Iovance Biotherapeutics (IOVA 0.54%) shares are down to the tune of 18% today following Thursday evening's release of its first-quarter numbers. The sell-off clearly suggests investors didn't like everything they heard. The knee-jerk response to the news, however, looks past a critical detail regarding the report.
An irrelevant quarterly report
Iovance Biotherapeutics did $715,000 worth of business during the three-month stretch ending in March, and lost $113 million (or $0.42 per share) in the process. While the loss was more or less in line with estimates, revenue fell short of analysts' average top-line expectations.
Lost in the noise, however, is the fact that last quarter's numbers are largely irrelevant. For all intents and purposes, the company's business only began in the quarter currently underway.
See, Iovance Biotherapeutics has spent the past several years developing and then refining the science of tumor-infiltrating lymphocytes (TIL). Lymphocytes are the human body's naturally occurring means of fighting off disease, including cancer. But sometimes our immune systems need a little help.
Iovance's science now offers that help. Its flagship drug -- called Amtagvi -- won its first approval in February of this year, as a means of treating certain forms of advanced melanoma.
Pharmaceutical companies can't simply begin mass-manufacturing a new drug the day after it's approved, however. Even if fully prepared, it can take some time to ramp up output and put a new therapy option in caregivers' hands. And in Iovance Biotherapeutics' case, it can take even longer than usual. That's because each Amtagvi treatment is custom-built for the patient using it.
None of last quarter's revenue reflects this business. Next quarter's will begin to, though. Since it was first approved, more than 100 patients have enrolled in the treatment regimen.
So where did last quarter's revenue come from? They reflect sales of Proleukin, which Iovance acquired in early 2023. This drug improves the response to some immunotherapies, including Amtagvi.
Proleukin was never intended to be a major profit center for Iovance on its own, however, making it difficult for analysts to predict its sales for any given quarter. The first quarter of this year was no exception.
Buy Iovance Biotherapeutics stock on this dip
Friday's setback is painful to shareholders, to be sure. But, it's ultimately a buying opportunity for interested newcomers.
See, Amtagvi isn't just a promising drug. It's the first tumor-infiltrating lymphocyte therapy of any kind to win regulatory approval. It won't likely be the last, though. Iovance has nearly two dozen other TIL trials underway for other forms of cancer. Analysts with GlobalData believe Amtagi alone will be generating annual revenue on the order of $1 billion by 2030.
In light of this outlook, Iovance Biotherapeutics' shares should bounce back from today's setback sooner than later. Just be sure you're OK with extreme volatility if you're diving in.
