Iovance Biotherapeutics Inc (IOVA) Options

For valuations on these pre- or early revenue companies, I try to create a pro-forma P&L looking out 3-5 years (to estimated peak sales). I then adjust the parameters as facts emerge. For a lot of biotechs, you hear people say "but they have an approved drug/treatment", but if the target patient population is too small, they will never get to profitability, even with a treatment at $2+M. People also always over-estimate adoption. Even for IOVA, people say "these patients are dying, of course they will treat", but even looking at my mom, who is 92 and relatively healthy (for 92), if she developed MM, I am 100% sure she would not treat, even if she was eligible. This is critical to getting to the "real" treatment population.

Having said that, I think IOVA does tick the boxes. For US population, I estimate peak patients at 1,800 for L2+. RoW should add about about 2,200 patients (ramping end 2025), but at a 15% price discount, for a total incoming at 4,000. Hitting about 100 patients/month should allow IOVA to hit efficiency to get to GM target of 70% (ultimately I think they can get to 75%-80%). This also assumes a drop rate moving down to 20% (which was where the trials were but higher FDA cell count requirement in the Assay hurt that). These two alone, get to a $35-40 price, assuming IBB PE and a PEG of 1.5. I think EU/RoW approval at 90%+ since CAR-T was approved. Adding L1, other IND including NSCLC only leverages the bottom line up and the SP would be multiples of the price noted.

Bottom line, for my core holdings, it only matter where I bought it (ave $9.90) and where I sell it (I expect much much higher). On the pullbacks and events, I use options to "play the game", just need to make sure I do not over do it so I can stay in the game.

GMH, Perceptive did add a small amount, MHR is unchanged. Updates will be posted on the company website soon enough. Perceptive's filing posted today: https://ir.iovance.com/sec-filings/sec-filing/sc-13ga/0001193125-24-258737 .

JE, MHR, and WR do seem to be in lockstep with each other based on share totals. WR with the most, Vanguard now 2nd on the list, JE of Perceptive 3rd, and MHR currently 4th. I'm unaware of any other major changes coming that would knock any of these 4 off the top spots.

The top 10 institutions have controlling interest of Iovance with over 54% of the shares for whatever that may mean. It won't take much to get agreement should the time come for a vote of the shareholders.

All still looks solid and stable amongst the top owners, but share price is still frustrating regardless. I still interpret this to mean that they're all on the same page as to what the future holds for Iovance, whatever that future may be - whether a buyout or to go it alone, a possible partnership or even an acquisition of another company. My guess is they all understand the plan as it was explained earlier on when they took large positions.

Just my opinion, of course.

Thanks for posting. Most of the holdings by the big firms (Vanguard, Black Rock, etc.) are the collective decisions of all the various fund managers they employ. The ones I am most interested in are Quogue, but that will only change when WR buys/sells so I don't think there will be an update on that one. Perceptive and MHR have big bets and this is there space and they are "in the know" so will be interesting what they have done. The others is just a mish mash of buys and sells by hundreds of fund managers. Hard to get a take on that.

Surf, nothing wrong with caution especially when preserving capital is important at a certain stage in life. I'm invested a bit more than I had originally planned, but I also have an eye on the what if...

I don't want to have to make my wife go back to work at her age, although she still can outwork most of the younger kids. Dang, maybe I should send her back, lots of companies need good employees. If we were in the Philly market, I hear Iovance is hiring.

Here's a little gem of a note: Hood River Capital Management LLC increased their holdings to 8.14 million shares, an increase of 5.41 million shares as of 9/30/24.

Best of luck to us.

I reached my limit when it was back to $7.44. 10 or 20 m years ago after the run I I would have flipped. Getting old and too cautious. LOL

Surf, what I can say is I increased my position today to get to my personal total number of shares goal and maintaining a price average below $9.50. I know Hicham sees reason to wait a bit longer and will try to catch the bottom, but at this point we're all just playing for small change. Nothing wrong with saving a few extra dollars on the purchase price if you can. My impatience got the best of me today. A year from now, I doubt I'll be too worried if I could have saved an extra quarter or two in the near term.

I took advantage of this drop reasonably well, but certainly not perfectly played.

Good luck to the longs.

Thanks!

Surf, actually, we've seen increases for Vanguard Group, State Street, Black Rock, and even Perceptive added a few more shares. Some new big positions and a couple big increases, but certainly a few that had sold down some shares probably right after the rise following Q2 earnings back in August. Some updates will appear in a day or two, but here's what's currently listed:

https://ir.iovance.com/stock-information/ownership-summary

As for how this stock gets beat around - it does seem well organized to a point. I'm guessing there's plenty of money being made selling the calls and puts and then wiping them all out just in time for options expiration. I've seen this game played on other stocks I've owned while the company was growing its business. But in the end, the good companies do win out and the share holders are rewarded. Options players have to take their chances on timing the moves properly - that's not such an easy task with a young commercial company.

Good luck to the longs.

Institutional injvestors shorting heavily.

We are all tempted to buy more but I am not sure we have hit the bottom. Whoever is dragging this down seams to be totally in control and therefore the SP can ever drop further...

 I personally prefer to wait until the dust settles. Not selling but not buying more ar this stage.

I agree. Feels like something big is brewing. I'm not scared, I'm more confident than ever we are about to hear something soon. Keep buying like they are! I know i am.

Good luck to the longs.

People always claim manipulation with stocks. Well IMO, you can see it with IOVA.
I have traded stocks full time for 5 years and watch charts on daily basis.
I was just watching IOVA on a 1 minute chart when it went to 9.04.
Immediately, 2 blocks of around 100000 shares came in to knock it back down.
That is almost 1 million dollars per these trades.
So what is that? Retail - not at all likely. A large institutional trader selling part of position - doubtful.
So what? IMO - it is naked shorting. They are trying to break the retail trader this week.
The ASK is reloaded on every upswing aggressively.

Just my thought.

Where is the bottom on this? Still trending lower and likely more dilution coming? Please help!

JD, this isn't a penny stock. Hope is not necessary for this investment - even though hope is being given to cancer patients because of Iovance's Amtagvi and TIL therapy. The company is executing on its plan and the market will catch up in time.

I was reminded of the following earlier tonight by a fellow investor with a timely share:

https://www.kingswell.io/p/chapter-8-of-the-intelligent-investor

Always worthwhile to remind ourselves what we've chosen to engage in when we invest in stocks.

Here's a brief takeaway: "That’s the whole ballgame right there. People mistakenly view market fluctuations as something to be afraid of — rather than as opportunities for the intelligent investor to feast upon."

So your banking on hope lol

Big driver will be topline though. As long as efficacy holds up, the treatment is exactly the same as for MM so almost no additional safety risk and the assay and label will probably be identical/nearly identical. At that point, just a question of when, but will still be angst around PDUFA date.

Thank you for saying this GMH, we always knew it was 2027 and the discussion of this being delayed was frustrated to witness. I think some people confused the application for accelerated approval with approval or they thought the application for accelerated approval was delayed. Regardless, there is no delay and in fact with accelerated enrolment it is happening as quickly as it can.

Yes! I keep thinking $25. SMH Have to wait and hope.

Sounds like bad timing on your part again... 

LUN-202 Approval was always going to be 2027. In biotech, you need to know the timeline. Retail investors always want weekly readouts from every patient.
1) After full enrollment/last patient - 4-6 months to determine endpoint (for ORR, mDoR is much longer)
2) 2 months to parse the data; present at conference
3) 4 months to meet with FDA/pull BLA paperwork together
4) 2 months for FDA to verify filing complete and accept BLA
5) 7 to 10 months for FDA review depending on if it is an accelerated approval or not.

All together, it is a minimum of 18 months from full enrollment to approval, if everything goes well. Once you get topline, that is usually what moves the stock. FDA approval can be estimated based on how good the topline data is (safety and efficacy), so less of an unknown. Then the revenue ramp, which, again, usually takes longer than most investors expect (3-4 years to hit peak sales).

I meant that "I had HEARD"

Holy Cow. They are completely hammering it today.
I had put something out about Lung occuring in 2027?
That removed a huge near term catalyst.
Gave the shorts ammo
This stock just makes me sad.
I decided a while back to only trade it as it took years off my life when I held for the time period that i did.

SB, well said. I've added a few shares over these past few days and I'll continue to look for places to add to my core position. I am willing to trade a few shares here and there around the edges so to speak, but I suspect there'll come that day when we all get surprised with some unexpected early good news from EU, a trial, or some other such event, maybe even a buyout. To your point, the company is doing well, improving on margins, increasing patient totals, adding ATCs, and tracking very well for other indications for TIL therapy.

Good luck to the longs.

I’m glad for you but I will just keep slowly accumulating every few weeks here for the next few years 😄 it’s not that this is my only investment of course but with rapid margins rising and costs reducing and very strong data coming out next year onwards… not a concern in the world for me.

Size up- To expect to see $18 once again in 2024 is a pipe dream. Not going to see new highs in 2024.
It is caught in a trading range of $9 to $12.
Risk is very high as timeline for derisking with pipeline progress keeps getting extended out, now to 2026/ 2027. They will do another cash raise at the ATM at your expense in the near future behind your backs. This overhang will keep the share price range bound. Shareholders are paying for the risk. I reduced my core position substantially at $11 (my avg. cost) and plan to watch this one from the sidelines. May buy under $9 and sell around $11 a few times over the next 6 months. The cost to do business is very high and logistics is too cumbersome. It may take 2 years for this bird to fly, if it ever does.

Meantime, I’ve made a killing buying SGMO under $1 a month ago. It’s headed to $5 near term and towards $10 within 1 year if both their drugs get FDA clearance based on stellar data. Now thats a growth trajectory with a faster turn. May add to my core IOVA position again after 6-9 months.

I would love to see the trading accounts of the big players. Personal ATM's?

Clinical biotechs are always a trade, Any company that mentions cash runway is really saying "we will be diluting in the near future". Transitioning to a commercial biotech is a bit tricky ... road will be bumpy but returns could be spectacular. "Never a buy and forget about it" in this space.

Agreed. With the Short interest being so high. They WILL control the stock unless incredibly large outlier news hits. Now the interesting thing is it looks like the big long players (Rothbaum/ Perceptive/etc) have made it apparent that they do not want it to go below 9.15.

The way this trades is very concerning. Thinking this was a solid growth stock was my mistake. I flipped it once and bought back in low.. (Missed the high) I should have treated this like a old time pink stock and flipped it several times. Would have made more than this hitting $30 a share. But hindsight is just a dream. We shall see on the next run up.

Disclosure - I do not own any shares. Sold on Earnings day for a quick scalp.
They do whatever they want to this stock. They will let it run to then just hammer it back down.
Its amazing and I'm sure very frustrating for holders.
Just ridiculous.

BK - The Operating Cashflow numbers are corporate, not functional so they are an "all in" number. It eliminates the noise of the R&D to COGS shift and other accounting allocations. Yes, SGA costs as well as COGS costs will increase, but should be at a slower pace that Revenue, which is really what the Operating Cashflow numbers are indicating.

Regarding OOS costs, I suspect they simply allocate the fully loaded Manufacturing costs out to R&D & COGS based on number of successful infusions. I highly doubt (and hope) that they have dedicated R&D vs Commercial production teams. At least that is the general approach we took when allocating out our costs to the various functions.

GMH, agreed, I think Iovance has been a bit conservative in their estimates, but some costs have increased around their sales team, expanding mfg capacity, and production staffing. Obviously, some costs went down now that Amtagvi is commercial - no longer in trial, but they're also allocating costs to the OOS product (didn't dig in on how that's being accounted). The OOS product is getting used so there's costs associated with that, just not sure who foots the bill.

Overall, numbers were solid, the company beat guidance, and they increased rev guidance for 2025 (based solely on U.S. Amtagvi sales). A few things appear like they'll take a bit longer than hoped with EU, and possibly a bit longer on nsclc (though I still suspect a surprise may be coming). But all in all, the numbers of what this company has the potential to earn over the next several years is very impressive. A buyout at any time is always a possibility, but now it seems more likely that we still have time to play, build our positions, and trade a little longer for seemingly a few more quarters. Then again, JPM is right around the corner in January: https://www.jpmorgan.com/about-us/events-conferences/health-care-conference . That's a good time for big deals to happen.

IOVA is still cheap by all comparisons to similar companies in the sector. I'm good with my core position growing because the company has demonstrated an ability to achieve profitability potentially before the end of 2025. There's plenty of companies out there that I'd be looking to exit as they appear overpriced. A good place to roll some of those great gains would be to drop some $'s into IOVA stock.

Good luck to the longs.

One interesting item that I think has gotten lost is the cash runway/cash burn rate. Took a look at the 10Q this weekend and here is what we have (10Q only has YTD cashflow numbers so think this is easy to miss).

Operating Cash Flow
Q1 Q2 Q3
YTD (122.3) (220.7) (279.7)
Qtr (122.3) (98.4) (59.0)
Delta 23.9 39.4

So most recent quarterly cash burn is $59M so given cash of $406M, gives a cash runway (stable level and no CAPEX) of 6.8 quarters or Q2 2026. However, cash burn decreased by almost $40M in the last quarter. Given the improvement in cashflow, I am thinking they may be very conservative in the cash runway estimate of H2 2026. All of this depends on improving the cashflow and CAPEX. I do think they will have 1 more cash raise just so as not to run on fumes in case of any hiccup, but think they are closer to cashflow breakeven than they let on.

Thanks ... I need to subscribe as this is a really good summary. Would save a lot of time rather than listening to the CCs on all my smaller positions (which I generally do not do either).

I reviewed Earnings Central's 5 minute video presentation for Iovance's Q3. It's a well prepared video capturing the highlights of the quarter and some of the future expectations for Iovance. Nicely done.

Ben Creelan, MD of Moffitt Cancer Center presents late breaking abstract 1488 at SITC 2024 (this is an oral presentation):

Thanks for the summary:

Just a note on the gross margin number. JMB stated that the Gross Margin $ for Q3 was $25.6M but this excluded non-cash expenses from the Proleukin acquisition. In the 10Q, COS is stated as $39.8M so the GAAP GM would be $18.7M or 32% and not the 44% indicated. Not sure why they feel they need to add back in the $6.9M amortization of Proleukin since that is a true COS.

After additional consideration, perhaps it can be argued that this is more of a capital cost than a COS, but so is the amortization of iCTC costs, so seems a bit inconsistent.

That was disclosed in the last earnings call on 8/8. They said they had tapped the ATM for $200M thru 7/19 (I believe). In the latest 10Q, they stated the same amount YTD thru Q3 so no additional sales occurred after the 8/8 earnings call.

I just saw that most of the 25 million shares were issued in Q2 so cannot justify the magnitude of the share price drop we just witnessed this week. 

Total Product Revenue (Q3 2024): $58.6 million, exceeding guidance of $53 million to $55 million.

Amtagvi Revenue (Q3 2024): $41 million.

Proleukin Revenue (Q3 2024): $16.5 million.

Year-to-Date Total Product Revenue (2024): $90.4 million.

Amtagvi Revenue Year-to-Date (2024): $54.9 million.

Proleukin Revenue Year-to-Date (2024): $35.5 million.

Net Loss (Q3 2024): $83.5 million or $0.28 per share.

Net Loss (First Nine Months 2024): $293.6 million or $1.03 per share.

Gross Margin (Q3 2024): $25.6 million against revenue of $58.6 million.

Cash Position (as of September 30, 2024): Approximately $403.8 million.

Research and Development Expenses (Q3 2024): $68.2 million.

Selling, General and Administrative Expenses (Q3 2024): $39.6 million.

Full Year 2024 Revenue Guidance: $160 million to $165 million.

Full Year 2025 Revenue Guidance: $450 million to $475 million.

Cash Burn Guidance (Full Year 2024): $320 million to $340 million, excluding one-time expenses.

https://finance.yahoo.com/news/prediction-president-elect-donald-trump-100600843.html

Zacks Equity Research
Fri, November 8, 2024 at 10:11 AM EST

Biotherapeutics, Inc. IOVA incurred a third-quarter 2024 loss of 28 cents per share, narrower than the Zacks Consensus Estimate of a loss of 31 cents. In the year-ago quarter, the company reported a loss of 46 cents.

As of Sept. 30, 2024, the company had nearly $404 million in cash, cash equivalents, short-term investments and restricted cash compared with $419 million as of June 30, 2024. The current cash balance also includes net proceeds of $200 million raised from an at-the-market (ATM) equity financing facility during the second and third quarters of 2024. Management expects this cash balance, plus anticipated product revenues, to fund the company’s operations into early 2026.

Iovance Biotherapeutics beat expectations with revenues of US$59m arriving 8.8% ahead of forecasts.
The company also reported a statutory loss of US$0.28, 6.0% smaller than was expected.
After the latest results, the 13 analysts covering Iovance Biotherapeutics are now predicting revenues of US$460.9m in 2025. If met, this would reflect a substantial 407% improvement in revenue compared to the last 12 months.
Iovance Biotherapeutics' rate of growth is expected to accelerate meaningfully, with the forecast 267% annualised revenue growth to the end of 2025

they issued c. 25 million additional shares to insitutional investors..................If so why?

Hi all, there is a rumour on yahoo that they issued c. 25 million additional shares to insitutional investors and hence the SP dropped. 

Any thought?

Sadly I had sold and bought back in at $7.44! I missed making $5.00 per share! SMH
Oh well, maybe look to load more when she bottoms out?

GMH, I also added to my position today on the price drop with a healthy share purchase. I'm happy I did, but certainly I'm disappointed about how far IOVA dropped. Despite that, do we know how many infusions in the Q2 were OOS? How many in Q3? Revs could have been higher had the % of OOS product been a bit lower. Some of those issues are being resolved. I don't recall how much of the production failed to garner revenue, but at least the patients were still able to receive the infusions with the hope for a successful outcome.

Production is increasing, OOS product is declining, but I'll need at least 2 more full quarters before I'll say they missed the boat early in the ramp up. I fully expected problems in the beginning, but I actually thought there were less than I had anticipated. I had hoped for more revenue producing infusions, but do we know how many infusions were done in total even if they didn't produce revenue? How much of the capacity is being used for trials? To your point, hopefully all of that is being worked out.

I did expect a higher share price at this point given all that we know. That's the one thing that still makes me question how the share price hasn't at least gotten back to $15.00+. Maybe in part your thoughts provide some of the explanation. I don't know, but I'm not overly worried anymore. I'll just take advantage of the volatility with a little more trading around the edges until such time that the share price more accurately reflects this company's value.

I do think Iovance will surprise even more to the high side for the Q4. Unlike so many other early commercial stage biotechs, we've been given a significant amount of guidance which is unheard of this early in a company's first commercial product.

Good luck to you with your trades. Collect a little OPM on those puts.

Having said that, I added a lot of exposure (selling puts and buying calls) on today's pullback. I think the company will overcome this, it is just disappointing that capacity is a problem at this point in the game.

Badger...the FDA approval was in Feb, they had been talking about a bolus of patients for months leading up to and after that, they stated several times that they did not want to be in a situation of limited capacity that CAR-T was at launch... and here we are, 9 months later and Fred makes the off-cuff comment that "So the fact that we're scaling up manufacturing is really what's driving that growth. It links up with the manufacturing capacity. "

That to me is troublesome and I am disappointed. I think they are resolving it and will get there, but this should never have been an issue in the first place. They knew there would be a capacity issue but did not plan accordingly.

Thanks bgk. Patience and perseverence will sooner or later pay off.