Shares of Iovance Biotherapeutics (IOVA 0.29%) 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 2.03%) 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.