IOVA - Iovance Biotherapeutics: Preparing For Volatility Around Lifileucel's Upcoming PDUFA Date

2024-01-19 16:59:33 ET

Summary

• Iovance Biotherapeutics is preparing for the extended FDA deadline to determine the approval of lifileucel for advanced melanoma treatment.
• The FDA has put a clinical hold on the company's Phase II study for LN-145, which has raised concerns about the approval of lifileucel.
• Iovance has the capacity and preparations for a successful launch of lifileucel in the US, with plans for a potential approval in Europe.

Iovance Biotherapeutics ( IOVA ) is preparing for lifileucel’s (LN-144), extended Prescription Drug User Fee Act (PDUFA) goal date of February 24th, 2024, which is the FDA’s self-imposed deadline to determine if the candidate will be approved for the treatment of advanced melanoma. The FDA’s original PDUFA date was set for November 25th, 2023, but it was extended due to resource constraints. This delay, which hurt the share price, typically bodes well for the approval and the decision can be decided well ahead of the extended PDUFA date. The company estimated the potential for approval in January. Unfortunately, the FDA put a clinical hold on the company’s Phase II study for its advanced NSCLC drug candidate LN-145 resulting from the death of a patient in the trial. Company management has reportedly revealed the death in the LN-145 study was officially categorized as a result of disease progression, and not from LN-145. However, the damage was done, and investors are concerned that the clinical hold will impact lifileucel’s likelihood of being approved because both drugs are tumor-infiltrating lymphocyte ('TIL') therapies. Consequently, investors need to be prepared for an out-of-the-blue announcement and have a solid game plan for either approval or a complete response letter ('CRL').

I intend to provide a brief background on Iovance Biotherapeutics and lifileucel. In addition, I discuss the opportunity, as well as the risks. Finally, I reveal my plan for grabbing some IOVA around the highly anticipated FDA decision.

Background on Iovance Biotherapeutics

Iovance Biotherapeutics is a leader in the development of tumor-infiltrating lymphocyte ('TIL') therapy for the treatment of cancer. TIL therapy is designed to harness a patient's TILs, which usually identify and attack cancer cells, but become ineffective when cancer prevails. Iovance's TIL therapy consists of collecting TILs from a patient's tumor, growing them outside the patient’s body, and reinvigorating them through a proprietary process. The personalized TIL therapy is then infused back into the patient, deploying billions of bespoke TILs to target various cancer cells.

At the forefront of the company’s clinical efforts is their TIL product candidate, lifileucel, designed for metastatic melanoma and cervical cancer, with the potential to become the first one-time cell therapy approved for solid tumor cancers. The company's other TIL candidate, LN-145, is being investigated across various advanced solid tumors.

Moreover, Iovance has been actively expanding its pipeline and collaborations. Iovance's next endeavor is personalized TIL therapies, which positions it well to capitalize on the growing trend of bespoke cancer therapies.

In terms of cash, Iovance finished Q3 with $427.8M in cash, cash equivalents, investments, and restricted cash, which the company believes would be enough to sustain operations into 2025 .

Lifileucel Data

Lifileucel has produced solid data over its clinical development that should support approval in melanoma. Indeed, Iovance recently announced additional positive data from lifileucel’s phase II C-144-01 study for unresectable or metastatic stage IIIc or IV melanoma. Lifileucel demonstrated positive outcomes at a median follow-up of 35.7 months, patients receiving the tumor-infiltrating lymphocyte therapy exhibited an objective response rate (ORR) of 50%, including a complete response in one patient. Notably, four of the six responders had durable and ongoing responses at the July 15 ^th , 2022, data cutoff. Safety observations included nonhematologic and hematologic treatment-emergent AEs, with febrile neutropenia being the most common grade 3/4 nonhematologic AE.

Lifileucel Opportunity

A lifileucel approval would be a transformative event for Iovance as it will be the company’s first approved therapy and will open the door to a massive metastatic melanoma U.S. market.

In addition, a lifileucel approval would validate th e company’s technology and TIL programs that will involve tens of thousands of patients in the United States.

Can Iovance Service That Many Patients?

According to the company’s Q3 earnings , Iovance has completed pre-approval onboarding steps for treating melanoma patients with lifileucel at around 30 Authorized Treatment Centers ((ATCs)). The company also mentioned that a supplementary 50 ATCs are anticipated to be onboarded within 90 days of the PDUFA date. So, most patients in the U.S. should have geographic access to lifileucel.

The company’s iCTC facility can supply TIL therapies for over 2K patients, with additional space for 5K+ patients. Plus, Iovance has secured additional contract manufacturing flexibility and capacity to effectively meet potential demands. Moreover, Iovance has made comprehensive preparations for the commercialization, manufacturing, patient access, and reimbursement of melanoma.

So, I would say that Iovance has the capacity and has prepared for a successful launch in the United States. Ex-U.S. the company believes they will have a marketing application submitted to the EMA in the first half of this year, with a potential approval in Europe.

PDUFA Risks

While the prospects for Iovance Biotherapeutics are encouraging, investors need to be aware of potential risks, especially around the pending FDA decision. As I mentioned in my introduction, the FDA put a clinical hold on Iovance’s Phase II study of LN-145 in advanced NSCLC due to a patient’s death in the trial. Although the company has categorized the death as a result of disease progression, and not from LN-145, investors need to accept elevated apprehension around the ticker due to LN-145 being a TIL, like lifileucel. The clinical hold is less than a month old, so, it is unlikely the FDA is going to release the hold in the immediate term. As a result, investors need to be prepared for the FDA’s decision to be on hold until they can verify the cause of death. So, the FDA may announce their decision later in the quarter, and not in January like the company had predicted. Yes, the extended PDUFA date is February 24 ^th , so the FDA does have time to make their approval decision, however, it would likely signal the FDA is weighing the impact of the clinical hold.

Indeed, just because the FDA does not announce their decision in January doesn’t mean they are going to CRL lifileucel. As a reminder, the FDA extended the PDUFA date to February because of the lack of resources to properly review the BLA before the original date in November. But… investors need to understand that the biotech sector is inherently volatile, and regulatory decisions carry uncertainties. Any indication of something not being perfect often results in an overblown response from the market.

If the FDA does send Iovance a CRL, the company's financial health, ongoing clinical trials, and strategic partnerships will come into focus. Although the company’s financials are healthy right now, investors would likely forecast dilution as the company might have to deal with additional studies and prolonged cash burn. Moreover, the company’s platform technology might be in question.

Considering these risks, I give IOVA a conviction level of 2 out 5 at this time, and will be in the “Bio Boom” speculative portfolio.

My Plan

Despite Iovance Biotherapeutics being near the forefront of cancer immunotherapy innovation, I have found ways to avoid the ticker over the past several years. Now, I am looking to take advantage of the market’s apprehension and get involved in TIL technology, which holds significant promise for transforming cancer treatment.

Looking at IOVA’s Daily Chart, we can see the ticker broke the downtrend ray and is now trading bullish on the Go-No-Go indicator.

In addition, the share price is above the 200-day EMA and is sitting on the volume shelf at around $8 per share. As a result, I am looking to initiate a small position in IOVA in the immediate term. Once I have established a position, I will wait for a decision from the FDA regarding lifileucel. If approved, I will wait to make a sizeable addition under $10 per share, and will subsequently place sell orders to book profits and move it to a "House Money" status.

If the company receives a CRL, I will hold onto the position and will wait for the company to address the issues in the CRL before making another move.

Long-term, I expect to maintain an IOVA position for at least five years in anticipation that they will become a leader in cancer immunotherapies.

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