The biotech industry has been described as the Wild West of the stock market. Although some companies manage to develop and commercialize a life-changing therapeutic, countless more start-ups inevitably fail. Nevertheless, the risk could be worth the reward if a new blockbuster drug creates massive shareholder wealth.
While that level of success is only obvious in hindsight, Iovance Biotherapeutics (IOVA -1.62%) is an emerging industry leader with significant potential. The company’s tumor-infiltrating lymphocyte (TIL) therapy is seen as a revolutionary treatment for a wide range of cancers, highlighting the attractiveness of the stock.
Could buying shares of Iovance make you a millionaire? Here’s what you need to know.
Iovance TIL therapy breakthrough
This has been a milestone year for Iovance Biotherapeutics. In February, the company received accelerated approval from the Food and Drug Administration (FDA) for lifileucel. The treatment, marketed as Amtagvi, is the first-of-its-kind cellular therapy to be approved for solid tumor cancers and advanced melanoma.
TIL therapy stands out through its unique mechanism of action. It begins by harvesting T cells directly from the patient’s tumor. This is important, as no two tumors are identical, and it allows the therapy to enhance the body’s natural cancer-fighting response with patient-specific immune targets.
From an extracted tumor sample, Iovance manufactures a personalized TIL monotherapy, which is returned to the patient as a one-time intravenous infusion. The clinical data has been impressive, demonstrating Amtagvi’s long-lasting response and ability to keep cancer from getting worse, specifically in advanced melanoma patients who had already failed to benefit from alternative immunotherapies.
Iovance estimates that the initial addressable market is 30,000 patients annually, but that more than 70,000 could benefit each year through an expanded label indication for all frontline advanced melanoma, currently in a phase 3 trial.
Image source: Iovance Biotherapeutics.
Iovance’s pipeline includes lifileucel applications in separate phase 2 studies for non-small cell lung cancer (NSCLC), which could be an even bigger prize for the company given the much larger global patient population. Longer-term, endometrial cancer is also an area of development.
Overall, there’s a lot to like about Iovance, which has taken the critical step of transforming from a clinical-stage biotech to launching a novel therapy into the market. Still, the company has a lot of work to do to confirm the viability of its business model.
Reasons for caution
The good news for investors is that Iovance is now generating real sales, with a runway to gain adoption within the oncology market. In the third quarter, total revenue reached $59 million compared to under $500,000 in the prior-year quarter — driven by accelerating patient intake of Amtagvi since the drug’s approval.
For full-year 2024, Iovance expects total revenue between $160 million and $165 million, nearly tripling to a target range of $450 million to $475 million in 2025, the first full year of Amtagvi sales.
At the same time, Wall Street analysts project a loss of $1.30 per share this year, only modestly narrowing to a loss of $0.82 per share in 2025. Ongoing research and development, and heavy spending to support global expansion, mean profitability will remain elusive.
So while Iovance’s top-long growth is exceptional, the market beginning to focus on metrics like margins and cash flow could be a financial headwind that keeps shares volatile. The other risk investors need to balance is the possibility of disappointing clinical data that forces a reset of the company’s prospects.
IOVA EPS Estimates for Current Fiscal Year data by YCharts.
The big picture for investors
Iovance Biotherapeutics shows a lot of promise in what may still be the early stages of a major growth opportunity. Will the stock evolve into a multi-bagger with the type of return capable of setting investors up for life? That remains to be seen, and there are significant uncertainties.
I believe that this future is possible, but it may take many years to play out. Iovance will need to demonstrate an ability to enter new oncology categories beyond melanoma. If you’re confident in that outlook, you might consider initiating a small position in the stock (within a diversified portfolio). But Iovance at least deserves to be on your radar, so you can keep up with the many expected developments in store.
