It's been a wild roller-coaster ride for Iovance Biotherapeutics (NASDAQ: IOVA) . In February, the stock more than doubled in price, then it fell to a 52-week low in July. The stock has since recovered and at recent prices was up 47% for the year.
Can Iovance keep soaring in the years to come, or is its big gain in 2024 more likely to fizzle out? Here's a look at what to expect in the near term from this popular stock.
Iovance could expand Amtagvi to new patients
Iovance Biotherapeutics stock more than doubled in February after the Food and Drug Administration approved Amtagvi, its first drug. Amtagvi is a complicated cellular therapy made of tumor-infiltrating lymphocytes (TILs), a type of immune cell that recognizes and attacks cancer cells.
At the moment, Amtagvi is approved to treat patients with unresectable or metastatic melanoma that failed to respond or relapsed after treatment with a PD-1 blocking antibody such as Keytruda from Merck .
Second-quarter sales of Amtagvi plus Proleukin, an immune cell growth factor that Iovance sells to expand the presence of infused TILs, reached just $31.1 million. This is a good start for a new cancer therapy but it could be much better.
Amtagvi is manufactured in batches of one from patient tumor samples. The reinfusion process requires a brutal 7-day preconditioning regimen that depletes the patient's immune system so new TILs can gain a foothold. Relapsed melanoma patients are often too frail to handle the full preconditioning process, so expanding to the newly diagnosed population could lead to a huge sales boost.
In May, Iovance showed results from a phase 2 trial with first-line melanoma patients treated with a combination of Amtagvi and Keytruda. The combination shrank tumors for 15 out of 23 patients, including seven who achieved complete remission.
The observed 65% response rate for the combination of Amtagvi plus Keytruda is highly encouraging. In the Keynote-6 trial, Keytruda as a monotherapy shrank tumors for just 33% of first-line melanoma patients.
Iovance is still enrolling patients into a phase 3 trial that will compare first-line melanoma patients receiving a combination of Amtagvi plus Keytruda to patients randomized to receive Keytruda as a monotherapy. While I expect Amtagvi to succeed, you shouldn't hold your breath. The study intends to follow these patients around for five years to measure how long the combined therapy can keep their disease at bay.
Iovance could improve manufacturing
In addition to somewhat frail patients who can't handle the preconditioning regimen, Amtagvi's launch is being held back by a less-than-ideal manufacturing process.
Obtaining a sufficient number of viable TILs out of a tumor biopsy and culturing them into a dose of Amtagvi is even more difficult than it sounds. In the trial leading to its approval, investigators sampled tumors from 111 enrolled patients but just 73 received the recommended dose.
Iovance priced Amtagvi at $515,000 per patient, but it doesn't get paid to try. Since it can only record revenue after a patient receives an appropriate dosage of TILs, minor tweaks to the manufacturing process could have big effects on total sales down the line.
Buy, sell, or hold?
Product sales that reached $31 million during the second quarter are a step in the right direction, but Iovance Biotherapeutics is still a long way from making ends meet. The company burned through $210 million in the first six months of the year to finish June with $419 million in cash.
It's still too early in Amtagvi's launch to know if the revenue it generates will outpace operating expenses. As ongoing phase 3 trials enroll more patients, though, we can be sure that operating expenses will rise. Given its limited cash cushion, I won't be surprised if Iovance announces a dilutive secondary offering in 2025.
At recent prices, Iovance has a $3.6 billion market cap . On the one hand, that is a lot to pay for a company that's on pace to lose over $400 million this year. Investors without a high risk tolerance will want to steer clear of this stock just in case Amtagvi's launch fizzles out.
However, with a good chance to expand Amtagvi's approval to include first-line melanoma patients and heaps of room to improve its manufacturing process, I won't be surprised if Iovance attracts a juicy buyout offer from a deep-pocketed pharmaceutical company within the next five years. For investors with a huge tolerance for risk, adding some shares to a diversified portfolio isn't a bad idea right now.
Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics and Merck. The Motley Fool has a disclosure policy .
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