IOVANCE BIOTHERAPEUTICS, INC. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020. Iovance is a clinical-stage biopharmaceutical company developing autologous cell therapies, principally tumor-infiltrating lymphocyte (TIL) therapies. It had no commercial products and generated no revenue.
Key financial metrics
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $57.0 million | $30.9 million; up 84% |
| General and administrative expense | $13.9 million | $9.1 million; up 53% |
| Operating loss | $70.8 million | $40.0 million |
| Net loss | $69.6 million; $0.55 per share | $37.0 million; $0.30 per share |
| Interest income, net | $1.2 million | $3.0 million; down 60% |
| Cash used in operating activities | $65.3 million | $29.1 million |
| Cash, cash equivalents and short-term investments | $245.7 million | $307.1 million at Dec. 31, 2019 |
| Restricted cash | $5.5 million | $5.5 million at Dec. 31, 2019 |
| Working capital | $216.8 million | Prior-period comparison not stated here |
| Total liabilities / lease liabilities | $45.0 million / $9.5 million | $45.7 million / $11.5 million at Dec. 31, 2019 |
Amounts are rounded. Including restricted cash, total cash, cash equivalents, short-term investments and restricted cash were $251.2 million at quarter-end. Short-term investments were U.S. Treasury and government agency securities, all with maturities under one year. The filing reports no financial borrowings; lease liabilities are disclosed. Profit margins are not meaningful because the company had no revenue.
Investing activities provided $100.1 million, largely reflecting the timing of investment maturities and purchases; financing activities provided $3.8 million, mainly from stock-option exercises. Cash, cash equivalents and restricted cash increased by $38.6 million, to $58.1 million. The quarter-end share count was 126.8 million common shares.
Material changes versus prior year
- Net loss increased $32.6 million, or 88%, and operating cash use increased $36.2 million.
- R&D expense rose $26.0 million. Management attributed the increase principally to a $10.0 million Novartis upfront license payment for IOV-3001, higher clinical-trial enrollment and costs, increased staffing, and expanded manufacturing activity. Stock-based compensation also increased.
- G&A expense increased $4.8 million, primarily due to higher stock compensation, payroll and legal costs.
- Interest income fell $1.8 million, reflecting lower interest rates and lower average cash and investment balances.
Outlook, operations and risks
- Management expects continued operating losses and no product-sale or licensing revenue in 2020. It stated that available funds were expected to cover anticipated operating expenses and capital expenditures for at least 12 months from the filing date, while also anticipating increased R&D, pre-commercial, staffing and manufacturing spending.
- The company said it remained on track to file a BLA for lifileucel by the end of 2020. Pivotal melanoma trial C-144-01 Cohort 4 had completed enrollment, with the last patient dosed in January 2020. The filing’s stated timeline is forward-looking and depends on clinical data, FDA discussions and review.
- Iovance anticipated a possible late-2020 BLA submission for LN-145 in metastatic cervical cancer, subject to its interpretation of FDA feedback and further study requirements. The company cautioned that protocol changes, enrollment, patient population, independent review and assay validation could affect results or timing.
- COVID-19 could disrupt trial-site operations, enrollment and monitoring, manufacturing supply, regulatory timelines and commercial-launch preparation. MD Anderson temporarily suspended research programs, pausing enrollment in company-sponsored studies under that collaboration.
- The Philadelphia commercial manufacturing facility was under construction. The company estimated $75–$85 million of equipment and construction spending over three years and noted flexibility over timing and amount. Its lease provides for approximately $320,000 monthly base rent from commencement, plus estimated operating expenses; the facility lease had not yet commenced.
- Management identified execution risks including clinical efficacy and safety, regulatory approval, patient-specific manufacturing and scale-up, CMO and supplier dependence, reimbursement and commercialization readiness. The company also disclosed potential future financing needs and dilution risk; its $400 million shelf registration statement had not been used as of the filing.
- Legal matters included a proposed derivative-litigation settlement that received preliminary court approval after quarter-end, and pending Solomon Capital and former executive litigation for which loss ranges could not be estimated. The company did not expect a material adverse outcome from pending matters overall, but outcomes remain uncertain.
Most important facts for investors to verify
- Whether lifileucel and LN-145 clinical results, FDA feedback and BLA timelines support the company’s stated regulatory plans.
- Whether operating cash burn, clinical and commercial-preparation spending, and facility construction remain consistent with the stated 12-month funding runway.
- Whether COVID-19 or manufacturing, supplier and trial-site issues affect enrollment, product comparability, supply or regulatory schedules.
- How Philadelphia facility costs, lease commencement and planned capital spending develop, and whether additional financing or share issuance becomes necessary.
- Final approval and terms of the derivative settlement, and developments in the Solomon and Fischkoff matters, whose potential losses were not estimable.