If you're looking for an under-the-radar stock that could deliver enormous gains in a defined time frame, the biopharmaceutical industry has you covered. Hardly a week goes by without clinical trial results or a regulatory decision that produces dramatic market movements.
One company Wall Street analysts have set their sights on, Iovance Biotherapeutics (NASDAQ: IOVA), is pioneering a new approach to treating cancer. Outstanding clinical trial results pushed this stock up to an unreasonable valuation a few years back.
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Iovance's first therapy, Amtagvi, is racking up sales, but the stock is down about 88% from a peak it set in 2021.
Shares of Iovance got ahead of themselves during the pandemic, but now they look severely underappreciated. The average sell-side analyst who follows the stock thinks it's worth $23.77 per share. That consensus target implies a gain of about 280% from recent prices.
If there's one thing individual investors need to remember about independent biopharmaceutical companies, it's that their first drug launches rarely progress as hoped. Iovance Biotherapeutics stands out because its first launch of a complex therapy has been successful.
Last February, the Food and Drug Administration (FDA) approved Amtagvi for the treatment of advanced-stage melanoma that progressed after treatment with immunotherapies like Keytruda. Each year, melanoma claims the lives of around 8,000 Americans. Their oncologists are clamoring for more treatment options for patients who don't respond well to standard care.
Amtagvi is manufactured in batches of one from immune cells called tumor-infiltrating lymphocytes (TILs) that must be harvested from each patient. Before infusion with Amtagvi, melanoma patients must undergo a weeklong lymphodepletion process or the new cells can't gain a foothold. A few hours after receiving Amtagvi, patients are infused with a second drug called Proleukin to support the expansion of recently infused TILs.
Amtagvi therapy isn't a walk in the park, but for patients who have run out of options, it's worth the hassle. In the clinical trial supporting its approval, the treatment shrank tumors for 31.5% of the patients who received it.
Despite being a complex treatment marketed by a new drugmaker, Amtagvi's launch has been a successful one. Iovance reported third-quarter sales of the new cellular cancer therapy that reached $42 million. Plus, Proleukin sales reached $16.5 million.
In November, Iovance told investors to expect total 2025 revenue to land in a range between $450 million and $475 million. A potential approval in Europe this year could make Amtagvi's launch even more successful. The European Medicines Agency is already reviewing a marketing authorization application, and an approval decision is expected in the second half of the year.
Iovance isn't going to stop at second-line melanoma. The company is enrolling frontline melanoma patients into the phase 3 Tilvance-301 trial. It's also running a phase 2 lung cancer study, with updated data expected later this year.
In addition to expanding Amtagvi's reach, Iovance is also working on a next-generation TIL therapy. IOV-4001 will use TILs that don't express programmed cell death protein 1 on their surface. That makes it a lot harder for tumor cells to shut them down when they attack, but there are no guarantees it won't lead to unintended side effects.
Lots of clinical activity will drive up operating expenses in 2025, but paying for it could be a big problem. While product sales have been encouraging, Amtagvi is so expensive to manufacture that gross margin has been narrow. Product sales reached $58.6 million in the third quarter, but the company's gross profit worked out to just 32% of top-line revenue.
Despite a successful initial launch of Amtagvi, Iovance Biotherapeutics is still losing a lot of money. The company finished last September with $397 million in cash after operations burned through $294 million during the first nine months of 2024.
Wall Street analysts aren't wrong to predict big gains from Iovance Biotherapeutics, but individual investors who don't have a strong risk tolerance should watch this story play out from a safe distance.
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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics. The Motley Fool has a disclosure policy.