IOVA - Iovance Biotherapeutics: Looking Towards Successful FDA Review In 2023

2023-04-19 00:43:05 ET

Summary

• Iovance completed its biologics license application (BLA) for its TIL therapy lifileucel before the end of March 2023 setting the stage for possible commercialization after FDA approval.
• IOVA's cash position of $471.8 million at the moment is sufficient to meet the company's operational needs for the next 12 months.
• Q1 2023 has seen Iovance expand its cohort 2 within its C-145-04 cervical cancer treatment trials.

Ever since I tracked Iovance Biotherapeutics ( IOVA ) back in 2018, the top question on my mind was whether its cancer cell therapy version at the time was viable and if the company meant business. IOVA has a market cap of $1.25 billion and finished off FY 2022 with $471.8 million in cash. True to form, the company recently announced that it completed its rolling Biologics License Application [BLA] for lifileucel- a therapy for tumor-infiltrating lymphocyte [TIL]- for patients with advanced or metastatic melanoma.

Thesis

Despite losing 67.99% [YoY] and trading close to the 52-week low of $5.33, IOVA stock price presents a good entry point given the commencement of the FDA’s review of the rolling BLA. According to me, Lifileucel, IOVA’s lead late-stage TIL product candidate for advanced melanoma is set to become (after approval) the first one-time cell therapy for solid tumors (cancer). I also think that the company has enough cash to support its operating activities into 2023 leaving little room for dilution into the year, except for unforeseeable reasons.

Market unmoved

The market has somewhat been unmoved with IOVA trading close to its 52-week low even after the rolling BLA announcement. As we know, the bone of contention has been whether cell therapies can be used in the treatment of solid tumors even though they have mostly proven effective in the treatment of blood cancers.

The most common approach for melanoma treatment has been surgery. FDA on March 18, 2022, approved the nivolumab and relatlimab-rmbw- known as Opdualag from Bristol-Myers Squib specifically for adults and patients aged 12 years and above with metastatic melanoma. At the time, the administration of Opdualag was dependent on body weight, with 40kg being the cut-off mark. Adult and pediatric patients weighing above 40kg were intravenously administered 480 mg of nivolumab combined with 160 mg of relatlimab. It was not yet established the recommended dose for patients below 40 kg.

Fast forward to 2023, Iovance Biotherapeutics is propagating a novel therapy known as tumor-infiltrating lymphocyte [TIL]. It is the introduction of a "special" white blood cell with the capacity to attack cancer and a solid tumor at that. Past medical studies have revealed that over time,

“Hematological malignancies have been far better targets for CAR T cell therapies than solid tumors, partly due to the massive differences in tumor stroma permissiveness. Briefly, in blood malignancies, CAR T cells are not required to penetrate through dense layers of extracellular matrix [ECM] to get to the tumor cells, so access to target cells is considerably easier.”

This reason somewhat explains why Iovance has escaped the radar of immunotherapies and companies that develop the TILs. In my view, IOVA's technology is an earlier version and we are all wondering if the TILs will be able to take over the cancer immunotherapy market by storm. That being said, treatment using the TILs first involves the removal of a solid tumor from a patient through surgery before immune cells are harvested, developed, and multiplied. All this process is heavily dependent on genome sequencing with the treatment customized according to a patient’s body cells. All cancer tumors found in cancer patients have particular mutations that generated cancer and I believe that if successful, IOVA may develop a blueprint for future cancer treatments.

So, where does Iovance stand right now?

In its earnings release, Iovance explained that it considered the preparation/ manufacturing of commercial supplies (for autologous TIL therapies) a matter of top priority. The company looks at maintaining “a success rate of 90% in more than 600 patients treated with its TIL therapy” in its clinical studies. Top for consideration is the fact the FDA has at least 60 days after receipt of IOVA's BLA to apply for review. Since the company announced that it completed its BLA submission for Lifileucel on March 24, 2023, we are looking at the FDA's review to commence by June 2023 or Q2 2023 (that is if it is accepted).

Under the Prescription Drug User Fee Act [PDUFA], the FDA may review the submitted BLA within 6 to 10 months, but I am hopeful that the priority review will be conducted in 6 months- taking us into 2024. IOVA has reassured investors that its BLA submission (for lifileucel) will be accepted for review since it is "supported by positive clinical data from the C-144-01 clinical trial in patients with advanced post-anti-PD1 melanoma." There is also the registration of the trial design of the TILVANCE-301 which is now in Phase 3 that will support this approval.

This trial design for lifileucel combines pembrolizumab as a frontline therapy for advanced melanoma. Earlier on, IOVA explained that the FDA had "granted the company a regenerative medicine advanced therapy [RMAT] designation status for lifileucel for advanced melanoma therapy further supporting the fact it is on course for a successful review.

Because of these developments, IOVA is focusing on getting into the CAT-T cell market, which it explained had approximately 10 centers driving 50% of all treated melanoma patients. Research shows that the solid tumor market was worth $209.61 billion in 2021 and is expected to reach $901.27 billion by 2029 (growing at a CAGR of 20% within the stated period).

Other developments

Q1 2023 has seen Iovance expand its cohort 2 within its C-145-04 cervical cancer treatment trials. The company explained that the patients under the program had progressed well after chemotherapy and the anti-PDI therapy.

The company will continue to negotiate with the FDA in 2023 in support of its regulator submission within Cohort 2.

Additionally, IOVA announced a strategic agreement with Clinigen ( CLIGF ) to acquire the global rights for Proleukin (IL-2 (Interleukin-2)) a drug also used for the treatment of adult patients with melanoma and metastatic renal cell carcinoma.

Cash Position

In FY 2022, Iovance reported a cash position of $471.8 million. The net cash used in operating activities stood at $292.8 million which is about half the money available for the company.

Further, investing activities generated $256.5 million while financing activities also generated $190.15 million. This situation meant that IOVA saw an increase of more than 1200% [YoY] in its net cash to $153.848 million in 2022 against $11.459 million in 2021. The company is also anticipating CapEx of about $20 million in 2023 ahead of its FDA feedback. I believe Iovance has enough capital to take it through the next 12 months and into Q1 2024.

Risks to Consider

The expensive nature of clinical testing may mean IOVA will take more than 12 months to obtain results from any trial especially while using the adoptive TIL cell therapy. The data also needs to be substantive to support the FDA’s approval. Failure to obtain this approval will push the company back and inhibit its ability to commercialize and generate revenues.

Additionally, IOVA is yet to become profitable or generate any revenues since it went public in late 2017. The company’s accumulated losses stand at $1.57 billion up 33.77% [YoY].

Bottom Line

Iovance kept its word by completing the submission of the rolling BLA for lifileucel for advanced melanoma in Q1 2023. I expect the FDA to commence review in June 2023 which will put at ease expensive CapEx and maintain aggregate spending of about $20 million for the next 12 months. I also believe the company has enough money to support its operations in the 12 months thereby avoiding instances of dilution. Finally, despite trading almost at its 52-week low, IOVA stock is currently a buy given the FDA's feedback before the end of 2023.

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