IOVANCE BIOTHERAPEUTICS, INC. — Q3 2021 Form 10-Q
Business context and period: Clinical-stage biopharmaceutical company developing autologous tumor-infiltrating lymphocyte (TIL) and other cell therapies for cancer. This unaudited report covers the quarter and nine months ended September 30, 2021; comparative figures are for 2020. Iovance had no approved commercial products and generated no revenue.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $65.4m | $43.1m | $183.4m | $149.3m |
| General and administrative expense | $20.9m | $15.9m | $59.8m | $44.1m |
| Operating loss | $(86.2)m | $(59.0)m | $(243.2)m | $(193.4)m |
| Net loss | $(86.1)m | $(58.6)m | $(242.9)m | $(191.2)m |
| Net loss per share | $(0.55) | $(0.40) | $(1.60) | $(1.41) |
| Operating cash used | Not provided for quarter | Not provided for quarter | $(174.1)m | $(142.4)m |
- Margins: Not meaningful because the company had no revenue.
- Liquidity at September 30, 2021: Cash and cash equivalents of $58.6m, short-term investments of $517.9m, long-term investments of $78.2m, and restricted cash of $6.1m; combined, approximately $660.8m. Working capital was $518.3m.
- Debt and lease obligations: $1.0m long-term, unsecured, non-interest-bearing job-creation note; $71.3m operating lease liabilities. The note may be forgiven subject to employment conditions, but the company did not consider forgiveness reasonably assured.
- Cash flows and financing: Nine-month investing cash use was $69.2m and financing cash inflow was $235.1m. Financing included $203.2m net proceeds from the at-the-market stock program. Cash, cash equivalents, and restricted cash declined $8.2m over the period.
Changes versus prior comparable periods
- Q3 net loss increased $27.6m, or 47%; nine-month net loss increased $51.7m, or 27%, reflecting expanded R&D activity and corporate infrastructure.
- R&D expense rose 52% in Q3 and 23% for nine months. Drivers included hiring and stock-based compensation, clinical trial activity, and iovance Cell Therapy Center (iCTC) costs. Nine-month costs were partly offset by lower research-alliance costs, including the absence of the $10.0m Novartis license fee recorded in 2020.
- G&A expense rose 31% in Q3 and 36% for nine months, mainly from increased headcount, stock-based compensation, insurance, and intellectual-property costs.
- Interest income fell to $0.1m in Q3 and $0.3m for nine months, primarily due to lower rates and investment income.
- Shares outstanding increased to 156.7m from 146.9m at December 31, 2020, reflecting ATM sales, option exercises, employee share purchases, and conversion of Series B preferred shares.
Outlook, developments, and risks
- Management expected available funds to cover planned operating expenses and capital expenditures for at least 12 months from the filing date, while anticipating increased spending on trials, manufacturing, pre-commercial work, staffing, and facility construction. It did not expect significant product revenue during the following 12 months.
- The planned lifileucel BLA submission for metastatic melanoma was expected in the first half of 2022. FDA feedback on potency assays had delayed the filing; Iovance reported ongoing assay development, validation, and regulatory discussions. This is a material regulatory and timing dependency.
- The iCTC construction was substantially completed; $62.3m of facility-related assets were placed in service during Q3. The company reported its first clinical batch of LN-145 from the iCTC in September 2021.
- Selected clinical results disclosed by management included a 36% objective response rate in 66 Cohort 2 melanoma patients and a 21.4% rate in 28 patients in an NSCLC cohort. These are clinical findings, not company revenue or proof of approval; pivotal data, review, and regulatory acceptance remain important uncertainties.
- Principal risks include clinical efficacy and safety uncertainty, FDA requirements and review timing, manufacturing scale-up and product consistency, reliance on contract manufacturers and suppliers, competition, future financing and shareholder dilution, reimbursement and commercialization execution, and possible COVID-19 disruption. Management said COVID-19 had not significantly affected trial enrollment to date, but future effects were uncertain.
- Pending litigation includes a stockholder derivative action and two Solomon-related suits. The company said the possible loss range could not be estimated for these matters; management did not believe pending matters would materially adversely affect its financial position, results, or cash flows.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether FDA potency-assay discussions and validation support the stated first-half 2022 lifileucel BLA timeline.
- Updated pivotal melanoma data, including independent review, safety, response durability, and any additional FDA data requirements.
- Progress in iCTC manufacturing readiness, product quality, capacity, and cost, and reliance on third-party manufacturers during scale-up.
- Cash burn relative to the $660.8m reported pool of cash, investments, and restricted cash; planned capital expenditures; and any further ATM issuance or dilution.
- Clinical trial progress and changing treatment standards in melanoma, cervical cancer, NSCLC, and other indications, alongside competition and commercialization or reimbursement requirements.
- Developments in the disclosed litigation and any resulting change in estimated exposure.