Iovance Biotherapeutics, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited consolidated financial statements. Iovance is a clinical-stage biotechnology company developing autologous cell therapies; it had no approved commercial products and had generated no product revenue.
Key financial results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $72.5M | $65.4M | $214.2M | $183.4M |
| General and administrative expense | $27.9M | $20.9M | $77.6M | $59.8M |
| Total costs and expenses | $100.4M | $86.2M | $291.8M | $243.2M |
| Net loss | $99.6M | $86.1M | $290.6M | $242.9M |
| Net loss per share | $0.63 | $0.55 | $1.85 | $1.60 |
Operating and profit margins are not meaningful because the company had no revenue. Net interest income was $0.8M in Q3 and $1.3M for the nine months. Stock-based compensation was $19.8M in Q3 and $64.5M year to date.
- Cash flow, nine months: Operating cash use was $215.1M, versus $174.1M in 2021. Investing activities provided $256.0M, mainly reflecting investment maturities net of purchases; financing used $0.4M, versus $235.1M provided in 2021, when the company raised $203.2M net through its at-the-market program.
- Liquidity at September 30: Cash and cash equivalents were $118.4M, short-term investments $241.8M, and restricted cash $6.4M, totaling $366.6M. Current assets were $369.9M and current liabilities $79.2M.
- Debt and obligations: Long-term note payable was $1.0M. Operating lease liabilities totaled $79.1M, including $7.2M current. Total liabilities were $152.2M.
- Balance sheet change: Total assets declined to $545.9M from $777.3M at year-end 2021; stockholders’ equity declined to $393.7M from $621.7M, principally reflecting accumulated losses and reduced investment balances.
Changes versus prior comparable periods
- Q3 net loss increased $13.5M, or 16%; nine-month net loss increased $47.7M, or 20%. Management attributed the increases primarily to expanded R&D, staffing, facilities, and pre-commercialization activity.
- R&D expense increased 11% in Q3 and 17% year to date. Increases in payroll, facilities and other development costs were partly offset by lower clinical-trial and manufacturing costs following completion of enrollment in pivotal cohorts.
- G&A expense rose 34% in Q3 and 30% year to date, reflecting headcount growth, commercial-readiness activity, marketing and infrastructure costs.
Outlook, developments and risks
- Iovance initiated a rolling BLA submission for lifileucel for metastatic melanoma in August 2022 and expected to complete it in Q4 2022. Management stated available funds were expected to cover planned operating expenses and capital expenditures for at least 12 months from the financial statements’ issuance date; it also anticipated continued significant spending and losses. Any initial product revenue, if approval is obtained, might not be material.
- The company planned to begin a Phase 3 lifileucel-plus-pembrolizumab trial in frontline metastatic melanoma in late 2022. It also began patient dosing in a trial of genetically modified TIL candidate IOV-4001 during Q3.
- In October 2022, a subsidiary entered a three-year WuXi manufacturing and services agreement covering commercial and clinical manufacturing and testing.
- A revised NIH patent license effective August 2022 added TIL technology rights; the company expected lower overall royalty payments under the agreement and anticipated a low-single-digit-million-dollar milestone payment upon BLA approval for covered products.
- Key risks include FDA review and manufacturing requirements, clinical-trial outcomes and enrollment, scaling internal and third-party manufacturing, competition, reimbursement and commercialization execution, and potential need for additional financing. The company noted that economic uncertainty, inflation and geopolitical disruption could affect markets and suppliers. It reported no material COVID-19 impact on results or liquidity through the period.
- A proposed settlement of a derivative lawsuit included governance changes and $400,000 in plaintiff legal fees, accrued at quarter-end, subject to court approval. In the Solomon litigation, the company said potential losses could not be estimated; it stated management did not believe pending matters would materially adversely affect its financial position, results or cash flows.
Important facts for investors to verify
- Whether the lifileucel BLA was completed as expected and subsequent FDA feedback, review timing, and manufacturing requirements.
- Actual cash burn, investment liquidity, and runway relative to continued trial, commercialization-readiness and facility spending.
- Clinical and regulatory progress for lifileucel, LN-145 and IOV-4001, including whether planned trials and enrollment milestones were achieved.
- Readiness, capacity, cost and regulatory validation of the i CTC and third-party manufacturing arrangements.
- Outcome of the derivative settlement hearing and developments in the Solomon cases.