What happened

Shares of Iovance Biotherapeutics (IOVA 0.17%) were up 14.5% as of 3:08 p.m. EDT on Monday. The nice gain appears to be caused by investors' speculation that Iovance could be the target of a buyout by a larger drugmaker, spurred by Pfizer's announcement that it plans to acquire Array BioPharma for $11.4 billion.

So what

There's no reason to think that Pfizer's acquisition of Array will suddenly cause other big drugmakers to begin looking to buy Iovance or any other small biotech. It's not like the executives of big pharmaceutical companies see one of their peers announce a deal and on a whim decide they should go shopping, too.

Hand holding beaker with test tubes, droppers, and other glassware in the foreground and background

Image source: Getty Images.

On the other hand, any time a major acquisition is announced, it prompts investors to think about which companies could be next to either make an acquisition or be acquired. Iovance is a viable candidate on the list of potential acquisition targets.

The biotech doesn't have an approved drug yet. However, Iovance made a big splash at the annual meeting of the American Society of Clinical Oncology (ASCO) earlier this month. The company provided an update on two of its tumor-infiltrating lymphocyte (TIL) immunotherapies, LN-145 and lifileucel. The durability of responses for these TIL immunotherapies was especially encouraging.

Iovance checks off several criteria that could make it an attractive buyout choice. The company's market cap is only around $2.7 billion -- in the sweet spot for many big drugmakers. Iovance also has a late-stage candidate in lifileucel that could potentially be approved within the next couple of years. 

Now what

Will Iovance be among the next small biotechs to be gobbled up at a big premium? Maybe, but maybe not. In the meantime, there are several things to watch with the company that could drive its share price higher.

Iovance plans to sit down with the U.S. Food and Drug Administration in the second half of 2019 to talk about a pathway to approval for LN-145 in treating cervical cancer. The biotech is also dosing patients in its pivotal study evaluating lifileucel in treating advanced melanoma. Initial results from this study should be on the way in early 2020.