Iovance Biotherapeutics Faces a Downgrade Assessment. Should Shedding Be Considered?
Shares of Iovance Biotherapeutics (IOVA 0.97%) have taken a tumble, dropping around 47% from their peak following the company's first drug's accelerated approval in February. One Wall Street analyst who praised the biotech firm after this approval is now expressing concerns.
On July 29, Piper Sandler analyst Joseph Catanzaro shifted his stance on Iovance, reducing his firm's rating on the stock to "neutral" from "overweight." He also slashed his price target, setting it at $10, down from $19.
Investors who bought Iovance shares following the drug's approval might be considering their next move in light of Catanzaro's changed assessment. Before making any hasty decisions based on analyst notes, let's delve into what's been frustrating Iovance and the potential for improved circumstances.
The Factors Behind Iovance's Downgrade
Iovance's lead drug secured approval from the Food and Drug Administration (FDA) in February. However, the groundbreaking treatment, Amtagvi, isn't an ordinary small molecule or injectable protein. Amtagvi is actually a collection of autologous immune cells called tumor-infiltrating lymphocytes, or TILs.
Manufacturing Amtagvi is a complex process that involves creating batches from a small amount of TILs found in tumor biopsies. Unfortunately, obtaining a viable sample that allows for Amtagvi production isn't guaranteed for all patients, and the majority of enrolled patients at surveyed treatment centers haven't yet received a dose of the drug, according to Catanzaro.
This slow rollout of Amtagvi isn't surprising given the intricate manufacturing process and the need to deplete each patient's immune system before TILs from an Amtagvi dose can take hold in their bone marrow. Given that the drug is approved for treating generally weakened patients who have already relapsed or failed other therapies, infrastructure and patient resources have to be in place for the treatment to be successful.
Can Iovance's Stock Rebound?
Before getting too excited about Piper Sandler's feedback after surveying six treatment centers, investors should know that Stifel's June survey of 20 treatment centers suggested that capacity was strong enough to cater to market demand.
Amtagvi is a notably effective option for advanced skin cancer patients who have relapsed after PD-1 blocker treatment, such as Keytruda, from Merck. Although it's not a cure-all, it has shown promise for pre-treated cancer patients.
For instance, in the trial that led to its approval, Amtagvi successfully shrank tumors for 23 out of 73 evaluable patients who received the recommended dosage. Ten patients continued to respond to the treatment 12 months after their initial response.
While a 10-month response rate may seem impressive for pre-treated cancer patients, the complex manufacturing process and scarcity of viable tumor samples have resulted in a relatively small sample set. Since tumor biopsies were easy to obtain for skin cancer patients, it remains to be seen how well Amtagvi performs in other cancer types.
Long-term success relies on the results of the ongoing Tilvance-301 trial, which is enrolling newly diagnosed skin cancer patients and treating them with a combination of Amtagvi and Keytruda.
A Risky Investment
Iovance's stock has plummeted significantly since earlier peaks, but the company still boasts a market cap of $2.5 billion. If combined Amtagvi and Keytruda therapy can demonstrate significant benefits in the ongoing trial, the company's market value could more than double.
Management is hopeful that an interim look at Tilvance-301's tumor responses could support accelerated approval for the combination treatment as a first-line melanoma treatment. However, we won't know how valuable the combination therapy is until we have outcome data, which is not expected until 2028.
For investors who have already seen significant losses in their Iovance Biotherapeutics stock, hanging on until Tilvance-301 results are available is sound advice. Potential buyers should keep in mind that sinking money into Iovance is appropriate only for industry savvy investors with enormous risk tolerance and plenty of patience.
For the rest of us, it's much wiser to observe Amtagvi's development from a safe distance.
Investors who purchased Iovance shares after the drug's approval might be pondering their future moves considering Catanzaro's altered view. The complex manufacturing process of Iovance's lead drug, Amtagvi, and the challenge of obtaining sufficient viable tumor samples for all patients have contributed to a slower rollout than anticipated, as mentioned by Catanzaro.
In light of the challenges, some investors might be contemplating whether it's worth investing more money into Iovance, given its current stock price and the lengthy timeline before achieving definitive results from the Tilvance-301 trial.
