Iovance Biotherapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Iovance is a clinical-stage biotechnology company developing cell therapies, including TIL candidate lifileucel. It had no commercial products and generated no revenue.
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $62.1m | $49.3m | $118.1m | $106.2m |
| General and administrative expense | $19.3m | $14.4m | $38.9m | $28.2m |
| Net loss | $81.4m | $63.0m | $156.8m | $132.6m |
| Basic and diluted loss per share | $0.53 | $0.47 | $1.04 | $1.02 |
Gross margin and operating margin are not meaningful because the company had no revenue. Net interest income was $0.1m in Q2 and $0.2m for the first half, down from $0.6m and $1.8m, respectively, in 2020.
- Cash and investments: At June 30, cash and cash equivalents were $82.8m, short- and long-term investments totaled $619.9m, and restricted cash was $6.1m. Combined, these were $708.7m. Working capital was $606.1m.
- Cash flow: Operating activities used $116.4m in the first half, versus $101.9m in 2020. Investing activities used $82.0m; financing activities provided $214.3m, including $203.2m net proceeds from the at-the-market stock offering. Cash, cash equivalents and restricted cash increased $16.0m to $88.8m.
- Debt and equity: The company reported a $1.0m unsecured, non-interest-bearing long-term note, potentially forgivable subject to employment conditions. Stockholders’ equity was $744.4m. Common shares outstanding increased to 154.8m from 146.9m at year-end 2020; the filing reported 155.0m shares outstanding at July 28, 2021.
Changes from the prior comparable periods
Q2 net loss increased $18.3m, or 29%, year over year; first-half net loss increased $24.2m, or 18%. First-half R&D expense rose 11%, reflecting payroll, stock-based compensation and manufacturing-facility activity, partly offset by lower clinical-trial costs and the absence of the $10.0m Novartis license expense recorded in 2020. First-half G&A expense rose 38%, driven by payroll, stock compensation, intellectual-property costs, insurance and professional fees. Lower interest income also contributed to the larger loss.
First-half operating cash use increased $14.5m year over year. Financing cash inflow was substantially lower than in 2020, when the company received $567.0m net from a public offering. Construction-related property and equipment purchases were $20.3m in the first half of 2021, versus $5.6m in 2020.
Outlook, developments and risks
- Management expected available funds to cover planned operating expenses and capital expenditures for at least 12 months from the filing date. It anticipated increased spending on clinical trials, pre-commercial activities, staffing and manufacturing capacity, and did not expect significant product or licensing revenue in the following 12 months.
- The lifileucel BLA for metastatic melanoma was expected in the first half of 2022, later than previously anticipated, following FDA feedback on potency assays. The company planned further assay work and an FDA meeting in the second half of 2021. Cervical-cancer BLA plans remained subject to regulatory discussions.
- Management cited Cohort 2 melanoma results presented in June 2021: 36% objective response rate among 66 patients, with median duration of response not reached after 33.1 months’ median follow-up. These are clinical findings, not revenue-generating results, and do not assure approval.
- The first patient was dosed in the potential registrational NSCLC trial IOV-LUN-202 in June 2021; enrollment was planned to continue through 2021 and 2022. COVID-19 had not significantly affected trial enrollment to date, but future operational and financial effects remained uncertain.
- Key risks include FDA review and assay requirements, clinical efficacy and safety uncertainty, complex cell-therapy manufacturing and scale-up, reliance on contract manufacturers and suppliers, commercialization and reimbursement challenges, competition, and potential need for additional financing and related dilution.
- Legal matters included a stockholder derivative action and two Solomon-related lawsuits. The company stated that loss ranges could not be estimated for these matters at the reporting stage.
Important facts for investors to verify
- Progress on validating lifileucel potency assays and the timing and regulatory basis for the expected first-half 2022 melanoma BLA.
- Updated clinical-trial data, including independent review, response durability, safety and patient follow-up for lifileucel and other candidates.
- Manufacturing-facility completion, validation, capacity, costs and ability to meet clinical or potential commercial supply requirements.
- Cash burn against the stated runway, future capital needs, use of the remaining ATM capacity and potential share dilution.
- Developments in the disclosed lawsuits and any material change to estimated contingencies or obligations.