Imputed and declared dividends on preferred stock — (15,091 )   Net loss attributable to common stockholders $ (3,021,709 ) $ (3,756,388 )   Amounts per common share — basic and diluted:   Net loss per share attributable to common stockholders $ (0.07 ) $ (0.10 )   Weighted average number of common shares outstanding — basic and diluted 43,837,739 37,694,634