IOVANCE BIOTHERAPEUTICS, INC. quarterly report, Q3 FY2023

Iovance Biotherapeutics, Inc. — Q3 2023 Form 10-Q

Reporting period: Three and nine months ended September 30, 2023. The company develops personalized tumor-infiltrating lymphocyte (TIL) cancer therapies; its lead candidate lifileucel was under FDA review for advanced melanoma. Amounts below are in U.S. dollars.

Financial performance and position

Metric	Q3 2023	Q3 2022	Nine months 2023	Nine months 2022
Revenue	$0.5 million	$0	$0.7 million	$0
Research and development	$87.5 million	$72.5 million	$256.6 million	$214.2 million
Selling, general and administrative	$27.0 million	$27.9 million	$77.0 million	$77.6 million
Net loss	$113.8 million	$99.6 million	$327.7 million	$290.6 million
Net loss per share, basic and diluted	$0.46	$0.63	$1.44	$1.85

Revenue was entirely from Proleukin sales in licensed markets outside the U.S.; no U.S. Proleukin sales were reported. Cost of sales was $4.3 million in Q3 and $6.4 million year to date, including acquired-technology amortization. Revenue therefore remained immaterial relative to costs.
Operating loss was $118.4 million for Q3 and $339.3 million for the first nine months. Net interest income was $3.4 million and $9.9 million, respectively; income tax benefits were $1.2 million and $1.7 million.
Cash used in operating activities was $277.9 million for the first nine months, versus $215.1 million in 2022. Investing activities used $82.4 million, including $212.9 million paid for the Proleukin acquisition, partly offset by investment maturities. Financing activities provided $462.0 million, primarily from common-stock offerings.
At September 30, cash and cash equivalents were $267.7 million, short-term investments $93.7 million, and restricted cash $66.4 million. The company reported $427.8 million in cash, cash equivalents, investments, and restricted cash combined; restricted funds included a $60 million letter of credit for a potential acquisition milestone.
Total assets were $852.3 million and stockholders’ equity $674.0 million. Long-term note payable was $1.0 million; operating lease liabilities totaled $78.5 million. No material funded debt beyond the note is identified in the supplied filing text.

Changes versus comparable periods

Q3 net loss increased $14.1 million (14%) year over year; nine-month net loss increased $37.1 million (13%). Management attributed the higher losses chiefly to expanded clinical development, manufacturing readiness and pre-commercialization spending.
R&D expense increased 21% in Q3 and 20% year to date, reflecting hiring, clinical trial activity—particularly Phase 3 TILVANCE-301—and iCTC manufacturing qualification and expansion. SG&A was down 3% in Q3 and 1% year to date.
Interest income rose substantially from 2022, primarily because of higher interest rates and a shift toward interest-bearing investments.
The Proleukin acquisition added product revenue, inventory, intangible assets and cost of sales. Developed technology was recorded at approximately $232.7 million and is amortized over 15 years.
Common shares outstanding increased to 255.8 million from 187.8 million at December 31, 2022. The company raised approximately $463.3 million net through a July public offering and at-the-market sales during the first nine months.

Outlook, risks and unusual items

The FDA accepted the lifileucel BLA for advanced melanoma and granted Priority Review. Its target action date was revised from November 25, 2023 to February 24, 2024. Approval and commercial launch remain uncertain.
Management said available capital was expected to fund planned operating expenses and capital expenditures for at least the next 12 months from issuance of the statements. It also expects significant continued spending and cautioned Proleukin and lifileucel revenue may not be material during that period.
Management expects R&D spending to continue increasing with clinical programs and manufacturing preparation; SG&A is expected to rise with commercialization preparations, Proleukin integration and organizational growth. No specific financial guidance was provided.
For LN-145 in advanced NSCLC, the company reported preliminary results from 23 patients: objective response rate of 26.1% and disease control rate of 82.6%. The registrational study was planned for approximately 120 patients, with enrollment expected to finish in the second half of 2024. These are preliminary clinical findings, not financial results.
The Proleukin acquisition included a potential approximately $50 million payment upon first approval of lifileucel in advanced melanoma, deferred consideration based on double-digit rates on global net sales for 12 years, and possible later earnout payments. These contingencies were not recognized as of September 30 because recognition criteria had not been met.
Additional Proleukin manufacturing purchase obligations were $33.5 million through 2027. Total disclosed operating lease and purchase obligations were $152.5 million, including $119.0 million of undiscounted facility lease payments.
Key risks include FDA review or additional data requirements, clinical trial outcomes and enrollment, scaling and validating cell-therapy manufacturing, reliance on third-party suppliers and manufacturers, commercialization and reimbursement challenges, and the possibility of further capital needs and shareholder dilution. The company reported no material impact from COVID-19 on Q3 or year-to-date results.
The Second Solomon lawsuit was dismissed by summary judgment on October 26, 2023, after the quarter end; an appeal deadline remained in November 2023. A separate derivative lawsuit remained subject to settlement-related proceedings.

Important facts for investors to verify

FDA review status and any additional conditions or timing changes for lifileucel, including the February 24, 2024 target action date.
Cash runway assumptions, the availability of restricted cash, operating cash burn, and any planned financing or ATM share sales.
Progress, capacity and regulatory readiness at the iCTC and third-party manufacturing sites, including supply commitments and cost of goods.
Proleukin sales, margins and integration costs, plus the financial implications of deferred consideration and the potential $50 million approval milestone.
Enrollment and final results for registrational trials, and whether preliminary clinical findings are confirmed in larger or final analyses.
Share dilution from outstanding equity awards, convertible preferred stock, and future equity issuance; common shares outstanding were 255.8 million at quarter end and 255.9 million at October 30, 2023.