Will Iovance Biotherapeutics Stock Bounce Back?

Iovance Biotherapeutics (NASDAQ:IOVA) is a fledgling pharmaceutical company that specializes in the use of immune therapies for cancer treatment. Specifically, Iovance is exploring new applications of tumor infiltrating lymphocyte (TIL) therapy, utilizing cells that the human body naturally produces to attack cancerous tumors.

There was lots of hype about this next-generation cancer treatment company but its share price has been decidedly lackluster this year, down 3% begging the question whether it will ever recover?

Where Is Iovance on Performance?

Iovance received a major tailwind earlier this year when the FDA gave fast-tracked approval to its immunotherapy drug for skin cancer. Partially as a result of this decision, 2024 has been the first year in Iovance’s 14-year public history that the company has reported meaningful revenues

The approval came through in February, but Q2 and Q3 saw Iovance report revenues of about $32 million and $59 million, respectively. As the company increases sales of its melanoma treatment and brings other anti-cancer drugs to market, these numbers will likely continue to rise at a healthy pace.

Profitability remains a long way off because on a trailing 12-month basis the company lost over $400 million by the end of Q3. Although losses have retreated over the last couple of quarters as the company has started generating revenue, these losses remain at a concerning level.

The good news that counterbalances Iovance’s ongoing losses is the fact that the company has a fairly strong balance sheet. As of the end of Q3, Iovance had a cash reserve of around $404 million. Given the lack of significant long-term debt among Iovance’s liabilities, it seems safe to say that the company has a comfortable cash cushion to support its progress toward profitability.

Looking forward, there could be room for enormous revenue growth from Iovance. Management’s full-year revenue guidance for 2025 is currently $450-475 million, almost three times what it expects to generate in 2024. Though management hasn’t released GAAP net income projections for next year, it’s likely that the company could continue to narrow its losses as its revenues spike.

What Does Wall Street Think of IOVA?

Wall Street is remarkably bullish on Iovance, with 13 of the 15 analysts covering the stock right now rating it as a buy. The analyst price targets for IOVA also imply an almost astronomical level of upside. Shares of Iovance currently trade well below $10 per share but the median forecast price of $24 implies returns in excess of 200% over the coming 12 months.

Wall Street’s love affair with Iovance doesn’t end with lofty price targets because more than 75% of the company is owned by institutional investors.

It’s particularly worth noting that institutional buyers have spent almost two years bulking up their positions in Iovance. The last time institutional selling exceeded institutional buying was in Q4 of 2022. In the last 12 months, the deep-pocketed funds have bought about $350 million worth of IOVA shares and sold only about $120 million.

Clinical Trials Loom Over Iovance

As noted above, Iovance is still a long way from achieving anything resembling profitability. A closely related risk for investors is the fact that the company’s pipeline mostly consists of treatments that are still in Phase 1 and Phase 2 clinical trials. Though the company’s prospects are promising, it’s hard to tell how long it will be before Iovance can become profitable based on the limited revenue history investors have to work with.

Eyed through the lens of valuation, IOVA shares trade at over 26x sales and just under three times book value. The high PS ratio might cause you to look more askance if it was mature but this early stage shouldn’t raise too many red flags, particularly as it’s just begun to deliver revenues at an appreciable level in Q2. And better yet, Q3’s results suggest that the company is still ramping up on the top line. Even taking that into consideration, though, IOVA may be a bit too high to appeal to value investors.

For those keeping a close eye on the P&L, selling expenses are starting to creep high and in Q3 reached $39.6 million. Spending that much to generate sales of $58.6 million is to say the least a cause for concern but worse still it has mushroomed over the past 12 months.

Will Iovance Biotherapeutics Stock Bounce Back?

There is a really wide range of analysts estimates on Iovance Therapeutics now but every single one of them sits higher than where the share price currently resides. The lowest estimate is $10 per share while the highest is $34 per share and the consensus price target among the whole group is $23.77 per share.

Chief among the reasons that could spark a rally are the two drugs, Amtagvi and Proleukin, actively on the market and generating revenues already. Amtagvi, the drug that was cleared by the FDA in February, generated $41 million in revenue in Q3 alone. Although this is a small base of drugs to rely on, Iovance has proven that it isn’t a purely speculative pharmaceutical company and that it can successfully bring products to market.

One bullish optionality that may slip under most radars is the Trump-effect that materialized during the last Presidency where Trump prioritized faster drug approvals by the FDA, a policy that later culminated in the successful fast-tracking of vaccines via the Emergency Authorization Use Act. Though the FDA may not do anything so dramatic this time around, a focus on faster drug approvals may very well help Iovance and rivals move drugs through their pipelines and out to the market more quickly.

There is no getting around the fact that Iovance is fraught with potential pitfalls and is a long way off from becoming a stable blue-chip stock, but for investors looking for outsized returns in the pharmaceutical industry this might be as good as any pharma stock to look at.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.