IOVA - Iovance: November PDUFA But A History Of Delays And Underwhelming Data

2023-08-30 16:01:36 ET

Summary

• Iovance Biotherapeutics, Inc. has a deep pipeline of cancer immunotherapies, but has faced delays and issues with duration of response.
• The company's lead asset, lifileucel, is being tested in multiple trials for different indications.
• Underwhelming data from a phase 2 study and poor duration of response in other trials have hurt Iovance Biotherapeutics stock.

Iovance Biotherapeutics, Inc. ( IOVA ) is a developer of cancer immunotherapies with a deep-moated pipeline of multiple products approaching final regulatory stages. However, its programs have been beset with delays; worse still, there have been persistent issues with duration of response.

Here’s the Iovance pipeline:

They have filed one BLA and have 7 active clinical trials. Lead asset is lifileucel, a tumor-infiltrating lymphocyte ((TIL))-based therapy targeting advanced or metastatic melanoma, as a monotherapy (BLA filed) in a post-PD-1 setting, and in combination with anti-PD1 pembrolizumab in a frontline setting (pivotal trial ongoing). Lifileucel is also running a pivotal trial in cervical cancer in a 2nd line post-chemo and post-anti-PD1 setting. A second asset, LN-145, is running a pivotal trial in metastatic NSCLC in a 2nd line post-chemo and post-anti-PD1 setting. In these three indications, these two assets have a number of other phase 2 trials running in various combos and settings. Plus there is a next generation PD-1 inactivation TIL called IOV-4001.

TILs are lymphocytes - immune cells - that travel from the bloodstream to the tumor to launch an immune response against cancer. In TIL-based immunotherapy, TILs are harvested from the patient’s own tumor, expanded (increased in numbers in a lab), the patient is given a lymphodepleting chemotherapy to reduce immune response, infused with these TILs, where they then launch a strong attack against the tumor.

This is the theory, but there are pitfalls every step of the way. Not only is the product expensive and takes a lot of time, but it is difficult to standardize for trials as well as during commercialization; moreover, lymphodepletion comes with its own side effects.

Last year, cohort 4 of the phase 2 C-144-01 study produced underwhelming data, tanking the stock overnight. There was a significant drop in ORR from cohort 2 data released in 2020, from 39.4% to 26%. There were fewer CRs, and duration of response declined as well. Although the company offered multiple explanations for the poor showing, including that patients were sicker in cohort 4 than in cohort 2, and that they had longer duration of anti-PD1 therapy, investors were still not convinced.

The worst part of the story is that this underwhelming data came about in May, after the company received positive feedback from the FDA about a proposed potency assay, which cleared a path forward for its much delayed BLA. Despite the data, the company went ahead and started a rolling BLA in August last year. But as is usual with this company, even the rolling BLA was delayed after the FDA sought more data in November. The FDA asked for “supplemental assay validation information and comparability data for lifileucel.” This delayed the rolling BLA completion to Q1 2023. This was finally completed on March 24, 2023. It was accepted and given a Nov 25 PDUFA under priority review. This is an accelerated approval, and a phase 3 confirmatory study will be required for full approval.

Iovance’s other programs have been beset with problems as well. Apart from delays and more delays, 2021 NSCLC data from a keytruda combo trial saw poor duration of response, which hurt the stock. Even if approved, such low durations may not take in the market, ruining chances of commercial success. In July, the FDA confirmed that the “design for the company’s ongoing IOV-LUN-202 trial for the lung cancer candidate LN-145 could be acceptable for a potential accelerated approval.” Like with the melanoma program, an approval on underwhelming data may not yield long-term benefit for the company, and certainly not for its patients.

Earlier this year, Iovance acquired proleukin, an IL-2 agent, from Clingen in a strategic transaction that will help secure its IL-2 supply chain for lifileucel regimen, and bring it inhouse. Proleukin is used to promote T-cell activity after lifileucel infusion. This cost them £208.4M, and it was paid through existing cash.

Financials

Iovance Biotherapeutics, Inc. has a market cap of $1.5bn and a cash balance of $317mn. Research and development expenses were $86.3 million for the second quarter ended June 30, 2023, while selling, general and administrative expenses were $21.9 million. At that burn rate, they have a cash runway of just 3 quarters. They also raised $161mn from a secondary offering in July. The company estimates that this cash will last them until the end of 2024. That will give them 3 to 4 quarters of breathing space after they launch lifileucel post approval.

Over 90% of Iovance Biotherapeutics, Inc. stock is held by "smart money," mostly institutions. Apart from the usual names like Vanguard, BlackRock and Perceptive, we also have Quogue Capital as a key holder. Insiders have regularly purchased stock, boosting its price in times of bad news.

Risks

Iovance has multiple shots on goal, but these shots are all beset with the same problem, which is duration of response, and just response in general. Their other problem was standardization and delay in manufacturing, and perhaps the proleukin acquisition was an effort to mitigate that. Cash is another problem, however, the fundraising in July has also mitigated that.

Bottom Line

Iovance Biotherapeutics, Inc. is trading quite near its 52 week lows, and we have a major catalyst in November. IOVA-wary investors are probably wondering whether their luck will last until then, because IOVA has a habit of delaying things. I would probably buy a small pilot right now just to play the PDUFA in November. But I wouldn’t bet too much on my chances of success.

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