Iovance Biotherapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Unaudited results; amounts below are in U.S. dollars unless stated otherwise.
Business context
Iovance is developing personalized tumor-infiltrating lymphocyte (TIL) cancer therapies, led by lifileucel for advanced melanoma. In May 2023, it acquired worldwide rights to Proleukin, an interleukin-2 product used with TIL therapy. Proleukin generated the company’s first product sales, while lifileucel remained subject to FDA review.
Financial performance
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0.238m | — | $0.238m | — |
| Cost of sales | $2.050m | — | $2.050m | — |
| Research and development | $86.347m | $73.406m | $169.081m | $141.706m |
| Selling, general and administrative | $21.927m | $26.328m | $50.049m | $49.741m |
| Operating loss | $110.086m | $99.734m | $220.942m | $191.447m |
| Net loss | $106.528m | $99.349m | $213.898m | $190.956m |
| Net loss per share, diluted | $0.47 | $0.63 | $0.98 | $1.21 |
| Interest income, net | $3.081m | $0.385m | $6.567m | $0.491m |
Proleukin sales were made in licensed markets outside the U.S.; there were no U.S. sales. Cost of sales exceeded revenue by approximately $1.8m, principally reflecting $1.9m of acquired intangible amortization, so the reported gross result is not representative of product economics at scale. The company reported a $0.477m income tax benefit.
For Q2, net loss increased 7% year over year; for the first half, it increased 12%. R&D rose 18% and 19%, respectively, reflecting hiring, clinical trial activity including Phase 3 TILVANCE-301, and manufacturing-facility readiness. Q2 SG&A fell 17%, mainly due to lower legal, stock compensation, and marketing costs; first-half SG&A was broadly flat.
Cash, liquidity and capitalization
- At June 30, cash and cash equivalents were $230.0m, short-term investments $20.9m, and restricted cash $66.4m; together, $317.3m. Restricted cash included a $60.0m letter of credit for a potential Proleukin acquisition milestone.
- Operating cash use was $193.8m in the first half, versus $151.4m a year earlier. Investing cash use was $3.4m, including the Proleukin acquisition; financing provided $259.2m, mainly from the ATM stock issuance.
- The company raised $260.1m net through its ATM program in the first half, issuing 36.1m shares at a weighted-average $7.35. After quarter-end, it issued 23.0m shares at $7.50 per share, with estimated net proceeds of $161.4m.
- Total liabilities were $178.7m, including $1.0m of long-term notes and $79.7m of operating lease liabilities. The filing reports no material conventional debt balance beyond the note.
- Shares outstanding were 224.7m at June 30 and 247.8m at August 3, 2023. Management said available funds, including the July offering proceeds, were expected to fund planned operations and capital expenditures for at least 12 months from the financial statement issuance date.
Developments, outlook and risks
- The FDA accepted the lifileucel advanced melanoma BLA and granted Priority Review in May 2023; the PDUFA target action date was November 25, 2023. Approval was not assured.
- The company expects significant continuing spending on clinical programs, i CTC manufacturing readiness, commercialization preparation, and Proleukin integration. Management cautioned that Proleukin and lifileucel revenues may not be material during the 12 months after the statements were issued, and expected continued losses.
- Proleukin acquisition cost was approximately $222.7m, including transaction costs. Potential additional consideration includes a $50m payment upon first lifileucel approval for advanced melanoma, sales-based deferred consideration over 12 years, and a possible subsequent earnout. The contingent-payment recognition criteria had not been met at June 30.
- In July, Iovance reported preliminary IOV-LUN-202 results in 23 NSCLC patients: objective response rate 26.1% and disease control rate 82.6%. It planned to enroll approximately 120 patients, with enrollment expected to finish in the second half of 2024. These are preliminary, post-quarter results and may change.
- Key risks include FDA review or manufacturing delays, clinical efficacy or safety outcomes differing from preliminary data, scaling and quality-control challenges for patient-specific therapies, reliance on third-party manufacturers and suppliers, reimbursement and commercial uptake, future financing and dilution, and foreign-currency exposure. The filing also describes pending derivative and Solomon litigation; the possible loss in the Solomon matters could not be estimated.
Important facts for investors to verify
- FDA action and any additional regulatory or manufacturing requirements for lifileucel by the November 25, 2023 target date.
- Cash burn, restricted-cash availability, and actual runway as commercialization and clinical spending continue.
- Proleukin sales, margins, supply obligations, and any milestone or sales-based payments arising under the acquisition agreements.
- Progress and final results for NSCLC, melanoma, cervical cancer, and other clinical programs, including enrollment and manufacturing capacity.
- Post-offering share count, potential future equity issuance, and the resulting dilution to existing shareholders.