Is this the start of a comeback for Iovance Biotherapeutics (IOVA -0.42%)? Though the small-cap biotech has significantly trailed the broader market in the past five years, its shares are up by 50% since 2024 started. Iovance is making progress on several fronts (more on that below).
It's no wonder that many investors are increasingly excited about the company's direction. But should long-term investors put their hard-earned money into this stock today? Let's find out.
What's going on with Iovance Biotherapeutics?
Iovance Biotherapeutics specializes in oncology. The company's platform uses the power of the body's defenses against cancer. Tumor-infiltrating lymphocytes (TILs) are a type of cell that can recognize and kill cancer cells. Iovance Biotherapeutics' approach seeks to remove TILs from cancer patients' bodies, grow them by the billions, and reinsert them into patients. Iovance Biotherapeutics currently has two products on the market.
The most recent to earn approval is Amtagvi, which belongs to the TIL family and earned the nod in February. Amtagvi became the first therapy approved by the U.S. Food and Drug Administration (FDA) for previously treated advanced melanoma, a form of skin cancer. The manufacturing process for Amtagvi takes about 34 days, on average, so revenue for it won't ramp up as fast as it would if it was a simple oral pill.
However, considering that it is currently the only game in town for advanced melanoma patients, it could become successful. Iovance estimates that there are roughly 15,000 cases of advanced melanoma in the U.S. every year and 8,000 deaths.
The company is also looking to expand, with planned regulatory submissions for Amtagvi in Europe and Canada sometime this year. Iovance will also go after the Australian market next year. Some analysts believe that Amtagvi could generate sales of $846 million by 2029. Last year, Iovance generated just about $1.2 million in sales, so things are about to improve significantly on that front.
What does the future hold?
Iovance Biotherapeutics is running a phase 3 clinical trial for Amtagvi in targeting front-line (or non-previously treated) advanced melanoma. The company is also conducting several other pivotal studies. With well over a dozen ongoing programs, Iovance's pipeline is pretty deep for a biotech company whose market capitalization is just $3.39 billion. That doesn't guarantee the company's success, but it is clearly an innovative biotech.
There will be at least two problems for Iovance Biotherapeutics. First, will it have enough money to fund its expensive TIL manufacturing process? Second, can the company turn a profit anytime soon? Regarding the first issue, Iovance had $485.2 million in cash and equivalents as of February. The biotech estimates that the money it currently has, coupled with revenue from Amtagvi, will be enough to run its operations until the second half of next year.
That's not very long, but Iovance shouldn't have too much trouble finding new funding sources, in my view. But can the company turn a profit anytime soon? Of note, Iovance Biotherapeutics improved on the bottom line last year. Its net loss per share of $1.89 was better than the $2.49 net loss reported in 2022. However, the company's expenses should increase due to manufacturing costs related to Amtagvi. Some of the medicine's revenue will more than cover these costs, so Iovance Biotherapeutics could still get close to profitability.
That said, investors will have to wait at least a few more years to see green on the bottom line. With that as a backdrop, Iovance Biotherapeutics looks like a somewhat risky bet, but one that could pay off with massive gains down the road, provided its platform bears fruit. I wouldn't advise this stock to risk-averse investors, but mildly aggressive ones may want to consider initiating a small position in the biotech stock.
