In investing and in life, it's rare for opportunities to be without accompanying risks, just as it's rare for clouds to be without silver linings if one looks hard enough. On that note, Iovance Biotherapeutics (IOVA 6.11%) is a biotech that's chock-full of upcoming opportunities for its investors, though it's also in the process of navigating a serious risk that might yet cause major disruption.
If that doesn't sound frightening to you, it might be worth considering an investment. So let's walk through three potential upsides, and one potential pitfall, to get started thinking about this stock.
1. Its first therapy is approaching approval
The biggest near-term opportunity for Iovance is that its therapy for advanced melanoma, lifileucel, will have a shot at attaining regulatory approval by the Food and Drug Administration (FDA) on or before Feb. 24. Then, later in the year, it'll go before regulators in the E.U. and Canada.
If everything goes as planned, the company will be raking in significant amounts of revenue before 2025. Analysts on Wall Street are calculating that it could bring in as much as $426 million for this year, though the average of analyst estimates is for a much lower sum of $152 million. Given that Iovance doesn't have any drugs on the market or much in the way of collaboration revenue, growing the top line for the first time is likely to be quite favorable for shareholders.
2. Other candidates are close behind its lead program
Lifileucel isn't just being investigated to treat melanoma. It isn't the only late-stage program in Iovance's pipeline, either.
Lifileucel is also being studied in phase 3 trials for cervical cancer, for non-small cell lung cancer (NSCLC), and as a combination treatment for melanoma with the active ingredient of Merck's drug Keytruda. Per a report by Research and Markets, the global market for melanoma treatments is anticipated to be worth more than $12 billion by 2028. And by that point, Iovance could potentially have four approved indications and combination therapies approved for sale.
Success with the first entrant would, without a doubt, dramatically raise the chance that its subsequent entries also get approved, as the candidates utilize the same technologies and are manufactured and administered in the same ways. But unless there's a wipeout in the late-stage trials (and there might be), it looks like the business is in for a favorable period ahead.
3. Its platform could make for a long life cycle for each commercialized program
Importantly, the biotech is pursuing clinical trials for a variety of niches within cancer therapy, which is itself a long-term opportunity.
That means some of its late-stage programs are catered toward patients with treatment-resistant cancers, whereas others are intended for first-line use as part of the initial regimen of anti-cancer therapies that a patient receives after diagnosis. The advantage of that approach is reaching the largest number of patients possible, thereby expanding its addressable market with each new approval.
What's more, the company's pipeline strategy endorses expanding indications to grow its revenue once it has a medicine on the market. In short, Iovance has been planning for years to squeeze every drop of revenue out of each of its research and development (R&D) dollars, and it's almost time for it to start reaping the harvest of its sustained diligence.
One risk: The clinical hold could resolve with the worst outcome
Despite the three opportunities outlined above, Iovance is also facing a major risk right now. On Dec. 27, it disclosed that five days earlier the FDA had enacted a clinical hold on its trial for a program called LN-145, after a patient in the trial died.
The patient's death was not initially attributed to the side effects of the therapy itself. The working theory is that it was caused by the intended effects of the conditioning regimen that patients need to undergo before treatment to prepare their systems to receive the therapy. As the conditioning process involves depleting the patient's white blood cells, it can be especially dangerous for people who are already very ill.
The risk is that the FDA will require the biotech to make some major changes to its treatment protocols, potentially in a way that makes the therapy less effective, or difficult to administer to a vulnerable sub-population of patients. That would require changes to be made across Iovance's cell therapy pipeline, detrimentally affecting multiple programs that also require the same conditioning process. It is also faintly possible that regulators will shut down the trial altogether.
For now, investors shouldn't rush to sell their shares. The odds of a lifting of the hold within the next few months are in the company's favor, though it's clear that regulators will be especially alert about safety issues if they evaluate LN-145 for approval after the phase 3 trial concludes. In the long term, the very difficult lessons learned from the incident may help give investors, and patients, confidence that such tragedies won't happen again.
