When a stock is in a seemingly endless tailspin, it can be tough to take a chance and invest in it. Even if its valuation seems enticing enough to take a position, there's always lingering worry about whether it will only end up falling further. While hitting a 52-week low may sound like shares have become a cheap buy, a new low could still be right around the corner.
Iovance Biotherapeutics (IOVA +3.04%) has been hitting new lows this year, and it's down more than 75% in the past 12 months. Its performance has been downright abysmal. Although the company does have an approved treatment in its portfolio, there's still no shortage of risk for investors. Is there a reason to expect a turnaround for Iovance, or are you better off simply steering clear of this healthcare stock?
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Iovance shows progress in recent results
On Nov. 6, Iovance released its third-quarter earnings numbers, which sparked a rally of more than 20%. Revenue totaled $67.5 million, an increase of 13% year over year. Sales of its leading therapy Amtagvi, a cellular therapy for advanced melanoma, generated the lion's share of revenue at $58 million. The company also noted that its gross margin improved and is now around 43%.
The problem is that the healthcare company still has a long way to go in getting to a break-even point. Its loss for third quarter totaled $91.3 million, which was higher than the $83.5 million loss that Iovance incurred in the same period last year. While its selling, general and administrative (SG&A) costs have decreased, the company has spent heavily on research and development (R&D), which at $75.2 million this past quarter was more than its top line.
Could this be the start of a bigger rally for Iovance?
Investors clearly seemed pleased with the recent results, which gave Iovance's stock a much-needed boost. But it may take a lot more than just a single quarter to convince the market that it's a safe buy. The good news is that the company is still in the early stages of commercializing Amtagvi, which obtained approval from regulators in February 2024.
This year is the first full year that Amtagvi has been on the market, and the company anticipates its top line will be between $250 million and $300 million. That's a considerable improvement from $164 million in 2024, and a huge step up from previous years when its revenue was zero. With much more growth on the way, Iovance could continue to win over more investors.
Another positive: The company says that with around $307 million in cash and investments on its books as of the end of September, it believes it can fund its operations until at least the second quarter of 2027, which means there may not be a big need for cash infusions (causing dilution) in the near future. But any time there's a lack of profitability, cash burn is inevitably going to be a concern, because new share offerings can quickly cripple a stock.
NASDAQ: IOVA
Key Data Points
Is Iovance a good stock to buy today?
Iovance shares have crashed in the past year, but the business itself is moving in the right direction. Sales are growing and margins are improving. The market isn't being patient with the stock, and there's still plenty of risk here. If you have a high risk tolerance, however, you may want to consider taking a small position at this stage.
This is an intriguing growth stock that a larger pharma company may end up acquiring in the future. And if Iovance is able to turn a profit and continue growing its sales, that could also lead to strong gains for investors down the road.
Iovance Biotherapeutics isn't a stock that's for the faint of heart, and there are no assurances that it can't go lower, even after its sizable decline over the past year. But if you're OK with the risk and uncertainty, I think Iovance could make for an underrated buy right now.
