IOVANCE BIOTHERAPEUTICS, INC. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Iovance is a clinical-stage biopharmaceutical company developing TIL and other cell therapies. It had no approved commercial products and generated no revenue.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $73.4 million | $62.1 million | $141.7 million | $118.1 million |
| General and administrative | $26.3 million | $19.3 million | $49.7 million | $38.9 million |
| Net loss | $99.3 million | $81.4 million | $191.0 million | $156.8 million |
| Basic and diluted loss per share | $0.63 | $0.53 | $1.21 | $1.04 |
- Operating expenses and losses increased as the company expanded research and clinical development, manufacturing, facilities, staffing and pre-commercial activities. Q2 R&D rose 18% and G&A 36% year over year; six-month increases were 20% and 28%, respectively.
- Six-month operating cash use was $151.4 million, versus $116.4 million a year earlier. Investing activities provided $182.3 million, primarily reflecting investment maturities net of purchases; financing activities used $0.7 million. Cash, cash equivalents and restricted cash increased by $30.2 million.
- At June 30, cash and cash equivalents were $108.1 million, short-term investments $316.4 million and restricted cash $6.4 million—$430.9 million combined. Management said available funds were expected to cover planned operating expenses and capital expenditures for at least 12 months from issuance of the statements.
- Total assets were $610.9 million and stockholders’ equity $472.7 million. Current liabilities were $64.2 million. Debt consisted of a $1.0 million long-term note payable; operating lease liabilities totaled $79.5 million. The filing does not report a meaningful operating margin because the company had no revenue.
- Interest income, net, was $0.4 million for Q2 and $0.5 million for the six-month period. Stock-based compensation was $22.5 million for Q2 and $44.7 million for six months.
Material changes and business developments
- In May 2022, Iovance reported that the independent review committee assessment of pivotal lifileucel melanoma Cohort 4 met the trial’s primary endpoint. The company planned to present additional cohort data in the second half of 2022.
- Following FDA discussions on lifileucel potency assays, the company held a pre-BLA meeting in July 2022 and planned to submit a BLA for metastatic melanoma in August 2022. This was a forward-looking plan, not an approval or completed filing reported in this 10-Q.
- The IOV-4001 genetically modified TIL trial was initiated in Q2; patient dosing was expected to begin in the second half of 2022. Enrollment in the LN-145 NSCLC trial was expected to continue through 2022.
- Cash and investments declined from $596.0 million at December 31, 2021 to $424.5 million at June 30, 2022, excluding restricted cash; restricted cash brought the reported combined liquidity total to $430.9 million. The decline primarily reflects operating cash use and investment activity. No shares were sold under the at-the-market program in the first half of 2022.
- Common shares outstanding were 157.8 million at June 30, up from 157.0 million at year-end. Stockholders approved increasing shares available under the 2018 Equity Incentive Plan to 20.7 million.
Outlook, risks and contingencies
- No formal revenue or earnings guidance was provided. Management expected continued losses and increased cash use as it advanced clinical programs, expanded manufacturing and completed iCTC tenant improvements. The company did not expect significant product revenue in the 12 months after issuance.
- Key execution risks include FDA review and potency-assay requirements, clinical trial outcomes and enrollment, product safety, manufacturing scale-up and quality, CMO and supplier dependence, and the ability to complete and operate the iCTC. The company cautioned that preliminary clinical results may differ from final results.
- The company said COVID-19 had not materially affected results or liquidity through June 30, 2022, but future effects remained uncertain. It also cited economic and capital-market volatility, including geopolitical risks, as potential concerns.
- Management believed existing funds were sufficient for at least 12 months, but also said further financing may be needed to complete development and commercialization. Additional equity financing could dilute shareholders.
- A proposed settlement in a derivative suit concerning director compensation, submitted to the Delaware court in June 2022, remained subject to court approval and included governance changes and payment of plaintiff legal fees. Solomon Capital litigation remained pending; the company said potential loss could not be estimated. Management did not believe pending matters would materially harm financial position, results or cash flows.
- Interest-rate sensitivity analysis estimated that a 1% rate change could move investment portfolio fair value by approximately $1.3 million. The company reported no material market risk and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether the lifileucel melanoma BLA was submitted as planned and how the FDA addressed potency assays, manufacturing controls and the application’s review timeline.
- Full Cohort 4 and pooled lifileucel trial data, including response durability, safety and consistency with earlier results.
- Cash burn, investment balances and financing needs relative to the stated runway, including construction and operating costs for the iCTC.
- Clinical progress and patient dosing in IOV-4001, LN-145 and other trials, plus any FDA feedback that changes registrational plans.
- Manufacturing readiness, product consistency, CMO capacity and the ability to scale supply for trials and any potential launch.
- Potential dilution from equity awards, convertible preferred shares, future financing and available shelf or at-the-market programs.