This biotech’s growth story is going to start moving faster, and soon.
Now’s a great time to build up a position in Iovance Biotherapeutics (IOVA -1.28%) with the aim of holding on to its shares for the next few years. Between the recent launch of its innovative cell therapy, strong progress in building up its network of clinics, and a financial situation that looks well-matched to its substantial needs in the near term, this is a biotech that’s as well-positioned as stocks in this very risky category tend to get.
Let’s take a look at the top three reasons it’s worth buying like there’s no tomorrow.
1. The infrastructure for growth is coming together quickly
Iovance’s first cell therapy product, Amtagvi, is a bit complicated to manufacture and administer. Amtagvi treats melanoma using a patient’s own tumor infiltrating lymphocyte (TIL) cells.
As the name implies, TILs are naturally occurring cells of the immune system that manage to enter the interior of solid tumors, where the tumor’s defense mechanisms are less effective, and where the TILs’ potent anti-tumor chemical secretions are extremely efficient. But without some external help from Iovance’s manufacturing techniques, TILs are very few in number, which sharply limits their ability to simply cure the patient without outside intervention.
Iovance’s approach requires a bit more than a month to culture a few of a patient’s TILs into a mighty army that’s ready to (fingers crossed) defeat a tumor. Furthermore, it requires a specialized authorized treatment center (ATC) to take a sample of the patient’s tumor to isolate the TILs, put the patient through the weeklong pre-treatment workup regimen, and then ultimately infuse the fresh legion of TILs to deliver the dose of Amtagvi.
Without enough of those ATCs positioned near major population centers, the company’s addressable market is much smaller, as fewer patients would be willing or able to travel to get treatment. Therefore, it’s good news for the stock that by the end of 2024, Iovance anticipates that it’ll be operating 70 ATCs in the U.S. That should mean that around 90% of eligible patients will be within 200 miles of a center.
What’s more, per management, roughly 75% of Amtagvi patients receive coverage from private insurance, typically within about three weeks of initiating the process.
That means the company is very rapidly assembling the clinical and financial infrastructure that patients need to get treated. That’s a reason to buy the stock as revenue growth will continue to pick up. By the end of the 2025 fiscal year, management is predicting revenue of as much as $475 million. In the second quarter of this year, it reported just $31 million.
2. The pipeline implies plenty of opportunity in the future
Iovance isn’t stopping with the research and development (R&D) of Amtagvi simply because it got regulatory approval for one indication.
Technically, right now the therapy is only approved to treat melanoma in patients who have already been treated with an anti-PD-1 drug, a different and more common treatment modality. In other words, it isn’t considered to be a first-line treatment, which limits the size of its addressable market.
To remedy that, the biotech is currently in phase 3 clinical trials investigating whether Amtagvi is effective for melanoma when administered as a combination with a drug of that type. If those trials are successful, it would make the therapy eligible for first-line administration, massively increasing its market, and constituting yet another big reason to buy the stock.
There are also other very positive implications in attaining first-line status. As Amtagvi is made from the living cells of the patient, being a first-line therapy means that the cancer has less time to progress. With less time for the disease to progress and inflict harm, the patient’s TILs are both healthier and more energetic on average. That makes their progeny manufactured by Iovance more vigorous too, thereby increasing the treatment’s chances of success.
With higher-quality starting material, it might also be possible for the biotech to spend less on manufacturing costs as it likely takes a lot longer to culture enough TILs to make one dose of Amtagvi when they’re weakened at the start of the process.
3. Its balance sheet is looking good
The last reason to buy Iovance stock like there’s no tomorrow is that it has a strong balance sheet, which is core to a biotech company’s survival in the period before it has significant revenue. In Q2, Iovance reported that it had $449.6 million in cash, equivalents, investments, and restricted cash.
Management thinks that should be enough money to last it through early 2026. At the same time, it reported just a little over $70 million in long-term debt and capital lease obligations. That shouldn’t be any problem to pay off once revenue from Amtagvi ramps up.
Plus, as the Amtagvi rollout picks up speed, the biotech likely won’t have trouble borrowing money if it needs more funds for the manufacturing and ATC buildout it has planned. Shareholders probably won’t need to take the dilution hit from it issuing more shares as a result.