Iovance Biotherapeutics (IOVA 0.87%) just reached a huge milestone -- and investors have flocked to the stock, helping it to soar more than 70% in less than a week.
What's the big news? The biotech company scored its first regulatory approval, from the U.S. Food and Drug Administration, for a treatment based on its cutting-edge personalized medicine technology. Amtagvi, developed under the name lifileucel, was granted accelerated approval for advanced melanoma, the deadliest form of skin cancer, and now Iovance is readying to roll out this treatment.
This is great news, but considering the stock's recent gain you may be wondering whether the news is pretty much priced in -- or is Iovance still a buy after this regulatory win? Let's dig deeper and find out.
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Harnessing the body's own power to fight disease
First, a bit of background on Amtagvi and the company's technology in general. This treatment and others in the Iovance pipeline harness the body's own power to fight cancer through the use of tumor-infiltrating lymphocytes (TILs). TILs are naturally present in the body and attack when cancer is present, but when the disease prevails, they need some help. And that's where Iovance comes in. The company collects a patient's TILs, reinvigorates this valuable resource, then returns it to the patient.
These treatments could be game changers since they're personalized, and they're administered just once -- meaning they may win when it comes to efficacy and patient uptake. Amtagvi addresses advanced melanoma, but Iovance also is studying a variety of TIL-based candidates -- including combinations of TILs with other treatments -- in clinical trials for other types of cancer.
Now, let's consider what's ahead for Amtagvi specifically. Iovance prepared for this moment last year by acquiring worldwide rights to cancer drug Proleukin from Clinigen. Amtagvi involves a conditioning phase that clears out existing lymphocytes and readies the body for treatment -- and this initial phase includes a course of Proleukin. Iovance's acquisition of this drug may help boost its earnings potential since Proleukin is an integral part of the TIL process.
The company has also prepared for the logistics of this launch, and now has 30 authorized treatment centers ready to collect patients' TILs in order to manufacture Amtagvi. Iovance's cell therapy center has manufacturing capacity for "several thousand patients" annually, and it's working to expand that over the next few years.
On the road to revenue growth
Of course, the launch of Amtagvi is more complex than the launch of a pill. The conditioning treatment and manufacturing procedure mean it will take longer to bring patients on board and start generating revenue. But once the process gets going, Iovance should be on the road to revenue growth -- with Amtagvi revenue that could reach an annual level of $740 million in the U.S. by 2036, according to GlobalData.
And if Iovance is successful with other pipeline candidates, revenue could truly take off later this decade or in the early 2030s.
Is Iovance a buy even after skyrocketing this week? After that performance, the stock still has about 40% to gain before reaching Wall Street's 12-month share-price forecast. Note that the stock still remains well off the highs it reached in the past -- when we had much less visibility on the prospects of its TIL therapy and therefore revenue.
This doesn't mean the stock will return to its previous peak levels, but with potential revenue growth and possibly additional product approvals, the stock could have room to run over the long term. The increases probably won't be as fast as the recent wave of gains following the Amtagvi approval, and Iovance may even see a pullback in the coming days as some investors lock in profits.
So, I wouldn't buy the stock hoping for a double-digit gain overnight. But, over time, Iovance shares clearly could climb as the company delivers revenue from Amtagvi -- and any positive clinical trial reports may boost the shares too. If you're looking for a biotech company on the rise, and you're willing to hold on for the long term, you can still consider this innovative company a buy.
