Inovio Biomedical and VGX Pharmaceuticals Sign Merger Agreement

Inovio Biomedical Corporation and VGX Pharmaceuticals, Inc. have announced the signing of a definitive merger agreement, which provides for the issuance of Inovio Biomedical securities in exchange for all of the outstanding securities of VGX Pharmaceuticals.

Each company’s board of directors has approved the merger agreement and the all-stock transaction it contemplates. The transaction is subject to completion of the registration of the Inovio Biomedical securities to be issued with the U.S. Securities and Exchange Commission (SEC), receipt of approval from both companies’ stockholders of the transaction, and other customary closing conditions.

The parties expect to complete the merger in the fourth quarter of 2008, however, the actual timing of the transaction will depend on a number of factors, some of which are beyond either company’s control. Upon closing, Inovio Biomedical will change its name to VGX Pharmaceuticals, Inc.

The parties believe that the following assets of the combined company will enable it to advance its integrated DNA vaccine technologies and generate value for its various stakeholders:

• Internationally recognized scientific expertise in the field of DNA vaccines complemented by extensive experience with electroporation technology as a method of DNA delivery.

• A diverse, proprietary pipeline of therapeutic and preventive DNA vaccine candidates against cancers and infectious diseases, with one wholly owned agent (for HIV) and one partly owned agent (for hepatitis C virus) in phase I clinical studies, investigational new drug (IND) applications that are open for one agent (for cervical cancer) and under review for avian influenza, and R&D activities in areas such as universal influenza vaccines and prostate cancer.

• SynCon™ technology, used to generate new clinical product candidates, including consensus sequences and antigens for some of the currently targeted disease proteins, offering coverage across different viral sub-types and taxonomic groups. These antigens are further optimized for gene expression and induction of a desired immune response.

• An extensive patent portfolio and line of clinical grade devices and prototypes for electroporation-based DNA delivery, a non-viral delivery platform that, based on interim clinical data, is indicating safety, tolerability, and positive immunological and clinical responses from DNA vaccines delivered using this technology.

• Interim clinical data from multiple studies assessing DNA vaccines or DNA-based immunotherapies delivered using the company's proprietary electroporation technology (ISO 13485-compliant), which have collectively indicated safety and tolerability, heightened levels of antibody and T-cell immune responses, and durable local and systemic tumor responses (melanoma), providing initial validation of electroporation's ability to enhance DNA vaccine potency.

• Regulatory approval to use electroporation delivery technology in conjunction with DNA vaccines in clinical trials in the US (FDA), Sweden, Italy, and the UK.

• A product line of DNA delivery systems with different design characteristics.

• Out-licenses and collaborations with various pharmaceutical, biotech, academic, government and non-government organizations include Merck (cancers), Wyeth (infectious diseases), HIV Vaccine Trial Network (HIV), Vical (metastatic melanoma), Moffitt Cancer Center (malignant melanoma), University of Southampton (prostate cancer), National Cancer Institute (HIV), and International AIDS Vaccine Initiative (HIV), which have already played a pivotal role in generating valuable preclinical data and proof-of-principle in humans regarding the utility of electroporation-based delivery of DNA vaccines. The costs of these studies have largely been borne by collaborators. Four phase I clinical studies are in progress and an IND has been filed for a fifth.

• VGX Animal Health, Inc., an 88%-owned subsidiary developing growth hormone releasing agents and DNA vaccines for various diseases for cats, dogs, horses, cows and pigs. LifeTide™ SW 5, a product of VGX Animal Health, was recently approved by the Australian Pesticides and Veterinary Medicines Authority as a veterinary gene therapy product for treating pigs (aimed at reducing mortality) making it the first and only DNA therapy product approved for food animals and only the fourth such product approved by regulatory agencies for any indication worldwide.

• Thirty percent (30%) ownership interest in VGX International, Inc. (VI), a Korean company listed on the Korean Stock Exchange, which has initiated a project to build and operate a 3,000-liter scale cGMP DNA plasmid manufacturing facility in Korea. VI also operates a low-volume cGMP DNA plasmid (vaccine) contract manufacturing facility based in The Woodlands, Texas, including 500-liter and 100-liter fermentors and using a cost-effective manufacturing process. The combined company would have existing supply arrangements with VI.

• Representative board of directors, management and research and development teams, retaining and combining Inovio's public company and electroporation experience and VGX's vaccine development experience.

The combined company is expected to be led by Dr. J. Joseph Kim as president, CEO and a director, with Dr. Avtar Dhillon serving as a consultant and a director. The remainder of the combined company’s board is expected to consist of two directors from each of Inovio’s and VGX’s current board of directors.

Dr. David B. Weiner is expected to be chairman of the scientific advisory board, drawing from the wide array of scientific resources currently available to both companies. The merger agreement provides for a post-combination management team integrated from both parties’ current management.

The combined company’s headquarters are anticipated to be located in Blue Bell, Pennsylvania, along with its DNA vaccine research and development efforts, while maintaining a San Diego, California operation focused on electroporation R&D and engineering. In addition, the combined company would continue existing research operations in The Woodlands, Texas, and Oslo, Norway.