Washington Editor

An unfavorable benefit-to-risk profile for Inovio Biomedical Corp.'s investigational drug-device cancer therapy has prompted the company to put the brakes on two Phase III trials in squamous cell head and neck cancer, causing its stock to plunge by 36 percent.

Specifically, the shares (AMEX:INO) fell $1.23 on Tuesday to close at $2.20. Officials at the San Diego company did not return calls seeking comment.

But a press release said a data monitoring committee recommended Inovio stop enrollment in the studies over concerns about efficacy and serious adverse events, including higher mortality rates in patients receiving its Selective Electrochemical Tumor Ablation (SECTA) therapy than in another group of patients having surgery. The release did not specify the number of deaths in the SECTA arm, or indicate what other serious adverse events arose, but it did point out that the independent reviewers also suggested that enrollment difficulties represented a possible challenge to meeting the studies' goals.

The pivotal program was testing a therapy that combines a chemotherapeutic drug called bleomycin sulfate with intratumoral delivery using Inovio's MedPulser electroporation system. The device locally applies a controlled electric field to targeted tissues - short-duration electric voltage pulses create that electric field to temporarily increase cellular membrane permeability - allowing individual cells to be perfused with a cytotoxic agent, in this case bleomycin.

Company officials expressed surprise at the data monitoring committee's findings, the release said. They added that they would determine the next steps based on "a thorough evaluation" of the now unblinded data.

The studies had been accruing North American and European patients with recurrent squamous cell carcinomas in the anterior and posterior areas of the oral cavity.

The worrisome data stemmed from 212 treated patients out of the 400 targeted by the trials' design.

Inovio will continue to follow those who have been treated for up to two years to further evaluate safety and efficacy, as per the protocol.

The primary endpoint is to demonstrate that patients treated with bleomycin and electroporation have superior preservation of function, such as eating, swallowing and talking, compared to surgery. Secondary endpoints include quality-of-life comparisons, safety and pharmacoeconomics, in addition to showing local tumor control and survival that are equivalent to surgery.

Inovio officials said they're notifying all clinical investigators participating in other ongoing cancer trials using the SECTA therapy, but will nonetheless continue to move forward with the development of the technology. Other testing is ongoing in recurrent breast cancer, skin cancer and head and neck cancer, with interim results before the end of this year in the latter indication, and the company said it would continue to pursue discussions with prospective partners, particularly focusing on the European marketplace.

In addition, the company said the SECTA setback would have no bearing on its DNA delivery technology for DNA-based immunotherapeutics, and will continue to advance a trial testing that technology as well as partnering activities in that field.

As of March 31, Inovio had cash and short-term investments of about $19 million, as well as working capital of about $17.7 million. More recently, the company last month raised about $16.2 million more in net proceeds through a direct offering of its common shares at $3.52 apiece.