Please ensure Javascript is enabled for purposes of website accessibility

Should You Buy This Cathie Wood Biotech Stock?

By Zhiyuan Sun – Jun 17, 2021 at 7:39AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This biotech's fumble has caught the attention of a fund manager known for making innovative investments.

Shares of Iovance Biotherapeutics (IOVA -0.64%) are down over 50% from their January highs. In May, the company disclosed it would be delaying its Biologic License Application (BLA) filing with the U.S. Food and Drug Administration (FDA) on its key drug until the first half of 2022, pending further data on its biological activity. Cathie Wood, the charismatic founder and CEO of Ark Investment Management, saw the sell-off as an opportunity and quickly bought over 1 million shares after the news release. 

Wood's investment firm now owns nearly 11 million shares of Iovance, representing a 6.5% stake in the company. Over the past five years, her Ark Innovation ETF (ARKK -0.88%) has returned a mouth-watering 544%, far above the S&P 500's 125% gain during the same period. Is Iovance a biotech investors can count on?

Nurse assisting cancer patient.

Image source: Getty Images.

How good is the science? 

Iovance is known for its flagship candidate, Lifileucel, a cryopreserved autologous tumor infiltrating lymphocyte (TIL) immunotherapy currently under investigation for four indications. These are melanoma, cervical cancer, non-small cell lung cancer (NSCLC), and head and neck squamous cell carcinoma (HNSCC).

In a phase 2 study, 66 patients with advanced melanoma who received Lifileucel had an overall response rate (ORR) of 36.4%. ORR for an experimental treatment is defined as either eliminating tumor activity or reducing tumor diameter by a minimum of 30%. However, the median duration of the responses is still indeterminate, and there was at least one possible treatment-related death due to intra-abdominal bleeding.

The results appear far better in context; for one thing, the patients involved failed at least three courses of standard therapy with leading immune checkpoint inhibitors before enrolling in the study. Disease progression ranged between 77% and 99% before treatment and fell to just 13.6% to 19.7% afterward. 

The findings were even better in another phase 2 study, in which Lifileucel was given alongside Merck's immune checkpoint inhibitor Keytruda. ORR after treatment was as high as 85.7% in a cohort of seven patients with advanced or metastatic melanoma.

Another TIL candidate, LN-145, demonstrated a 44.4% ORR in nine hard-to-treat patients with HNSCC when given alongside Keytruda. The therapy had also done well against advanced-stage cervical cancer, with an ORR of 44% in phase 2. TILs have also shown promise in fighting NSCLC, with a median tumor shrinkage of 38% post-treatment. The ORR in that case is not yet known. 

The verdict? 

Immunotherapies that effectively fight multiple types of cancer (such as Opdivo and Keytruda) are currently bringing in $8 billion to $14 billion each year in sales. So there's definitely a lot of potential for Iovance if it can advance TILs past the regulatory hurdles, considering its market cap is only $3.65 billion. 

Right now, the company's TIL therapies have multiple efficacy data across a variety of indications, each supporting one another. It's highly likely -- if not almost a given -- that Iovance's immunotherapies could receive FDA approval. 

I see its temporary BLA filing setback as a buying opportunity. Keep in mind that the company has more than $600 million in cash on its balance sheet, which is enough to last until 2023. If approved, Lifileucel would likely become a blockbuster drug, making the biotech a solid buy.

Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Iovance Biotherapeutics, Inc. Stock Quote
Iovance Biotherapeutics, Inc.
IOVA
$6.18 (-0.64%) $0.04
Merck & Co. Stock Quote
Merck & Co.
MRK
$107.50 (0.64%) $0.68
ARK Innovation ETF Stock Quote
ARK Innovation ETF
ARKK
$36.00 (-0.88%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.