Iovance Biotherapeutics, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. Filed November 5, 2020. Iovance is a clinical-stage cell-therapy company developing tumor-infiltrating lymphocyte (TIL) therapies, including lifileucel for metastatic melanoma and cervical cancer. It had no commercial products or revenue.
Financial results
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $43.1 million | $41.6 million | $149.3 million | $111.8 million |
| General and administrative | $15.9 million | $10.0 million | $44.1 million | $30.0 million |
| Net loss | $58.6 million | $49.5 million | $191.2 million | $134.0 million |
| Net loss per share, basic and diluted | $0.40 | $0.40 | $1.41 | $1.08 |
| Net interest income | $0.4 million | $2.1 million | $2.2 million | $7.8 million |
Cash flow, nine months: Operating activities used $142.4 million, compared with $105.1 million in 2019. Investing activities used $376.6 million, largely reflecting purchases of short-term investments; 2019 investing activities provided $63.2 million. Financing activities provided $573.5 million, primarily from the June 2020 stock offering, versus $4.0 million in 2019.
Balance sheet at September 30, 2020: Cash and cash equivalents were $68.3 million; short-term investments, $645.8 million; restricted cash, $5.5 million; and total assets, $782.3 million. Working capital was $659.2 million and stockholders’ equity was $711.8 million. Total liabilities were $70.5 million, including $10.9 million of operating lease liabilities. The filing reports no debt borrowings. The Philadelphia manufacturing facility lease had not yet commenced; it was expected to begin in December 2020 with a 20-year term.
Changes versus prior comparable periods
- Nine-month net loss increased $57.2 million, or 43%; operating cash use rose $37.4 million. Management attributed the loss growth to expanded R&D, clinical trials, manufacturing activities, and corporate infrastructure.
- Nine-month R&D expense rose $37.5 million, or 34%, primarily from higher payroll, clinical-trial costs, a $10.0 million Novartis IOV-3001 license payment, and increased stock-based compensation; lower manufacturing costs partly offset the increases.
- Nine-month G&A expense increased $14.2 million, or 47%, driven mainly by payroll, stock-based compensation, and higher directors’ and officers’ insurance costs.
- Net interest income fell 71% for the nine months, mainly because interest rates declined.
- Common shares outstanding increased to 146.6 million from 126.4 million at December 31, 2019. The June offering issued 19.5 million shares and generated $567.0 million in net proceeds.
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 also expected continued losses and higher spending on trials, pre-commercial work, staffing, manufacturing expansion, and facility construction. The company did not expect significant product revenue in the coming 12 months.
- In October 2020, Iovance said FDA feedback on potency assays required refinement of existing assays and development of new ones. The company delayed the lifileucel metastatic melanoma BLA submission from the previously anticipated 2020 timing to 2021, and reported agreement with FDA on Cohort 4 follow-up duration to support the filing.
- For melanoma Cohort 4, 89 patients had been dosed; interim results for 68 patients with two radiological assessments showed a 32.4% investigator-assessed response rate and 72.1% disease-control rate at a March 16, 2020 cutoff. These were interim results, not the final BLA dataset. Earlier Cohort 2 results included a 36% response rate among 66 patients; median duration of response had not been reached at the reported follow-up.
- Management reported that COVID-19 had not significantly affected clinical-trial enrollment to date, but warned of uncertainty around future trial operations, manufacturing, regulatory timelines, commercial preparations, and financial markets. MD Anderson temporarily suspended research programs; enrollment in Iovance-sponsored studies there was paused and later partially restarted.
- The company planned approximately $75 million to $85 million of equipment and construction spending over three years for its Philadelphia commercial-scale facility. It also cited material risks around clinical results and regulatory approval, manufacturing scale-up and quality, dependence on contract manufacturers and trial sites, competition, reimbursement, and possible future financing and dilution.
- Legal matters included Solomon Capital litigation, for which the company said potential loss could not be estimated; an appeal relating to a ruling limiting damages on one claim; and a separate lawsuit. A confidential settlement with former executive Steven Fischkoff was reached in September and dismissed with prejudice in October 2020. The shareholder derivative litigation related to the SEC stock-promotions matter received final settlement approval in July 2020, with no significant company cost expected.
Important facts for investors to verify
- Whether FDA assay discussions, validation work, and required follow-up support the revised 2021 lifileucel BLA timeline.
- Final, independently reviewed efficacy and safety results for melanoma Cohort 4, including response confirmation and duration of response.
- Clinical-trial progress and enrollment across lifileucel, cervical cancer, head and neck, lung, and other programs, including any continuing COVID-19 effects.
- Cash burn, funding runway, equity issuance and dilution, and actual spending against the Philadelphia facility estimate and schedule.
- Manufacturing readiness, production capacity, product consistency, and the ability to meet regulatory and commercial requirements.
- Updates on the Solomon litigation, other contingencies, and the financial terms or implications of the Fischkoff settlement.