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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This 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 Annual 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 consolidated financial statements and the related notes and other financial information appearing elsewhere in this Annual Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in Item 1A of Part I of this Annual Report under the Caption “Risk Factors.”

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 pre-clinical 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 electroporation technology and DNA vaccines may fail to show the desired safety and efficacy traits in clinical trials; the availability of funding; the ability to manufacture vaccine 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.

Overview

INOVIO is a biotechnology company focused on rapidly bringing to market precisely designed DNA medicines to treat and protect people from infectious diseases, cancer, and diseases associated with human papillomavirus (HPV). Our DNA medicines pipeline is comprised of three types of product candidates: DNA vaccines, DNA immunotherapies and DNA encoded monoclonal antibodies (dMAbs®). In clinical trials, we have demonstrated that DNA medicines can be delivered directly into cells in the body through our proprietary smart device to consistently activate robust and fully functional T cell and antibody responses against targeted pathogens and cancers.

Our novel DNA medicine candidates are made using our proprietary SynCon® technology that uses a computer algorithm designed to identify and optimize the DNA sequence of the target antigen (be it virus or a tumor). INOVIO then creates optimized plasmids, which are circular strands of DNA that instruct a cell to produce antigens to help the person’s immune system recognize and destroy cancerous or virally infected cells.

Our patented CELLECTRA® smart delivery devices provide optimized uptake of our DNA medicines within the cell, overcoming a key limitation of other DNA-based technology approaches, namely cellular uptake.

Human clinical trial data to date has shown a favorable safety profile of our DNA medicines delivered directly into cells in the body using the CELLECTRA® smart device in more than 7,000 administrations across more than 3,000 patients.

Our corporate strategy is to advance, protect and, once approved, commercialize our novel DNA medicines to meet urgent and emerging global health needs. We continue to advance and clinically validate an array of DNA medicine candidates that target HPV-associated diseases, cancer, and infectious diseases, such as COVID-19 (SARS-CoV-2). We aim to advance these candidates through commercialization and continue to leverage third-party resources through collaborations and partnerships, including product license agreements.

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Our partners and collaborators include ApolloBio Corp., AstraZeneca, Advaccine, The Bill & Melinda Gates Foundation (Gates), Coalition for Epidemic Preparedness Innovations (CEPI), Defense Advanced Research Projects Agency (DARPA), The U.S. Department of Defense (DoD), GeneOne Life Science, HIV Vaccines Trial Network, the U.S. Defense Threat Reduction Agency’s Medical CBRN Defense Consortium (MCDC), International Vaccine Institute (IVI), National Cancer Institute, National Institutes of Health, National Institute of Allergy and Infectious Diseases, Ology Bioservices, the Parker Institute for Cancer Immunotherapy, 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.

We or our collaborators are currently conducting or planning clinical studies of our DNA medicines for HPV-associated precancers, including cervical, vulvar, and anal dysplasia; HPV-associated cancers, including head & neck, cervical, anal, penile, vulvar, and vaginal; other HPV-associated disorders, such as recurrent respiratory papillomatosis, or RRP; glioblastoma multiforme, or GBM; prostate cancer; HIV; Ebola; Middle East Respiratory Syndrome, or MERS; Lassa fever; Zika virus; and the COVID-19 virus.

All of our product 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 such revenues for at least the next several years. We earn revenue from license fees and milestone revenue and collaborative research and development agreements. Our product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing. All product 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 December 31, 2020, we had an accumulated deficit of $906.2 million. 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.

Impacts of COVID-19 on Our Business

The COVID-19 pandemic has had a number of significant impacts on our business during 2020. Most notably, in the United States, South Korea and China, we have accelerated the clinical development of INO-4800, our DNA vaccine candidate matched to the outbreak strain of SARS-CoV-2, the virus that causes COVID-19. In January, we received initial grant funding from CEPI to advance INO-4800 into preclinical studies and clinical development through Phase 1 human testing. We had previously been awarded grants from CEPI for the development of other DNA vaccines against Lassa fever and Middle East Respiratory Syndrome, MERS, which is also caused by a coronavirus like COVID-19. We commenced a Phase 1 clinical trial in the United States in April, and in June we reported positive interim data from the first two cohorts of the trial. In December 2020, we dosed the first subject in the Phase 2 segment of our Phase 2/3 clinical trial called INNOVATE (INovio INO-4800 Vaccine Trial for Efficacy). We have fully enrolled approximately 400 participants in the Phase 2 segment who are 18 years or older at 17 U.S. sites to evaluate safety and immunogenicity in order to confirm the dose(s) for the subsequent efficacy evaluation as part of the Phase 3 segment of the trial, once the FDA allows us to proceed. The Phase 3 segment of the INNOVATE remains on partial clinical hold until we satisfactorily resolve the FDA's remaining questions related to the CELLECTRA® 2000 device that will be used to deliver INO-4800 into the cells of the skin. We plan to satisfy the remaining device questions during the conduct of Phase 2 segment and prior to the start of the Phase 3 segment of INNOVATE. In the Phase 3 segment of the trial, we intend to enroll healthy men and non-pregnant women 18 years and older, to evaluate the efficacy of the proposed dosing level(s) for each age group based on the data from the Phase 2 evaluation. Participants will be enrolled in a one-to-one randomization to receive either INO-4800 or a placebo. The Phase 3 segment will be case-driven with the final number of enrollees to be determined by the incidence of COVID-19 during the Phase 3 segment. The primary endpoint of the Phase 3 segment will be virologically-confirmed COVID-19 disease.

We have also initiated clinical trials of INO-4800 in South Korea and China. In April, CEPI awarded us a grant of $6.9 million to work with International Vaccine Institute and the Korea National Institute of Health to conduct a Phase 1/2 trial, which was the first COVID-19 vaccine clinical trial approved in South Korea. In China, we are collaborating with Advaccine and have dosed 640 subjects with the first vaccination in a Phase 2 clinical trial in China. The Phase 2 clinical trial of INO-4800 in China has enrolled both adults who are 18-59 years old and older adults (60 years and older) with the primary endpoints of evaluating safety and immunogenicity within the Chinese population.

In parallel with our accelerated clinical development efforts, we have engaged a network of partners for the planned large-scale manufacturing of INO-4800 if it achieves regulatory approval. In March, the U.S. Department of Defense, or DoD, awarded Ology Bioservices Inc. a contract to manufacture INO-4800 for the DoD to be used in upcoming clinical trials. In April, we entered into an agreement with the German contract manufacturer Richter-Helm BioLogics GmbH & Co. KG and expanded our preexisting manufacturing partnership to support large-scale manufacturing of INO-4800. In March, we also received a grant from the Bill and Melinda Gates Foundation for accelerated testing and scale up of our CELLECTRA® 3PSP proprietary smart device for the intradermal delivery of INO-4800. In June, the DoD awarded us $71.1 million to support the large-scale manufacture of CELLECTRA® 3PSP, production of doses and the procurement of CELLECTRA® 2000 devices that

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are used to deliver INO-4800 intradermally. In the second half of 2020, we added Thermo Fisher Scientific and Kaneka Eurogentec S.A., an affiliate of Kaneka Corporation, to our manufacturing consortium.

Operationally, we have not experienced significant disruptions to date as a result of the COVID-19 pandemic.In response to the outbreak, a number of governmental orders and other public health guidance measures were implemented across much of the United States, including in the locations of our offices, laboratories, clinical trial sites and third parties on whom we rely. We have implemented a work from home policy allowing employees who can work from home to do so, while those needing to work in laboratory facilities work in shifts to reduce the number of people gathered together at one time. Business travel has been suspended, and online and teleconference technology is used to meet virtually rather than in person. We have taken measures to secure our research and development project activities, while work in laboratories has been organized to reduce risk of COVID-19 transmission.

To date, our liquidity has also not been negatively impacted by the pandemic. During the year ended December 31, 2020, we raised $454.5 million in net proceeds from the sale of shares of our common stock through our "at-the-market" equity offering program, which further enhanced our liquidity and capital resources. As of December 31, 2020, our cash and cash equivalents and short-term investments were $411.6 million, compared to $89.5 million as of December 31, 2019. In addition, in January 2021, we closed an underwritten public offering with net proceeds to us of $162.1 million.

We are closely monitoring the impact of the COVID-19 pandemic on our employees, collaborators and service providers. The extent to which the pandemic will impact our business and operations will depend on future developments, including the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease, including mass vaccination efforts, that are highly uncertain. For additional information on the potential effects of the COVID-19 pandemic on our business, financial condition and results of operations, see the “Risk Factors” section above in Part I, Item 1A of this Form 10-K.

Critical Accounting Policies

The SEC defines critical accounting policies as those that are, in management’s view, important to the portrayal of our financial condition and results of operations and require management’s judgment. Our discussion and analysis of our financial condition and results of operations are based on our audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on experience and on various assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. Our critical accounting policies include:

Collaboration Agreements

We assess whether our 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, we assesses whether the payments between us and the collaboration partner are subject to other accounting literature. If payments from the collaboration partner to us represent consideration from a customer, then we account for those payments within the scope of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”). However, if we concludes that our collaboration partner is not a customer for certain activities, such as for certain collaborative research and development activities, we present such payments as a reduction of research and development expense.

Revenue Recognition

We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy our performance obligations. At contract inception, we assess the goods or services agreed upon within each contract and assess whether each good or service is distinct and determine those that areperformance obligations. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

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Collaborative Arrangements

We enter into collaborative arrangements with partners that typically include payment of one or more of the following: (i) license fees; (ii) product supply services; (iii) milestone payments related to the achievement of developmental, regulatory, or commercial goals; and (iv) royalties on net sales of licensed products. Where a portion of non-refundable, upfront fees or other payments received are allocated to continuing performance obligations under the terms of a collaborative arrangement, they are recorded as deferred revenue and recognized as revenue when (or as) the underlying performance obligation is satisfied.

As part of the accounting for these arrangements, we must develop estimates and assumptions that require judgment of management to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligation. The standalone selling price may include items such as forecasted revenues, development timelines, discount rates and probabilities of technical and regulatory success. We evaluate each performance obligation to determine if it can be satisfied at a point in time or over time. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

License Fees

If a license to intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Product Supply Services

Arrangements that include a promise for future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. We evaluate whether we are the principal or agent in the arrangement. We have determined that we are the principal in current arrangements as we control the product supply before it is transferred to the customer.

Milestone Payments

At the inception of each arrangement that includes milestone payments (variable consideration), we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or our collaboration partner’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achieving such milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration or other revenues and earnings in the period of adjustment.

Royalties

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any royalty revenue resulting from any of our collaborative arrangements.

Grants

We account for various grant agreements under the contributions guidance under Subtopic 958-605, Not-for-Profit Entities-Revenue Recognition, which is outside the scope of Topic 606, as the government agencies granting us funds are not receiving reciprocal value for their contributions. All contributions received from current grant agreements are recorded as a contra-expense as opposed to revenue on the consolidated statement of operations.

Leases

For our long-term operating leases, we recognized an operating lease right-of-use asset and an operating lease liability on our consolidated balance sheets. The lease liability is determined as the present value of future lease payments using an estimated rate of interest that we would pay to borrow equivalent funds on a collateralized basis at the lease commencement

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date. The right-of-use asset is based on the liability adjusted for any prepaid or deferred rent. We determined the lease term at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise.

Fixed rent expense for our operating leases is recognized on a straight-line basis over the term of the lease and is included in operating expenses on the consolidated statements of operations. Variable lease payments including lease operating expenses are recorded as incurred.

Derivative Liabilities

We evaluate our debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives requiring separate recognition in our financial statements. The result of this accounting treatment is that the fair value of the embedded derivative is revalued at each balance sheet date and recorded as a liability, and the change in fair value during the reporting period is recorded in other income (expense) in the consolidated statements of operations. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date.

Research and Development Expenses

Our activities have largely consisted of research and development efforts related to developing electroporation delivery technologies and DNA immunotherapies and vaccines. Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, facilities and other overhead expenses, clinical trials, contract services and other outside expenses. Research and development expenses are charged to operations as they are incurred. These expenses result from our independent research and development efforts as well as efforts associated with collaborations and licensing arrangements. We review and accrue clinical trial expense based on work performed, relying on estimates of total trial management costs, sites activated, patients enrolled, and number of patient visits. We follow this method since reasonably dependable estimates of the costs applicable to various stages of a research agreement or clinical trial can be made. 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 our results of operations.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is contained in Note 2 to the consolidated financial statements, included elsewhere in this report.

Results of Operations

The consolidated financial data for the years ended December 31, 2020, 2019 and 2018 is presented in the following table and the results of these periods are used in the discussion thereafter.

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Revenues:

Operating expenses:

Change in fair value of common stock warrants — — 360,795 — — (360,795) *

Loss on extinguishment of convertible bonds (8,177,043) — — (8,177,043) * — —

Gain on extinguishment of convertible senior notes 8,762,030 — — 8,762,030 * — —

*Not meaningful

Comparison of Years Ended December 31, 2020 and 2019

Revenue

Revenue primarily consisted of revenues under collaborative research and development arrangements, including arrangements with affiliated entities for the years ended December 31, 2020 and 2019. Our year over year total revenue increased $3.3 million, or 80%. The increase in revenue was primarily due to revenue earned from Advaccine and the milestone revenue earned from our affiliated entity Plumbline Life Sciences, Inc., or PLS, offset by a decrease in revenue recognized from our collaboration with AstraZeneca.

Research and Development Expenses

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The $6.2 million increase in research and development expenses for the year ended December 31, 2020 as compared to 2019 was primarily due to higher drug manufacturing expenses and outside services related to our INO-4800 clinical trials of $17.1 million, an increase in engineering services related to our CELLECTRA® 3PSP device development and array automation project of $12.4 million, higher expensed device materials of $5.0 million, higher contract labor expense of $2.4 million, higher employee stock-based compensation expense of $2.1 million, higher drug manufacturing expenses related to our Wistar IPCAVD grant of $1.2 million and an increase in patent maintenance and milestone fees to Wistar of $1.1 million. These increases were offset by an increase in contra-research and development expense recorded from grant agreements of $33.5 million, among other variances.

Contributions received from current grant agreements and recorded as contra-research and development expense were $45.4 million and $11.9 million for the years ended December 31, 2020 and 2019, respectively. The increase year over year was primarily due to increases of $21.2 million, $10.0 million and $4.1 million earned under grants from the DoD, CEPI and Gates, respectively, related to INO-4800 and device development activities, partially offset by a decrease of $2.4 million earned from the Gates grant and Wistar sub-grant related to our dMAb technology, among other variances.

General and Administrative Expenses

The $10.0 million increase in general and administrative expenses for the year ended December 31, 2020 as compared to 2019 was primarily related to an increase in legal expenses of $5.2 million, an increase in expenses for work performed related to corporate marketing and communications of $3.1 million and higher employee and consultant stock-based compensation expense of $3.0 million, partially offset by a gain on foreign exchange of $2.2 million recorded as contra-general and administrative expense, among other variances.

Stock-based Compensation

Employee stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period. Total employee stock-based compensation cost for the years ended December 31, 2020 and 2019 was $14.5 million and $9.8 million, of which $8.0 million and $5.9 million was included in research and development expenses and $6.5 million and $3.9 million was included in general and administrative expenses, respectively. The increase for 2020 compared to 2019 was primarily due to a higher weighted average grant date fair value for the awards granted in 2020, offset in part by the reversal of previously recorded stock option expense due to a reduction in force in the third quarter of 2019 and an option modification expense recorded in the second quarter of 2019. At December 31, 2020, there was $4.4 million of total unrecognized compensation cost related to unvested stock options, which we expect to recognize over a weighted-average period of 1.4 years, as compared to $3.4 million for the year ended December 31, 2019 expected to be recognized over a weighted-average period of 1.7 years. At December 31, 2020, there was $10.9 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 1.9 years, as compared to $4.3 million for the year ended December 31, 2019 expected to be recognized over a weighted-average period of 1.6 years. Total stock-based compensation for options granted to non-employees for the years ended December 31, 2020 and 2019 was $1.2 million and $970,000, respectively.

Interest Income

The $706,000 increase in interest income for the year ended December 31, 2020 as compared to 2019 was primarily due to more interest earned on our higher balance of short-term investment holdings.

Interest Expense

The $754,000 increase in interest expense for the year ended December 31, 2020 as compared to 2019 was primarily due to higher interest expense recorded from our August 2019 Bonds and December 2019 Bonds, which were issued during the third and fourth quarters of 2019, respectively.

Change in Fair Value of Derivative Liability

The change in fair value of derivative liability for the year ended December 31, 2020 and 2019 was $75.7 million and $1.8 million, respectively. We determined that our August 2019 Bonds included an embedded conversion feature that was considered to be a derivative liability requiring bifurcation from the debt instrument and separate recognition in our financial statements. The conversion feature was revalued at the end of each reporting period and immediately prior to the conversion of the August 2019 Bonds in August 2020, with the resulting changes in fair value reflected in the consolidated statements of operations. The derivative liability was derecognized upon the conversion in full of the August 2019 Bonds.

Gain (Loss) on Investment in Affiliated Entity

The gain (loss) on investment in affiliated entity for the years ended December 31, 2020 and 2019 was $36.6 million and $(3.1) million, respectively, resulting from the change in the fair market value of our investments in GeneOne and PLS. During the third quarter of 2020, we sold our full equity interest in GeneOne. We record our investment in PLS at its market value

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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 consolidated statements of operations.

Net Unrealized Gain on Available-for-Sale Equity Securities

The net unrealized gain on available-for-sale equity securities for the year ended December 31, 2020 of $1.7 million resulted from a change in the fair market value of our equity investments as of December 31, 2020.

Gain on Deconsolidation of Geneos

The gain recorded represents the excess of the fair value of our retained noncontrolling investment in Geneos and the carrying amount of the non-controlling interest over the carrying amount of Geneos's assets and liabilities as of June 1, 2020, the date of deconsolidation.

Loss on Extinguishment of Convertible Bonds

Upon the full conversion of our August 2019 Bonds, a loss of $8.2 million was recorded for the difference between the fair value of the derivative liability immediately prior to its derecognition plus the carrying amount of the debt component, and the fair value of our common stock issued upon conversion.

Gain on Extinguishment of Convertible Senior Notes

As a result of the partial conversions of the Notes during the third and fourth quarters of 2020, we recorded an $8.8 million gain on extinguishment calculated as the difference between the estimated fair value of the debt and the carrying value of the Notes as of the conversion dates.

Share in Net Loss of Geneos

The share in net loss of Geneos represents our share of Geneos's losses during the period after deconsolidation.

Income Tax Benefit/Provision for Income Taxes

The income tax benefit of $257,000 for the year ended December 31, 2019 reflected our application of the intraperiod tax allocation rules under which we are required to record a tax benefit in continuing operations to offset the tax provision we recorded directly to other comprehensive income (loss) related to unrealized gains on our short-term investments.

Income Taxes

Since inception, we have incurred operating losses and accordingly have not recorded a provision for U.S. income taxes for any of the periods presented. Utilization of net operating losses and tax credits are subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended, or IRC. As of December 31, 2020, we had net operating loss carry forwards for U.S. federal, California and Pennsylvania income tax purposes of $566.2 million, $68.6 million and $75.3 million, respectively, net of the net operating losses that will expire due to IRC Section 382 limitations. We also had U.S. federal and state research and development tax credits of $19.8 million and $3.2 million, respectively, net of the federal research and development credits that will expire due to IRC Section 383 limitations. The net operating losses and credits began to expire during 2021.

Comparison of Years Ended December 31, 2019 and 2018

Revenue

Revenue primarily consisted of revenues under collaborative research and development arrangements, including arrangements with affiliated entities for the years ended December 31, 2019 and 2018. Our year over year total revenue decreased $26.4 million, or 87%. The decrease was primarily due to the recognition of a one-time upfront payment of $23.0 million from ApolloBio during the second quarter of 2018.

Research and Development Expenses

The $7.2 million decrease in research and development expenses for the year ended December 31, 2019 as compared to 2018 was primarily due to a decrease in expenses related to our collaboration with AstraZeneca of $2.9 million, a decrease in employee compensation expense of $2.6 million due to lower employee headcount and an increase in contra-research and development expense recorded from grant agreements of $2.4 million, as well as no sub-license fee expense in 2019 as compared to $1.9 million recorded in 2018 related to the ApolloBio collaboration. These decreases were offset by an increase in clinical trial related expenses of $3.5 million and the one-time personnel-related restructuring charge of approximately $1.9 million in connection with the employee termination costs incurred during the third quarter of 2019, among other variances.

Contributions received from current grant agreements and recorded as contra-research and development expense were $11.9 million and $9.5 million for the years ended December 31, 2019 and 2018, respectively. The increase year over year was primarily due to an increase of $1.9 million earned from the CEPI grant, an increase of $1.9 million from the Bill & Melinda

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Gates Foundation grant and an increase of $890,000 from the MCDC grant, offset in part by decreases of $1.1 million and $963,000 from various Wistar sub-grants and the DARPA Ebola grant, respectively, among other variances.

General and Administrative Expenses

The $2.1 million decrease in general and administrative expenses for the year ended December 31, 2019 as compared to 2018 was primarily related to the $1.4 million of foreign non-income taxes withheld from the ApolloBio upfront payment we received in 2018 and the associated advisory fees of $960,000, among other variances.

Stock-based Compensation

Employee stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee’s requisite service period. Total employee stock-based compensation cost for the years ended December 31, 2019 and 2018 was $9.8 million and $10.2 million, of which $5.9 million and $5.9 million was included in research and development expenses and $3.9 million and $4.3 million was included in general and administrative expenses, respectively. The slight decrease for 2019 compared to 2018 was primarily due to the reversal of previously recognized stock-based compensation expense due to the reduction in our workforce in July 2019 and a lower weighted average grant date fair value for the awards granted in 2019, offset by an option modification expense recorded in the second quarter of 2019. At December 31, 2019, there was $3.4 million of total unrecognized compensation cost related to unvested stock options, which we expect to recognize over a weighted-average period of 1.7 years, as compared to $5.2 million for the year ended December 31, 2018 expected to be recognized over a weighted-average period of 1.7 years. At December 31, 2019, there was $4.3 million of total unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 1.6 years, as compared to $5.1 million for the year ended December 31, 2018 expected to be recognized over a weighted-average period of 1.7 years. Total stock-based compensation for options granted to non-employees for the years ended December 31, 2019 and 2018 was $970,000 and $302,000, respectively.

Interest Income

The $341,000 increase in interest income for the year ended December 31, 2019 as compared to 2018 was primarily related to the interest earned on our higher short-term investments holdings in 2019.

Interest Expense

The interest expense for the year ended December 31, 2019 of $7.9 million primarily relates to our 6.5% convertible senior notes due 2024, or the Notes, which were issued during the first quarter of 2019, as well as our 1.0% convertible bonds due August 2024, or the August 2019 Bonds, which were issued during the third quarter of 2019.

Change in Fair Value of Common Stock Warrants

The change in fair value of common stock warrants for the year ended December 31, 2018 was $361,000. The warrants were exercised during the quarter ended September 30, 2018, eliminating the associated fair value re-measurement in subsequent periods.

Change in Fair Value of Derivative Liability

The change in fair value of derivative liability for the year ended December 31, 2019 was $1.8 million. We determined that our August 2019 Bonds included an embedded conversion feature that is considered to be a derivative liability requiring bifurcation from the debt instrument and separate recognition in our financial statements. The conversion option is revalued at each reporting period with the resulting changes in fair value reflected in the consolidated statements of operations.

Loss on Investment in Affiliated Entity

The loss on investment in affiliated entity for the years ended December 31, 2019 and 2018 was $3.1 million and $2.0 million, respectively, resulting from the change in the fair market value of our investments in GeneOne and PLS. We record our investments in GeneOne and PLS at their market values based on the closing prices of those securities on the applicable stock exchange at each balance sheet date, with changes in fair value reflected in the consolidated statements of operations.

Income Tax Benefit/Provision for Income Taxes

The income tax benefit of $257,000 for the year ended December 31, 2019 reflected our application of the intraperiod tax allocation rules under which we are required to record a tax benefit in continuing operations to offset the tax provision we recorded directly to other comprehensive income (loss) related to unrealized gains on our short-term investments. The provision for income taxes of $2.2 million for the year ended December 31, 2018 was related to foreign income taxes on the upfront payment received from ApolloBio in 2018.

Income Taxes

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Since inception, we have incurred operating losses and accordingly have not recorded a provision for U.S. income taxes for any of the periods presented. Utilization of net operating losses and tax credits are subject to a substantial annual limitation due to ownership change limitations provided by the IRC. As of December 31, 2019, we had net operating loss carry forwards for U.S. federal, California and Pennsylvania income tax purposes of $483.3 million, $68.6 million and $80.5 million, respectively, net of the net operating losses that will expire due to IRC Section 382 limitations. We also had U.S. federal and state research and development tax credits of $17.3 million and $3.2 million, respectively, net of the federal research and development credits that will expire due to IRC Section 383 limitations. The net operating losses and credits began to expire during 2020.

Liquidity and Capital Resources

Historically, our primary uses of cash have been to finance research and development activities including clinical trial activities in the oncology, DNA vaccines and other immunotherapy areas of our business. 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 December 31, 2020, we had cash and short-term investments of $411.6 million and working capital of $429.5 million, as compared to $89.5 million and $62.2 million as of December 31, 2019, respectively. The increase in cash and short-term investments during the year ended December 31, 2020 was primarily due to the net proceeds from the sale of our common stock under at-the-market, or ATM, sales agreements, offset by expenditures related to our research and development activities, clinical trials and various general and administrative expenses related to legal, consultants, accounting and audit, and corporate development.

Net cash used in operating activities for the year ended December 31, 2020 of $178.0 million consisted of net loss of $167.5 million less use of net cash in operating assets and liabilities of $71.1 million, partially offset by net non-cash adjustments of $60.6 million. The net cash used in operating activities included a $62.1 million increase in prepaid expenses and other assets, primarily comprising prepayments for facilities, equipment and manufacturing related to INO-4800 and a $17.9 million increase in accounts receivable primarily from the DoD. The primary non-cash adjustments to net loss included the increase in fair value of derivative liability of $75.7 million prior to its derecognition, stock-based compensation of $15.6 million, share of net loss in Geneos of $4.6 million, interest expense of $4.1 million and depreciation and amortization of $3.6 million, offset by gain on investment in affiliated entities of $36.6 million and gain on deconsolidation of Geneos of $4.1 million, among other items.

Net cash used in operating activities for the year ended December 31, 2019 of $97.9 million consisted of net loss of $120.6 million less use of net cash in operating assets and liabilities of $3.5 million, partially offset by net non-cash adjustments of $26.2 million. The primary non-cash expenses added back to net loss included stock-based compensation of $10.9 million, interest expense of $5.2 million, depreciation and amortization of $4.7 million and loss on investment in affiliated entities of $3.1 million and change in fair value of derivative liability of $1.8 million.

Net cash used in investing activities was $58.8 million and $9.0 million for the years ended December 31, 2020 and 2019, respectively. The variance was primarily the result of timing differences in short-term investment purchases, sales and maturities, offset by the proceeds from the sale of our investment in GeneOne of $40.1 million.

Net cash provided by financing activities was $465.3 million and $105.4 million for the years ended December 31, 2020 and 2019, respectively. The variance was primarily due to the significantly higher net proceeds from the sale of common stock under the ATM sales agreement as well as proceeds from stock option exercises in 2020, offset by the net proceeds received in 2019 from the issuance of Notes and August 2019 and December 2019 Bonds.

Issuances of Notes and Bonds

In December 2019, we completed a private placement of our 1.0% convertible bonds due December 2024, or the December 2019 Bonds, to an institutional investor in Korea for an aggregate principal amount of 4.7 billion Korean Won (KRW) (approximately USD $4.1 million based on the exchange rate on the date of issuance). Net proceeds from the offering were $4.0 million, after deducting the offering expenses payable by us.

In August 2019, we completed a private placement of aggregate principal amount of 18 billion Korean Won (KRW) (approximately USD $15.0 million based on the exchange rate on the date of issuance) of August 2019 Bonds issued to institutional investors led by Korea Investment Partners. Net proceeds from the offering were $14.5 million, after deducting the offering expenses payable by us. In August 2020, the August 2019 Bonds were fully converted into 4,692,364 shares of our common stock.

In the first quarter of 2019, we completed a private placement of $78.5 million aggregate principal amount of Notes, sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. Net proceeds from the

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offering were $75.7 million, after deducting the initial purchasers' discount and offering expenses payable by us. During 2020, certain holders of the Notes converted principal amount of $62.1 million into an aggregate of 11,535,660 shares of our common stock. As of December 31, 2020, $16.4 million aggregate principal amount of Notes remains outstanding. See Note 11 to the consolidated financial statements included in this report for further discussion.

Issuances of Common Stock

In May 2018, we entered into an At-the-Market Equity Offering Sales Agreement, or the Sales Agreement, with an outside placement agent, or the Placement Agent, to sell shares of our common stock with aggregate gross proceeds of up to $100.0 million, from time to time, through an “at-the-market” equity offering program under which the Placement Agent would act as sales agent. During the year ended December 31, 2019, we sold 3,340,678 shares of common stock under the Sales Agreement for aggregate net proceeds of $9.1 million.

In the first quarter of 2020, we entered into amendments to the Sales Agreement to increase the amount of our common stock that could be sold through the Placement Agent under the Sales Agreement to an aggregate offering price of up to $250.0 million. During the three months ended March 31, 2020, we sold 43,148,952 shares of common stock under the Sales Agreement for aggregate net proceeds of $208.2 million. Following these sales, there was no remaining capacity under this Sales Agreement.

On April 3, 2020, we entered into a new sales agreement, or the New Sales Agreement, with the same Placement Agent to sell shares of our common stock. On that same day, we filed a prospectus supplement pursuant to the New Sales Agreement for the offer and sale of our common stock for aggregate gross proceeds of up to $150.0 million. On May 12, 2020 we filed an additional prospectus supplement pursuant to the New Sales Agreement for the offer and sale of our common stock for an additional $100.0 million of gross proceeds, bringing the maximum gross proceeds of sales under the New Sales Agreement to $250.0 million. Through December 31, 2020, we sold 22,915,934 shares of common stock under the New Sales Agreement for aggregate net proceeds of $246.2 million. As of December 31, 2020, there was no remaining capacity under the New Sales Agreement.

On January 25, 2021, we closed an underwritten public offering of 20,355,000 shares of our common stock at a public offering price of $8.50 per share. The net proceeds, after deducting the underwriters' discounts and commissions and other estimated offering expenses payable by us, were $162.1 million.

During the year ended December 31, 2020, stock options to purchase 2,178,252 shares of common stock were exercised for aggregate net proceeds of $12.3 million, which proceeds were offset by tax payments made related to net share settlement of RSU awards of $4.0 million. During the year ended December 31, 2019, stock options to purchase 42,969 shares of common stock were exercised for aggregate net proceeds of $113,000, which proceeds were offset by tax payments made related to net share settlement of RSU awards of $893,000. During the year ended December 31, 2018, stock options and warrants to purchase 756,853 shares of common stock were exercised for aggregate net proceeds of $2.4 million, which proceeds were offset by tax payments made related to net share settlement of RSU awards of $612,000.

As of December 31, 2020, we had an accumulated deficit of $906.2 million and we expect to continue to operate at a loss for some time. The amount of the accumulated deficit will continue to increase, as it will be expensive to continue research and development efforts. These activities will require additional financing. If these activities are successful and if we receive approval from the FDA to market our DNA vaccine and DNA immunotherapy product candidates, then we will need to raise additional funding to market and sell the approved products and equipment. We cannot predict the outcome of the above matters at this time. We are evaluating potential collaborations as an additional way to fund 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.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Contractual Obligations

As of December 31, 2020, future minimum payments due under our contractual obligations are as follows:

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Payments Due by Period

Total Less than1 year 1 – 3 years 3 – 5 years More than5 years

(1) Amounts represent remaining contractual amounts due under our Notes, including interest based on the fixed rate of 6.5% per year. Although these Notes mature in March 2024, they may be converted into shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity would result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. During 2020, certain holders of the Notes converted principal amount of $62.1 million into an aggregate of 11,535,660 shares of our common stock. See Note 11, "Convertible Debt” in the Consolidated Financial Statements section of this report for further discussion.

(2) Amounts represent contractual amounts due under our December 2019 Bonds, including interest based on the fixed rate of 1% per year plus a premium on such bonds to provide an internal rate of return with respect to such Bonds of 6% at maturity. Although these bonds mature in December 2024, they may be converted into equity securities prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. In August 2020, our August 2019 Bonds were fully converted into 4,962,364 shares of our common stock. See Note 11, "Convertible Debt” in the Consolidated Financial Statements section of this report for further discussion.

(3) We have entered into operating leases for our facilities, which expire from 2023 to 2029, and operating leases for office equipment, which expire in 2021 and 2022. In the fourth quarter of 2019, we entered into two subleases for a portion of our Plymouth Meeting corporate headquarters facility through December 31, 2022 and March 31, 2025. As of December 31, 2020, we expect to receive aggregate future minimum lease payments totaling $1.2 million (non-discounted) over the duration of the sublease agreements, which expected payments are not included in the table above.

In the normal course of business, we are a party to a variety of agreements pursuant to which we 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 our obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these types of agreements have not had a material effect on our business, consolidated results of operations or financial condition.

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Market risk represents the risk of loss that may impact our consolidated financial position, results of operations or cash flows due to adverse changes in financial and commodity market prices and rates. We are exposed to market risk primarily in the area of changes in United States interest rates and conditions in the credit markets, and the recent fluctuations in interest rates and availability of funding in the credit markets primarily impact the performance of our investments. We do not have any material foreign currency or other derivative financial instruments. 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 investment grade securities. Due to the short-term maturities of our cash equivalents and the low risk profile of our investments at December 31, 2020, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents.

The interest rate on our indebtedness, consisting exclusively of the Notes and Bonds, is fixed and not subject to fluctuations in interest rates.

Fair Value Measurements

The investment in affiliated entity at December 31, 2020 represents our ownership interest in the Korean-based company PLS. We report this investment at fair value on the consolidated balance sheet using the closing price of PLS shares of common stock as reported on the date of determination on the Korea New Exchange Market.

Foreign Currency Risk

We have operated primarily in the United States and most transactions during the year ended December 31, 2020 were made in United States dollars. Accordingly, we have not had any material exposure to foreign currency rate fluctuations, with

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the exception of the sale of our investment in GeneOne, which was denominated in South Korean Won, the issuance of the August 2019 and December 2019 Bonds, which were and 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. We do not have any foreign currency hedging instruments in place.

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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is incorporated by reference to our Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm beginning at page F-1 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 Annual 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 December 31, 2020 at the reasonable assurance level.

Internal Control Over Financial Reporting

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with United States generally accepted accounting principles.

As of December 31, 2020, management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, management determined that we maintained effective internal control over financial reporting as of December 31, 2020.

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Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting that occurred during the fourth quarter of our fiscal year ended December 31, 2020, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Independent Registered Public Accounting Firm

The independent registered public accounting firm that audited the consolidated financial statements that are included in this Annual Report on Form 10-K has issued an audit report on the effectiveness of our internal control over financial reporting as of December 31, 2020. The report appears below.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Inovio Pharmaceuticals, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Inovio Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework (the COSO criteria). In our opinion, Inovio Pharmaceuticals, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2020 and related notes and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for designing, implementing, and maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct, misstatements. Also, projections of any assessment of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Diego, California

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ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 is hereby incorporated by reference from our definitive proxy statement, to be filed pursuant to Regulation 14A within 120 days after the end of our 2020 fiscal year, under the captions “Election of Directors” and “Executive Officers and Other Information.”

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item 11 is hereby incorporated by reference from our definitive proxy statement, to be filed pursuant to Regulation 14A within 120 days after the end of our 2020 fiscal year, under the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation of Directors” and “Director Compensation Table.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 is hereby incorporated by reference from our definitive proxy statement, to be filed pursuant to Regulation 14A within 120 days after the end of our 2020 fiscal year, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director independence and other information required by this Item 13 is hereby incorporated by reference from our definitive proxy statement, to be filed pursuant to Regulation 14A within 120 days after the end of our 2020 fiscal year, under the captions “Certain Relationships and Related Party Transactions” and “Election of Directors.”

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14 is hereby incorporated by reference from our definitive proxy statement, to be filed pursuant to Regulation 14A within 120 days after the end of our 2020 fiscal year, under the caption “Ratification of Appointment of Registered Public Accounting Firm.”

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1.Financial Statements

Consolidated financial statements required to be filed hereunder are indexed on Page F-1 hereof.

2.Financial Statement Schedules

Schedules not listed herein have been omitted because the information required to be set forth therein is not applicable or is included in the Financial Statements or notes thereto.

3.Exhibits

The following exhibits are filed as part of this annual report on Form 10-K:

ExhibitNumber Description of Document

83

84

85

21.1 Subsidiaries of the registrant (filed herewith).

23.1 Consent of Independent Registered Public Accounting Firm (filed herewith).

24.1 Power of Attorney (included on signature page).

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

+ Designates management contract, compensatory plan or arrangement.

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ITEM 16. FORM 10-K SUMMARY

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 1, 2021.

Inovio Pharmaceuticals, Inc.

By: /s/ J. JOSEPH KIM

J. Joseph KimPresident and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints J. Joseph Kim and Peter Kies, and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the United States Securities and Exchange Commission in connection with the Annual Report on Form 10-K and any and all amendments hereto, as fully for all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature Title Date

J. Joseph Kim

/s/ SIMON X. BENITO Chairman of the Board of Directors March 1, 2021

Simon X. Benito

Peter Kies

/s/ ANN MILLER Director March 1, 2021

Ann Miller

/s/ JAY SHEPARD Director March 1, 2021

Jay Shepard

/s/ DAVID WEINER Director March 1, 2021

David Weiner

/s/ WENDY YARNO Director March 1, 2021

Wendy Yarno

/s/ LOTA ZOTH Director March 1, 2021

Lota Zoth

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INOVIO PHARMACEUTICALS, INC.

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets F-4

Consolidated Statements of Operations F-5

Consolidated Statements of Comprehensive Loss F-6

Consolidated Statements of Stockholders' Equity F-7

Consolidated Statements of Cash Flows F-8

Notes to Consolidated Financial Statements F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Inovio Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Inovio Pharmaceuticals, Inc. (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated March 1, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Valuation of Debt Instruments

F-2

Accrual of Clinical Trial Expenses

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2002.

San Diego, California

F-3

Inovio Pharmaceuticals, Inc.

CONSOLIDATED BALANCE SHEETS

December 31,

ASSETS

Current assets:

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued expenses due to affiliated entities 642,969 729,729

Deferred revenue from affiliated entities — 31,775

Grant funding liability from affiliated entities 58,500 708,425

Commitments and contingencies

Inovio Pharmaceuticals, Inc. stockholders’ equity:

Accumulated other comprehensive income (loss) (256,150) 472,608

Non-controlling interest — 1,969,759

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Inovio Pharmaceuticals, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year ended December 31,

Revenues:

Other revenue from affiliated entities — 1,800 —

Operating expenses:

Other income (expense):

Change in fair value of common stock warrants — — 360,795

Net unrealized gain on available-for-sale equity securities 1,695,497 — —

Gain on deconsolidation of Geneos 4,121,075 — —

Loss on extinguishment of convertible bonds (8,177,043) — —

Gain on extinguishment of convertible senior notes 8,762,030 — —

Income tax benefit (provision for income taxes) — 257,335 (2,169,811)

Share in net loss of Geneos (4,584,610) — —

Net loss attributable to non-controlling interest 1,063,757 1,192,558 —

Net loss per share attributable to Inovio Pharmaceuticals, Inc. stockholders

Weighted average number of common shares outstanding

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Inovio Pharmaceuticals, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the Year ended December 31,

Other comprehensive income (loss):

Foreign currency translation 27,205 — —

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Inovio Pharmaceuticals, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Numberof shares Amount Numberof shares Amount

Cumulative effect of accounting change (1) — — — — — 231,366 (231,366) — —

Unrealized loss on short-term investments — — — — — — (180,496) — (180,496)

Conversion of preferred stock to common stock (14) — 5,147 5 (5) — — — —

Foreign currency translation — — — — — — 27,205 — 27,205

(1) Upon adoption of ASU 2016-01 on January 1, 2018, the Company began to measure and record equity investments, except those accounted for under the equity method of accounting that have a readily determinable fair value, at fair value and began to recognize the changes in fair value in its consolidated statements of operations, instead of recognizing unrealized gains and losses through accumulated other comprehensive income (loss), as done under the previous guidance. The Company recorded a $231,000 cumulative effect adjustment to reclassify the cumulative unrealized gain, net of tax effect, from its investment in an affiliated entity, PLS, from accumulated other comprehensive loss to accumulated deficit.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Inovio Pharmaceuticals, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of operating lease right-of-use assets 1,041,713 851,760 —

Change in fair value of common stock warrants — — (360,795)

Amortization of premiums on investments — 1,962 72,561

Deferred taxes — 5,397 —

Gain on deconsolidation of Geneos (4,121,075) — —

Share of net loss in Geneos 4,584,610 — —

Loss on extinguishment of convertible August 2019 bonds 8,177,043 — —

Gain on extinguishment of convertible senior notes (8,762,030) — —

Net unrealized gain on available-for-sale equity securities (1,695,497) — —

Tax benefit from other unrealized gains on short-term investments — (266,215) —

Changes in operating assets and liabilities:

Cash flows from investing activities:

Proceeds from sale of investment of GeneOne 40,125,418 — —

Decrease of cash resulting from the deconsolidation of Geneos (2,774,851) — —

Investment in Geneos (1,399,999) — —

Cash flows from financing activities:

Proceeds from Geneos issuance of note payable 171,620 — —

Effect of exchange rate changes on cash and cash equivalents 27,205 — —

Supplemental disclosure:

Amounts accrued for purchases of property and equipment $ 136,711 $ — $ 559,646

Equity component of issuance of convertible notes $ — $ 15,752,698 $ —

The accompanying notes are an integral part of these consolidated financial statements.

F-8

Inovio Pharmaceuticals, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company

Inovio Pharmaceuticals, Inc. (the “Company” or “INOVIO”), is a biotechnology company focused on rapidly bringing to market precisely designed DNA medicines to treat and protect people from infectious diseases, cancer, and diseases associated with human papillomavirus (HPV). INOVIO's DNA medicines pipeline is comprised of three types of product candidates: DNA vaccines, DNA immunotherapies and DNA encoded monoclonal antibodies (dMAbs®). In clinical trials, INOVIO has demonstrated that DNA medicines can be delivered directly into cells in the body through its proprietary smart device to consistently activate robust and fully functional T cell and antibody responses against targeted pathogens and cancers.

The Company's novel DNA medicine candidates are made using its proprietary SynCon® technology that uses a computer algorithm designed to identify and optimize the DNA sequence of the target antigen (be it virus or a tumor). INOVIO then creates optimized plasmids, which are circular strands of DNA that instruct a cell to produce antigens to help the person’s immune system recognize and destroy cancerous or virally infected cells.

INOVIO's patented CELLECTRA® smart delivery devices provide optimized uptake of its DNA medicines within the cell, overcoming a key limitation of other DNA-based technology approaches.

Human clinical trial data to date has shown a favorable safety profile of INOVIO's DNA medicines delivered directly into cells in the body using the CELLECTRA® smart device in more than 7,000 administrations across more than 3,000 patients.

INOVIO's corporate strategy is to advance, protect and, once approved, commercialize its novel DNA medicines to meet urgent and emerging global health needs. The Company continues to advance and clinically validate an array of DNA medicine candidates that target HPV-associated diseases, cancer, and infectious diseases, such as COVID-19 (SARS-CoV-2). The Company aims to advance these candidates through commercialization and continue to leverage third-party resources through collaborations and partnerships, including product license agreements.

The Company's partners and collaborators include ApolloBio Corporation., AstraZeneca, Beijing Advaccine, The Bill & Melinda Gates Foundation, Coalition for Epidemic Preparedness Innovations (CEPI), The U.S. Department of Defense (DoD), Defense Advanced Research Projects Agency (DARPA), GeneOne Life Science, HIV Vaccines Trial Network, the U.S. Defense Threat Reduction Agency’s Medical CBRN Defense Consortium (MCDC), International Vaccine Institute (IVI), National Cancer Institute, National Institutes of Health, National Institute of Allergy and Infectious Diseases, Ology Bioservices, the Parker Institute for Cancer Immunotherapy, Plumbline Life Sciences, Regeneron Pharmaceuticals, Inc., Richter-Helm BioLogics, Thermo Fisher Scientific, the University of Pennsylvania, the Walter Reed Army Institute of Research, and The Wistar Institute.

The Company and its collaborators are currently conducting or planning clinical studies of its DNA medicines for HPV-associated precancers, including cervical, vulvar, and anal dysplasia; HPV-associated cancers, including head & neck, cervical, anal, penile, vulvar, and vaginal; other HPV-associated disorders, such as recurrent respiratory papillomatosis (RRP); glioblastoma multiforme (GBM); prostate cancer; HIV; Ebola; Middle East Respiratory Syndrome (MERS); Lassa fever; Zika virus; and the COVID-19 virus (coronavirus).

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

2. Summary of Significant Accounting Policies

Basis of Presentation and Liquidity

INOVIO incurred a net loss attributable to common stockholders of $166.4 million for the year ended December 31, 2020. INOVIO had working capital of $429.5 million and an accumulated deficit of $906.2 million as of December 31, 2020. 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. The Company’s cash, cash equivalents and short-term investments of $411.6 million as of December 31, 2020, are sufficient to support the Company's operations for a period of at least 12 months from the date it is issuing these financial statements. The Company has evaluated subsequent events after the balance sheet date through the date it issued these consolidated 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 use of potential future At-the-Market Equity Offering Sales Agreements (“Sales Agreements”). The Company has a history of conducting debt and equity financings, including the receipt of net proceeds under past Sales

F-9

Agreements of $454.5 million during the year ended December 31, 2020, and net proceeds of $9.1 million under a Sales Agreement during the year ended December 31, 2019. The Company also received net proceeds of $75.7 million from a private placement of 6.50% convertible senior notes due 2024 (the “Notes”), net proceeds of $14.5 million from the private placement of 18 billion Korean Won (KRW) (approximately USD $15.0 million based on the exchange rate on the date of issuance) aggregate principal amount of its 1.0% convertible bonds due August 2024 (the "August 2019 Bonds"), and net proceeds of $4.0 million from the private placement of 4.7 billion KRW (approximately USD $4.1 million based on the exchange rate on the date of issuance) aggregate principal amount of its 1.0% convertible bonds due December 2024 (the "December 2019 Bonds" and, together with the August 2019 Bonds, the “Bonds”) during the year ended December 31, 2019. 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.

In June 2020, the Company formed a wholly-owned subsidiary, Inovio Asia LLC, under the laws of South Korea, through which the Company intends to advance its corporate development projects and other functions in South Korea and other Asian countries.

From time to time, the Company may 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.

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.

Risks and Uncertainties

The global pandemic resulting from COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will continue to cause significant disruptions to the global economy, as well as businesses and capital markets around the world.

The Company is closely monitoring the impact of the COVID-19 pandemic on its employees, collaborators and service providers. The extent to which the pandemic will impact the Company's business and operations will depend on future developments, including the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease, that are highly uncertain.

Consolidation

The consolidated financial statements include the accounts of Inovio Pharmaceuticals, Inc. and its subsidiaries. As of December 31, 2020 the Company consolidated its wholly-owned subsidiary Inovio Asia LLC. On December 31, 2020, former wholly-owned subsidiaries Genetronics, Inc. and VGX Pharmaceuticals Inc. and former majority -owned subsidiary VGX Animal Health, Inc. were merged into Inovio Pharmaceuticals, Inc. All intercompany accounts and transactions have been eliminated upon consolidation. As of June 1, 2020, the Company deconsolidated its former subsidiary Geneos Therapeutics, Inc. ("Geneos"), as the Company no longer held a controlling financial interest. Refer to Footnote 19 for further discussion of Geneos.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one segment operating primarily within the United States.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration of Credit Risk

F-10

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and short-term investments. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities which are designed to maintain principal and maximize liquidity.

The Company has contracts with certain of its customers that have represented more than 10% of the Company's total revenues, as discussed in Note 7.

Fair Value of Financial Instruments

The Company’s financial instruments consist principally of cash equivalents, short-term investments and investments in affiliated entities. The carrying amounts of cash equivalents approximate the related fair values due to the short-term maturities of these instruments. Investments are recorded at fair value, based on current market valuations. The Company carries convertible notes and bonds at face value less unamortized debt discount and issuance costs on its consolidated balance sheet, and it presents the fair value of such convertible notes and bonds for disclosure purposes only.

Cash and Cash Equivalents

Cash equivalents are considered by the Company to be highly liquid investments purchased with original maturities of three months or less from the date of purchase. Cash and cash equivalents included certain money market accounts and U.S. treasury securities at December 31, 2020 and money market accounts at December 31, 2019.

Investments

The Company defines investments as income-yielding securities that can be readily converted into cash or equity investments classified as available-for-sale. Investments included mutual funds, U.S. treasury securities, certificates of deposit, U.S. agency mortgage-backed securities and an equity investment in the Company’s affiliated entity, PLS, at December 31, 2020. Investments included mutual funds and an equity investment in the Company's affiliated entities, PLS and GeneOne, at December 31, 2019.

Accounts Receivable

Accounts receivable are recorded at invoiced amounts and do not bear interest. The Company performs ongoing credit evaluations of its customers’ financial condition. Credit is extended to customers as deemed necessary and generally does not require collateral. Management believes that the risk of loss is significantly reduced due to the quality and financial position of the Company's customers.No allowance for doubtful accounts was deemed necessary at December 31, 2020 and 2019.

Fixed Assets

Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful life of the assets, generally three to five years. Leasehold improvements are amortized over the shorter of the remaining term of the related leases or the estimated economic useful lives of the improvements. Repairs and maintenance are expensed as incurred.

Long-Lived Assets

All long-lived assets are reviewed for impairment in value when changes in circumstances dictate, based upon undiscounted future operating cash flows, and appropriate losses are recognized and reflected in current earnings, to the extent the carrying amount of an asset exceeds its estimated fair value determined by the use of appraisals, discounted cash flow analyses or comparable fair values of similar assets. The Company has not recognized any losses on long-lived assets through December 31, 2020.

Valuation of Intangible Assets and Goodwill

Intangible assets are amortized over their estimated useful lives ranging from two to 18 years. Acquired intangible assets are continuously being developed for the future economic viability contemplated at the time of acquisition. The Company is concurrently conducting preclinical studies and clinical trials using the acquired intangibles and has entered into licensing agreements for the use of these acquired intangibles.

Historically, the Company has recorded patents at cost and amortized these costs using the straight-line method over the expected useful lives of the patents or 17 years, whichever is less. Patent cost consists of the consideration paid for patents and related legal costs. New patent costs are expensed as incurred, with patent costs capitalized as of that date continuing to be amortized over the expected life of the patent. License costs are recorded based on the fair value of consideration paid and are amortized using the straight-line method over the shorter of the expected useful life of the underlying patents or the term of the related license agreement to the extent the license has an alternative future use. As of December 31, 2019 and 2018, the Company’s intangible assets resulting from acquisitions and additional intangibles including previously capitalized patent costs and license costs, net of accumulated amortization, totaled $3.1 million and $3.7 million, respectively.

F-11

The determination of the value of intangible assets requires management to make estimates and assumptions that affect the Company’s consolidated financial statements. The Company assesses potential impairments to intangible assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. The Company’s judgments regarding the existence of impairment indicators and future cash flows related to intangible assets are based on operational performance of its acquired businesses, market conditions and other factors. If impairment is indicated, the Company will reduce the carrying value of the intangible asset to fair value. While current and historical operating and cash flow losses are potential indicators of impairment, the Company believes the future cash flows to be received from its intangible assets will exceed the intangible assets’ carrying value, and accordingly, the Company has not recognized any impairment losses through December 31, 2020.

Goodwill represents the excess of acquisition cost over the fair value of the net assets of acquired businesses. Goodwill is reviewed for impairment at least annually at November 30, or more frequently if an event occurs indicating the potential for impairment. During its goodwill impairment review, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance of the Company. If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of its reporting unit is less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, the Company proceeds to perform the two-step test for goodwill impairment. The first step involves comparing the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of loss, which involves comparing the implied fair value of the goodwill to the carrying value of the goodwill. The Company may also elect to bypass the qualitative assessment in a period and elect to proceed to perform the first step of the goodwill impairment test. The Company performed its annual assessment for goodwill impairment as of November 30, 2020, identifying no impairment.

Although there are inherent uncertainties in this assessment process, the estimates and assumptions the Company is using are consistent with its internal planning. If these estimates or their related assumptions change in the future, the Company may be required to record an impairment charge on all or a portion of its goodwill and intangible assets. Furthermore, the Company cannot predict the occurrence of future impairment triggering events nor the impact such events might have on its reported asset values. Future events could cause the Company to conclude that impairment indicators exist and that goodwill or other intangible assets associated with its acquired businesses are impaired. Any resulting impairment loss could have an adverse impact on the Company’s results of operations. See Note 10 for further discussion of the Company’s goodwill and intangible assets.

Income Taxes

The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities along with net operating loss and tax credit carry forwards. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

Valuation allowances against the Company’s deferred tax assets were $159.7 million and $137.2 million at December 31, 2020 and 2019, respectively. Changes in the valuation allowances, when they are recognized in the provision for income taxes, are included as a component of the estimated annual effective tax rate.

Collaboration Agreements

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, the Company assesses whether the payments between the Company and the collaboration partner are subject to other accounting literature. 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”). However, if the Company concludes that its collaboration partner is not a customer for certain activities, such as for certain collaborative research and development activities, the Company presents such payments as a reduction of research and development expense.

Revenue Recognition

F-12

The Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligations. At contract inception, the Company assesses the goods or services agreed upon within each contract and assess whether each good or service is distinct and determine those that areperformance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Collaborative Arrangements

The Company enters into collaborative arrangements with partners that typically include payment of one or more of the following: (i) license fees; (ii) product supply services; (iii) milestone payments related to the achievement of developmental, regulatory, or commercial goals; and (iv) royalties on net sales of licensed products. Where a portion of non-refundable, upfront fees or other payments received are allocated to continuing performance obligations under the terms of a collaborative arrangement, they are recorded as deferred revenue and recognized as revenue when (or as) the underlying performance obligation is satisfied.

As part of the accounting for these arrangements, the Company must develop estimates and assumptions that require judgment of management to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligation. The standalone selling price may include items such as forecasted revenues, development timelines, discount rates and probabilities of technical and regulatory success. The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time. In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

License Fees

If a license to intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Product Supply Services

Arrangements that include a promise for future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. The Company evaluates whether it is the principal or agent in the arrangement. The Company had determined that it is the principal in the current arrangements as the Company controls the product supply before it is transferred to the customer.

Milestone Payments

At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company's or its collaboration partner’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achieving such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration or other revenues and earnings in the period of adjustment.

Royalties

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its collaborative arrangements.

F-13

Grants

The Company accounts for various grant agreements under the contributions guidance under Subtopic 958-605, Not-for-Profit Entities-Revenue Recognition, which is outside the scope of Topic 606, as the government agencies granting the Company funds are not receiving reciprocal value for their contributions. All contributions received from current grant agreements are recorded as a contra-expense as opposed to revenue on the consolidated statement of operations.

Derivative Liabilities

The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives requiring separate recognition in the Company's financial statements. The result of this accounting treatment is that the fair value of the embedded derivative is revalued at each balance sheet date and recorded as a liability, and the change in fair value during the reporting period is recorded in other income (expense) in the consolidated statements of operations. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the balance sheet date.

Foreign Currency Transactions

The functional and presentation currency of the Company is the U.S. dollar. Transactions denominated in a currency other than the functional currency are recorded on the initial recognition at the exchange rate at the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are remeasured at the end of each reporting period into the functional currency at the exchange rate at that date. Exchange differences are included in general and administrative expenses in the consolidated statement of operations. Non-monetary assets and liabilities measured at cost are remeasured at the exchange rate at the date of the transaction.

Variable Interest Entities (VIE)

The Company evaluates its ownership, contractual and other interests in entities that are not wholly-owned to determine if these entities are VIEs, and, if so, whether the Company is the primary beneficiary of the VIE. In determining whether the Company is the primary beneficiary of a VIE and therefore required to consolidate the VIE, the Company applies a qualitative approach that determines whether it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the rights to receive benefits from, the VIE that could potentially be significant to that VIE. The Company will continuously perform this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE.

Equity Investments

Under ASC Topic 321, Investments - Equity Securities, the Company must measure equity investments (except those accounted for under the equity method, those that result in consolidation of the investee and certain other investments) at fair value and recognize any changes in fair value in the consolidated statement of operations. The Company can elect a measurement alternative for equity investments that do not have readily determinable fair values and do not qualify for the practical expedient in ASC Topic 820, Fair Value Measurement, to estimate fair value using the net asset value per share (or its equivalent). The Company's equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient for estimating fair value are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identifiable or similar investments of the same issuer.

Research and Development Expenses

The Company’s activities have largely consisted of research and development efforts related to developing electroporation delivery technologies, DNA vaccines, DNA immunotherapies and dMAbs. Research and development expenses consist of expenses incurred in performing research and development activities including salaries and benefits, facilities and other overhead expenses, clinical trials, contract services and other outside expenses. Research and development expenses are charged to operations as they are incurred. These expenses result from the Company's independent research and development efforts as well as efforts associated with collaborations and licensing arrangements. The Company reviews and accrues clinical trial expense based on work performed, which relies on estimates of total trial management costs, sites activated, patients enrolled, and number of patient visits. The Company follows this method since reasonably dependable estimates of the costs applicable to various stages of a research agreement or clinical trial can be made. 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.

F-14

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss for the year by the weighted average number of common shares outstanding during the year. Diluted net loss per share is calculated in accordance with the treasury stock method for the outstanding stock options and restricted stock units 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 outstanding Notes and Bonds issued by the Company (discussed in Note 11) has been 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 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 years ended December 31, 2020, 2019 and 2018, basic and diluted net loss per share are the same, as the assumed exercise or settlement of stock options, restricted stock units and the potentially dilutive shares issuable upon conversion of the Notes and Bonds are antidilutive.

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

Year Ended December 31,

Performance-based restricted stock units 663,353 — —

Leases

For its long-term operating leases, the Company recognized an operating lease right-of-use asset and an operating lease liability on its consolidated balance sheets. The lease liability is determined as the present value of future lease payments using an estimated rate of interest that the Company would pay to borrow equivalent funds on a collateralized basis at the lease commencement date. The right-of-use asset is based on the liability adjusted for any prepaid or deferred rent. The Company determines the lease term at the commencement date by considering whether renewal options and termination options are reasonably assured of exercise.

Fixed rent expense for the Company's operating leases is recognized on a straight-line basis over the term of the lease and is included in operating expenses on the consolidated statements of operations. Variable lease payments including lease operating expenses are recorded as incurred.

Stock-Based Compensation

The Company incurs stock-based compensation expense related to restricted stock units 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 Global Select 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:

F-15

Year Ended December 31,

Expected volatility 78% 70% 72%

Expected life in years 6 6 6

Dividend yield — — —

The Company adopted ASU 2018-07 on January 1, 2019, which generally aligned the accounting for stock-based compensation for non-employees with that of employees. The fair value of the stock options granted to non-employees was estimated using the Black-Scholes pricing model.

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

Year Ended December 31,

Expected volatility 76% 88% 78%

Expected life in years 10 10 9

Dividend yield — — —

Recent Accounting Pronouncements - Recently Adopted

The recent accounting pronouncements below may have a significant effect on the Company's financial statements. Recent accounting pronouncements that are not anticipated to have an impact on or are unrelated to the Company's financial condition, results of operations, or related disclosures are not discussed.

ASU No. 2019-12. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. FASB issued this Update as part of its simplification initiative to improve areas of GAAP and reduce cost and complexity while maintaining usefulness. The main provision that impacts the Company is the removal of the exception to the incremental approach of intra-period tax allocation when there is a loss from continuing operations and income or gain from other items (for example, discontinued operations and other comprehensive income). ASU 2019-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The Company has elected to early adopt ASU 2019-12. By early adopting, ASU 2019-12 became effective as of the beginning of 2020; however, there was no cumulative effect to be recognized with the early adoption. As of December 31, 2020, there was a loss from continuing operations and a cumulative loss in other comprehensive income and there was therefore no effect on the tax provision for the period ended December 31, 2020.

ASU No. 2016-13. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available for sale debt securities. This standard includes the Company's financial instruments, such as accounts receivable and investments that are generally of high credit quality. Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new guidance requires the Company to identify, analyze, document and support new methodologies for quantifying expected credit loss estimates for its financial instruments, using information such as historical experience and current economic conditions, plus the use of reasonably supportable forecast information. The Company adopted ASU 2016-13 on January 1, 2020, and there was no material impact to its consolidated financial statements. The Company will continue to monitor the impact of the coronavirus, SARS-CoV-2 (“COVID-19”) outbreak on expected credit losses.

ASU No. 2018-13. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which amends certain disclosure requirements over fair value measurements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income. The Company adopted this guidance on January 1, 2020, and there was no material impact to its consolidated financial statement disclosures (see Note 6 for more information about the Company’s fair value classifications).

ASU No. 2018-18. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which clarified the interaction between Topic 808, Collaborative

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Arrangements, and Topic 606, Revenue from Contracts with Customers. The Company adopted this guidance on January 1, 2020, and there was no material impact to its consolidated financial statements.

ASU 2017-04. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the recognition and measurement of a goodwill impairment loss by eliminating Step 2 of the quantitative goodwill impairment test. The guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if any. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 and should be applied on a prospective basis. The Company adopted this guidance on January 1, 2020, and there was no material impact to its consolidated financial statements.

3. Revenue Recognition

During the year ended December 31, 2020, the Company recognized total revenue under license and other agreements of $5.0 million from Advaccine, $1.4 million from its affiliated entity Plumbline Life Sciences, Inc. ("PLS"), and $1.0 million from various other contracts. Of the total revenue recognized during the year ended December 31, 2020, $127,000 was in deferred revenue as of December 31, 2019. During the year ended December 31, 2019, the Company recognized revenue of $293,000 that was included in deferred revenue at December 31, 2018. Performance obligations are generally satisfied within 12 months of the initial contract date.

4. Collaborative Agreements

Advaccine Biopharmaceuticals Suzhou Co., Ltd. (Advaccine)

On December 31, 2020, the Company entered into a Collaboration and License Agreement (the “Agreement”) with Advaccine. Under the terms of the Agreement, the Company has 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”). Advaccine will not have the right to grant sublicenses, other than to affiliated entities, without the Company’s express prior written consent. As part of the collaboration, Advaccine has also granted to the Company a non-exclusive license to certain DNA vaccine manufacturing processes.

The Company and Advaccine have collaborated since January 2020 to leverage Advaccine’s clinical development expertise to conduct an early-stage clinical trial in China in parallel with the Company’s clinical development efforts in the United States and South Korea. In December 2020, the Company and Advaccine announced that they had dosed the first subject in a Phase 2 clinical trial of INO-4800 in China. This trial is independent of the Company’s ongoing clinical trial of INO-4800, called INNOVATE, being conducted in the United States.

Under the Agreement, Advaccine made an upfront payment to the Company of $3.0 million subsequent to December 31, 2020. In addition to the upfront payment, the Company is entitled to receive up to an aggregate of $108.0 million upon the achievement of specified milestones related to the development, regulatory approval and commercialization of INO-4800, including the achievement of specified net sales thresholds for INO-4800 in Greater China, if approved. As of December 31, 2020 the Company had earned a $2.0 million milestone payment based on the enrollment of the first subject in the Phase 2 clinical trial for the product in the Advaccine territory. The Company will also be entitled to receive a royalty equal to a high single-digit percentage of annual net sales in each region within Greater China, subject to reduction in the event of competition from biosimilar products in a particular region and in other specified circumstances. Advaccine’s obligation to pay royalties will continue, on a licensed product-by-licensed product basis and region-by-region basis, for ten years after the first commercial sale in a particular region within Greater China or, if later, until the expiration of the last-to-expire patent covering a given licensed product in a given region.

Under the Agreement, Advaccine will be responsible for the development and commercialization of the licensed products at its own cost and expense and shall use commercially reasonable efforts to develop, obtain and maintain regulatory approval of INO-4800, as well as the Company’s CELLECTRA® device and arrays for use in connection with the administration of INO-4800, in each region in Greater China. In the event that the Company has not initiated the planned Phase 3 segment of its ongoing clinical trial of INO-4800 in the United States within one year after entering into the Agreement, Advaccine may elect to conduct a Phase 3 clinical trial outside of Greater China at its own cost and expense for the purposes of obtaining regulatory approval in China, subject to the Company’s right to review and approve the protocols and design of such a trial.

Under the Agreement, the Company will supply Advaccine’s clinical requirements of INO-4800 and devices, although Advaccine may manufacture INO-4800 for its clinical use and may procure alternate suppliers. Advaccine is responsible for the manufacture and supply of INO-4800 itself or through a contract manufacturer for commercial use. Upon Advaccine’s reasonable request, the parties may negotiate a separate clinical and/or commercial supply agreement.

The Company evaluated the terms of the Advaccine Agreement under ASC Topics 606 and 808, and determined that the contract was with a customer and therefore should be accounted for under ASC Topic 606. The license to INO-4800 in the

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territories was identified as the only distinct performance obligation on a standalone basis as of the inception of the agreement. The Company concluded that the license was distinct from potential future manufacturing and supply obligations. The Company further determined that the transaction price under the agreement consisted of the $3.0 million upfront payment plus the initial $2.0 million milestone payment which was achieved upon contract signing. The future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained. As part of the evaluation of the development and regulatory milestones constraint, the Company determined that the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals, each of which is uncertain at this time. Future potential milestone amounts may be recognized as revenue under the Advaccine Agreement, as well as under other collaborative research and development arrangements, if unconstrained. Reimbursable program costs will be recognized proportionately with the performance of the underlying services or delivery of drug supply and are excluded from the transaction price.

The Agreement will continue in force on a region-by-region basis until Advaccine has no remaining royalty obligations in such region. Either party may terminate the Agreement (i) in the event the other party shall have materially breached its obligations thereunder and such default shall have continued for a specified period after written notice thereof or (ii) upon the bankruptcy or insolvency of the other party. In addition, the Company may terminate the agreement, upon prior written notice, if Advaccine (i) ceases all development or commercialization activities for at least nine months, subject to certain exceptions, or (ii) challenges the validity, enforceability or scope of any of the patents licensed by the Company to Advaccine under the Agreement, subject to certain conditions. Advaccine may terminate the Agreement at any time for convenience upon nine months’ written notice to the Company, if such notice is provided before the first commercial sale of INO-4800 in Greater China, or 18 months’ written notice thereafter; provided that the Company may accelerate the effectiveness of such termination to the extent permitted by law.

Under Topic 606, the entire transaction price of $5.0 million was allocated to the license performance obligation. The Company determined that as of December 31, 2020, the transfer of technology has occurred for the use and benefit of the license and accordingly, the performance obligation was fully satisfied. The Company accordingly has recognized $5.0 million in revenue under collaborative research and development arrangements on the consolidated statement of operations during the year ended December 31, 2020. As of December 31, 2020, the Company had an accounts receivable balance of $7.1 million from Advaccine.

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"), with an effective date of March 20, 2018. Under the terms of the ApolloBio Agreement, the Company granted to ApolloBio the exclusive right to develop and commercialize VGX-3100, its DNA immunotherapy product candidate designed to treat pre-cancers caused by HPV, within the territories of China, Hong Kong, Macao, Taiwan, and may include Korea in the event that no patent covering VGX-3100 is issued in China within the three years following the effective date of the ApolloBio Agreement.

Under the ApolloBio Agreement, the Company received proceeds of $19.4 million in March 2018, which comprised the upfront payment of $23.0 million less $2.2 million in foreign income taxes and $1.4 million in certain foreign non-income taxes. The foreign income taxes were recorded as a provision for income taxes and the foreign non-income taxes were recorded as a general and administrative expense, on the consolidated statement of operations. The Company also incurred advisory fees of $960,000 in connection with receiving the upfront payment from ApolloBio. These fees were determined to be incremental costs of obtaining the contract. The Company applied the practical expedient that permits a company to expense incremental costs to obtain a contract when the expected amortization period is one year or less and recorded the fees in general and administrative expense during the quarter ended March 31, 2018. No additional advisory fees are due related to the ApolloBio Agreement.

In addition to the upfront payment, 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 the United States, China and Korea. 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.

The Company evaluated the terms of the ApolloBio Agreement under ASC Topic 606, and the license to VGX-3100 in the territories was identified as the only distinct performance obligation on a standalone basis as of the inception of the agreement. The Company concluded that the license was distinct from potential future manufacturing and supply obligations. The Company further determined that the transaction price under the agreement consisted of the $23.0 million upfront payment. The future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained. As part of the evaluation of the development and regulatory milestones constraint, the Company determined that

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the achievement of such milestones is contingent upon success in future clinical trials and regulatory approvals, each of which is uncertain at this time. Future potential milestone amounts may be recognized as revenue under the ApolloBio Agreement, as well as under other collaborative research and development arrangements, if unconstrained. Reimbursable program costs will be recognized proportionately with the performance of the underlying services or delivery of drug supply and are excluded from the transaction price. As of December 31, 2020 there have been no significant reimbursable program costs under the ApolloBio Agreement.

The ApolloBio Agreement will continue in force until ApolloBio has no remaining royalty obligations. Either party may terminate the ApolloBio Agreement in the event the other party shall materially breach or default in the performance of its material obligations thereunder and such default continues for a specified period after written notice thereof. In addition, ApolloBio may terminate the ApolloBio Agreement at any time beginning one year after the effective date for any reason upon 90 days written notice to the Company.

Under Topic 606, the entire transaction price of $23.0 million was allocated to the license performance obligation. The Company determined that during the quarter ended June 30, 2018, the transfer of technology occurred and accordingly, the performance obligation was fully satisfied. The Company has recorded the gross upfront payment received from ApolloBio of $23.0 million as license revenue on the consolidated statement of operations during the year ended December 31, 2018.

AstraZeneca

On August 7, 2015, the Company entered into a license and collaboration agreement with MedImmune, the global biologics research and development arm of AstraZeneca ("AstraZeneca"). Under the agreement, AstraZeneca acquired exclusive rights to the Company's INO-3112 immunotherapy, renamed as MEDI0457, which targets cancers caused by human papillomavirus (HPV) types 16 and 18, with the ability to sublicense those license rights. AstraZeneca made an upfront payment of $27.5 million to the Company in September 2015. AstraZeneca may be obligated to make potential future development and regulatory event-based payments to the Company totaling up to $125 million and potential future commercial event-based payments totaling up to $115 million, in each case upon the achievement of specified milestones related to MEDI0457 set forth in the license and collaboration agreement. AstraZeneca will fund all development costs associated with MEDI0457 immunotherapy. The Company is entitled to receive up to mid-single to double-digit tiered royalties on MEDI0457 product sales. Under the agreement, AstraZeneca can also request the Company to provide certain clinical manufacturing at an agreed upon price. The Company determined these options did not represent material rights at the inception of the agreement.

As of December 31, 2017, the Company had recognized all of the $27.5 million upfront payment as revenue, as all identified material performance obligations had been met with respect to that payment. In both December 2018 and March 2019, the Company recognized as revenue $2.0 million in milestone payments from AstraZeneca triggered by AstraZeneca’s initiation of the Phase 2 portion of ongoing clinical trials in the second and third major indication, respectively, under the agreement.

Coalition for Epidemic Preparedness Innovations

On April 11, 2018, the Company entered into agreements with CEPI, pursuant to which the Company intends to develop vaccine candidates against Lassa fever and MERS. The goal of the collaboration between the Company and CEPI is to conduct research and development so that investigational stockpiles will be ready for clinical efficacy trial testing during potential disease outbreaks. The agreements with CEPI contemplate preclinical studies, as well as Phase 1 and Phase 2 clinical trials, occurring over multiple years. As part of the arrangement between the parties, CEPI has 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. During the years ended December 31, 2020 and 2019, the Company received funding of $6.4 million and $6.3 million, respectively, related to these grants and recorded those payments as contra-research and development expense. As of December 31, 2020, the Company had a grant funding liability balance related to the CEPI grant of $2.6 million recorded as grant funding liability on the consolidated balance sheet related to the CEPI grant.

In January 2020, CEPI awarded the Company a grant of up to $9.0 million to develop a vaccine against COVID-19. This initial CEPI funding is intended to support preclinical and clinical development through Phase 1 human testing in the United States of INO-4800, the Company's COVID-19 vaccine candidate against COVID-19. 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. During the year ended December 31, 2020, the Company received funding of $10.0 million from CEPI related to these grants for INO-4800 and recorded such amounts as contra-research and development expense. As of December 31, 2020 the Company had $3.4 million recorded as deferred grant funding on the consolidated balance sheet related to the CEPI grants related to INO-4800.

Bill & Melinda Gates Foundation

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In October 2018, the Bill & Melinda Gates Foundation (“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 years ended December 31, 2020 and 2019, the Company recorded $463,000 and $2.1 million, respectively, as contra-research and development expense related to the Gates dMAb grant. As of December 31, 2020, the Company had $575,000 recorded as deferred grant funding on the consolidated balance sheet related to the grant.

In March 2020, Gates awarded and funded the Company a grant of $5.0 million to accelerate the development of the CELLECTRA® 3PSP device for the intradermal delivery of INO-4800. During the year ended December 31, 2020, the Company recorded $4.1 million as contra-research and development expense and had $884,000 recorded as deferred grant funding on the consolidated balance sheet related to this Gates grant.

Department of Defense (DoD)

In June 2020, the Company entered into an Other Transaction Authority for Prototype Agreement (the “OTA Agreement”) with the DoD to fund the Company’s efforts in developing the CELLECTRA® 3PSP device and associated arrays to be used for delivery of INO-4800 against COVID-19. Under the OTA Agreement, the Company intends to develop the CELLECTRA® 3PSP device and arrays for use in the U.S. military population and the U.S. population as a whole, subject to approval of the device by the U.S. Food and Drug Administration (the “FDA”). The OTA Agreement is also expected to support large-scale manufacturing of the CELLECTRA® 3PSP device, as well as large-scale DNA plasmid production for manufacture and supply of a specified number of doses of INO-4800 in support of FDA approval of the device. The total amount of funding being made available to the Company under the OTA Agreement is approximately $54.5 million. The Company has determined that the OTA Agreement should be considered under Subtopic 958-605, Not-for-Profit Entities-Revenue Recognition, which is outside the scope of Topic 606, as the government agency granting the Company funds is not receiving reciprocal value for their contributions. The Company will record contra-research development expense on the consolidated statement of operations in the same period that the underlying expenses are incurred.

Additionally, in June 2020, the Company was awarded a fixed-price contract (the “Procurement Contract”) from the DoD for the purchase of the Company’s intradermal CELLECTRA® 2000 device and accessories. The CELLECTRA® 2000 devices will be used to inject INO-4800 in the Company’s planned later-stage clinical trials. The total purchase price under the Procurement Contract is approximately $16.6 million. The Company has determined that the Procurement Contract does not currently fall under the scope of ASC Topic 606 as contingencies remain regarding INO-4800 which does not give the Company the ability to satisfy its obligations under the arrangement.

During the year ended December 31, 2020, the Company recorded $21.2 million as contra-research and development expense related to these agreements with the DoD. As of December 31, 2020, the Company had an accounts receivable balance of $11.4 million on the consolidated balance sheet from the DoD.

In November 2020, the Company announced that the DoD has also agreed to provide funding for the Phase 2/3 clinical trial for INO-4800, called INNOVATE (INOVIO INO-4800 Vaccine Trial for Efficacy). These expenses will be paid directly by the DoD.

5. Short-term Investments

Short-term investments at December 31, 2020 consisted of mutual funds, certificates of deposit and U.S. agency mortgage-backed securities. Short-term investments at December 31, 2019 consisted of mutual funds. Short-term investments are recorded at fair value, based on current market valuations. Unrealized gains and losses on the Company's debt securities are excluded from earnings and reported as a separate component of other comprehensive loss until realized. Realized gains and losses and unrealized gains and losses on available-for-sale equity securities are included in non-operating other income (expense) on the consolidated statements of operations and are derived using the specific identification method for determining the cost of the securities sold. During the years ended December 31, 2020 and 2019, the Company recorded gross realized gain on investments of $744,000 and $594,000, respectively, and gross realized loss on investments of $1.3 million and $118,000, respectively. During the year ended December 31, 2020, the Company recorded net unrealized gain on available for sale equity securities of $1.7 million. There was no material unrealized gain or loss on available-for-sale equity securities recorded during the year ended December 31, 2019. No material balances were reclassified out of accumulated other comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018. Interest and dividends on investments classified as available-for-sale are included in interest income in the consolidated statements of operations. As of December 31, 2020, the Company had 12 available-for-sale securities in a gross unrealized loss position, of which none were in such position for longer than 12 months.

The following is a summary of available-for-sale securities as of December 31, 2020 and 2019:

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*No single maturity date.

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 December 31, 2020 were primarily due to changes in interest rates, including credit spreads from perceived increased credit risks as a result of the COVID-19 global pandemic, and not due to increased credit risks associated with specific securities. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. 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 December 31, 2020, the Company has not recorded an allowance for credit losses related to its available-for-sale debt securities.

6. Fair Value Measurements

The guidance regarding fair value measurements establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets that are accessible at the measurement date; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Assets are, and prior to September 30, 2020 liabilities were, classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company did not have any transfer of assets and liabilities between Level 1, Level 2 and Level 3 of the fair value hierarchy during the years ended December 31, 2020 and 2019. All liabilities in the fair value hierarchy were extinguished as of September 30, 2020 as described below.

The following table presents the Company’s assets that are measured at fair value on a recurring basis, and are determined using the following inputs as of December 31, 2020:

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Fair Value Measurements at

Assets:

Cash and cash equivalents

Short-term investments

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, and are determined using the following inputs as of December 31, 2019:

Fair Value Measurements at

Assets:

Cash and cash equivalents

Short-term investments

Liabilities:

Total liabilities measured at fair value $ 8,819,023 $ — $ — $ 8,819,023

Level 1 assets at December 31, 2020 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. Level 1 assets at December 31, 2019 consisted of money market funds and mutual funds held by the Company that are valued at quoted market prices, as well as the Company’s investments in its affiliates, GeneOne and PLS. The Company accounts for its investment in 597,808 common shares of PLS as an equity investment with a fair value 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 (loss) on available-for-sale equity securities or as a gain (loss) on investment in affiliated entities. In August 2020, the Company sold its investment in 1,644,155 common shares of its affiliated entity GeneOne for net proceeds of $40.1 million, resulting in a gain on investment in affiliated entity of

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