47% Growth in 2024: Where Will Iovance Biotherapeutics Be in 5 Years?

It’s been a wild roller coaster ride for Iovance Biotherapeutics (IOVA 0.25%). In February, the stock price more than doubled, then fell to a 52-week low in July. The stock has since recovered and, at recent prices, is up 47% for the year.

Can Iovance continue to grow in the coming years, or is it more likely that his big gain in 2024 will dry up? Here’s a look at what to expect in the short 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 complex cell therapy made from tumor-infiltrating lymphocytes (TILs), a type of immune cell that recognizes and attacks cancer cells.

Amtagvi is currently approved to treat patients with unresectable or metastatic melanoma who have not responded 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, came in at 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 at a time from the patient’s tumor samples. The reinfusion process requires a brutal 7-day preconditioning regimen that depletes the patient’s immune system so that the new TILs can gain a foothold. Patients with relapsed melanoma are often too frail to handle the entire preconditioning process, so expanding to the newly diagnosed population could lead to a huge sales boost.

In May, Iovance showed the results of a Phase 2 study of first-line melanoma patients treated with a combination of Amtagvi and Keytruda. The combination shrunk tumors for 15 of 23 patients, including seven who achieved complete remission.

The 65% response rate observed for the Amtagvi plus Keytruda combination is extremely encouraging. In the Keynote-6 study, Keytruda as monotherapy shrank tumors for only 33% of patients with first-line melanoma.

Iovance is still enrolling patients in a phase 3 study that will compare first-line melanoma patients receiving a combination of Amtagvi plus Keytruda with patients randomized to receive Keytruda alone. While I expect Amtagvi to succeed, you shouldn’t hold your breath. The study plans to follow these patients for five years to measure how long the combination therapy can keep their disease at bay.

Iovance could improve production

In addition to somewhat frail patients not being able to handle the preconditioning regimen, Amtagvi’s launch is hampered by a less-than-ideal manufacturing process.

Getting enough viable TILs from a tumor biopsy and culturing them into a dose of Amtagvi is even more difficult than it sounds. In the study that led to its approval, investigators took tumor samples from 111 enrolled patients, but only 73 received the recommended dose.

Iovance has priced Amtagvi at $515,000 per patient, but is not getting paid to try it. Because it can only record revenue after a patient receives an adequate dose of TIL, minor changes in the manufacturing process could have major effects on overall sales on the line.

Buy, sell or keep?

Product sales that reached $31 million in the second quarter are a step in the right direction, but Iovance Biotherapeutics is still far from done. The company burned $210 million in the first six months of the year to end June with $419 million in cash.

It is still too early in Amtagvi’s launch to know if the revenue it generates will exceed operating expenses. However, as the ongoing phase 3 trials enroll more patients, we can be sure that operating expenses will increase. 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 market cap of $3.6 billion. On the one hand, that’s a lot to pay for a company that’s on track to lose more than $400 million this year. Investors without a high risk tolerance will want to steer clear of this stock if the Amtagvi launch pans out.

However, with a good chance to expand Amtagvi’s approval to include first-line melanoma patients and plenty of room to improve its manufacturing process, I won’t be surprised if Iovance attracts a juicy buyout offer from a pharmaceutical company with deep pockets in the next five years. For investors with a huge risk tolerance, adding some stocks to a diversified portfolio isn’t a bad idea right now.