Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) Q1 2025 Earnings Call Transcript

Iovance Biotherapeutics, Inc. (NASDAQ: IOVA ) Q1 2025 Earnings Call Transcript May 8, 2025

Iovance Biotherapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.36 EPS, expectations were $-0.25.

Operator: Good day and thank you for standing by. Welcome everyone to the Iovance Biotherapeutics First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sara Pellegrino, SVP, IR and Corporate Communications. Please go ahead.

Sara Pellegrino: Good afternoon and thank you for joining the Iovance conference call and webcast to discuss our first quarter 2025 financial results, as well as recent corporate updates. Dr. Fred Vogt, our Interim Chief Executive Officer and President will provide an introduction and focus on the U.S. Commercial launch of Amtagvi, including revenue and revenue guidance. Dan Kirby, Chief Commercial Officer, will discuss the Amtagvi commercial launch; Dr. Igor Bilinsky, our Chief Operating Officer, will provide a manufacturing update. Jean-Marc Bellemin, our CFO, will review our financial results, including revenue and revenue guidance, gross margin, and cash burn guidance; and Dr. Friedrich Finckenstein, our Chief Medical Officer, will summarize key pipeline programs.

Additional members of our leadership team, including Dr. Raj Puri, our Chief Regulatory Officer; Dr. Brian Gastman, our EVP of Medical Affairs, will be available for the Q&A session. Earlier this afternoon, we issued a press release that can be found on our corporate website at iovance.com. Before we start, I would like to remind everyone that statements made during this conference call will include forward-looking statements regarding Iovance's goals, business focus, business plans and transactions, revenue and revenue guidance, commercial activities, clinical trials and results, regulatory approvals and interactions, plans and strategies, research and preclinical activities, potential future applications of our technologies, manufacturing capabilities, regulatory feedback and guidance, payer interactions, licenses and collaborations, cash position and expense guidance, and future updates.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond our control, including the risks and uncertainties described from time-to-time in our SEC filings. Our results may differ materially from those projected during today's call. We undertake no obligation to publicly update any forward-looking statements. With that, I will turn the call over to Fred.

Fred Vogt: Thank you, Sarah and welcome to the Iovance first quarter 2025 conference call. We are four quarters into our U.S. launch of Amtagvi, the first FDA-approved TIL cell therapy and the first treatment for patients with advanced melanoma who progress following anti-PD-1 treatment and have appropriate targeted therapy. In the first 12 months of our U.S. launch, we've executed towards our long-term goal -- adoption goals and generated more than $210 million in revenue. This includes infusions from nearly 300 Amtagvi patients in the first launch year, starting with our first infusions in April of 2024. Total first quarter product revenue was $49.3 million, including $43.6 million from more than 80 Amtagvi infusions and $5.7 million from Proleukin sales.

Following steady growth throughout 2024, revenue was lower in the first quarter of this year, driven by three key contributors. First, our internal manufacturing facility, the ICTC, completed annual scheduled maintenance in December of last year, as we previously discussed on last quarter's call. As a result of limited production starts for multi-week Amtagvi manufacturing across our network, capacity was reduced by more than half for about one month. In addition, volume was impacted by higher rates of patient drop-off and lower manufacturing success rates, but has since rebounded. Today, we are seeing healthy demand with a record number of production starts in the second quarter. Lower Proleukin sales were the second factor contributing to lower first quarter revenue.

We expect two of the three largest U.S. ship wholesalers to start replenishing Proleukin in line with growing Amtagvi demand in the second quarter. We're also growing the other components of our franchise, including sales of Proleukin to third parties for use with manufacturing and clinical research. The third contributor to first quarter revenue was the variable pace at which ATCs began treating patients as this differs from center to center. For context, 16% of ATCs have treated more than 10 patients. Our ATCs have ample room to grow, and we anticipate near-term contributions from ATCs that came online in the latter half of 2024 into 2025. We are also confident in our growth prospects under our new Chief Commercial Officer, Dan Kirby. Dan brings a valuable leadership experience in cell therapy commercial organizations since the earliest developments in the field.

In less than three months, Dan is already strengthening our commercial operations to drive ATC adoption and amplify earlier community referrals to our ATC network. The commercial team is working aggressively to implement key learnings from the first year as we continue to execute our U.S. launch. We are also excited about upcoming milestones related to our ex-U.S. launch expansion and pipeline development in lung cancer and beyond. We anticipate three potential approvals for Amtagvi in the United Kingdom, Canada, and the European Union and additional regulatory submissions are also underway in Australia and Switzerland. We are on track to report updated data from our registrational trial of TIL cell in previously treated advanced non-small cell lung cancer and first clinical data in endometrial cancer.

And we continue to advance our robust pipeline of next-generation TIL cell therapies for patients with solid tumors. Looking ahead, I will briefly comment on our revised full year revenue guidance and cash spend outlook. We revised our guidance to between $250 million and $300 million in total product revenue for the full year 2025. We consider our experience with growth trajectory at the ATCs, timelines for new ATCs to begin treating their first patients and expectations for large community practices and community referrals to drive momentum in the second half of 2025. These demand trends are consistent with the trajectory of other cell therapy launches moving from year one to year two. After aligning our manufacturing slot plans with our new demand forecast, we are maintaining our prior cash runway guidance into the second half of 2026.

We remain confident in a peak sales opportunity of more than $1 billion in the U.S. and more than $2 billion globally for Amtagvi in the current approved indication. We also continue to expect that gross margin can exceed 70% in the coming years. Amtagvi and Proleukin are showing steady growth in the second quarter and will accelerate in the second half of the year. Current momentum is strong, and we project between 100 and 110 commercial patient infusions in the second quarter. We're also motivated by positive feedback from key opinion leaders and patient success stories that reinforce the unmet medical need and value of Amtagvi. On a macro level, as Igor will describe, we are well prepared to supply ongoing demand to deliver commercial Amtagvi as well as our investigational TIL products to patients around the world.

Iovance is competitively positioned with a fully U.S.-based patent portfolio and manufacturing network. Tariffs should have a minimal impact on Amtagvi and Proleukin. I'm happy to go into more detail during the Q&A, I will now turn the call to Dan Kirby for a detailed commercial launch update.

Dan Kirby: Thank you, Fred. Following my first 90 days at Iovance, I'm excited about the potential for Amtagvi to benefit patients around the world. I've identified the strength of our launch as well as opportunities to optimize adoption and accelerate growth. Amtagvi is a game-changer for patients who have failed first-line treatment in melanoma. Amtagvi is also the first cell therapy for patients with solid tumor cancers. I'll begin with my observations of what is going well. First, I'm very impressed by our confident and dedicated commercial organization and cross-functional field teams. These teams have established a solid foundation for Amtagvi by building awareness of the unmet need in advanced melanoma and strong clinical profile of Amtagvi, activating our 70 ATCs within our treatment network and preparing for the next wave of new centers, securing early inclusion in the NCCN guidelines and favorable reimbursement access for more than 95% of U.S. covered lives.

As a result of this execution, Amtagvi is a successful cell therapy, the first of its kind in solid tumors. Today, I will discuss status and near-term initiatives to improve our performance across three key areas. First, our ATC network expansion and retention strategy to drive adoption. A second area is to address plans to revamp engagements with medical oncologists to guide earlier consideration for Amtagvi. And the third area is to further establish Amtagvi within the U.S. community oncology networks. I'll start with our ATC strategy. In the first year of launch, we strategically prioritized 70 experienced cell therapy centers in most of the major cancer centers, nearly all currently treated melanoma patients and are within a two-hour drive of these ATCs. Current metrics amongst these 70 centers demonstrate ample growth performance and potential for Amtagvi.

79% or 56 ATCs have completed tumor resections, the starting material for TIL manufacturing. 69% or 48 ATCs have infused or more patients and 16% or 11 ATCs have infused more than 10 patients. ATC adoption is tracking in the right direction. We expect additional growth from the early launch centers with strong and steady patient volume. Newer centers activated later in the launch are currently contributing as they gain experience. For the next set of ATCs, we are currently in the process of activating more than 10 select high-quality centers, including those aligned to large community networks that have premier access to patients needing Amtagvi as their second-line treatment. These next set of ATCs reflects lessons learned, best practices and the characteristics that distinguish our top-performing ATCs while specifically incorporating clinic referral patterns.

Meanwhile, we continuously collaborate with all of our active ATCs to support early referrals and best practices for procuring tumor samples. As we prepare to commercialize Amtagvi beyond the U.S., 10 international treatment centers are in process to become ATCs for our planned launches in the United Kingdom, Canada, and Europe. We remain on track to onboard 15 international centers as ATCs by year-end. Turning to the second area of focus. We updated our goal in the last three months to better understand our physicians and how they view Amtagvi. In the initial launch, the team did a great job of educating the cell therapy community and key medical oncologists on the benefits of Amtagvi. From our market research, we see that those physicians view Amtagvi as second-line treatment.

We also saw that there is a disconnect in Amtagvi-treatment sequencing between our initial target physicians who view Amtagvi as a second-line treatment and referring medical oncologists in the community who consider Amtagvi as third line or later in therapy. This is a large market opportunity for Amtagvi. Our number one goal is to establish Amtagvi as the preferred option for all appropriate patients. To this end, we are educating referring medical oncologists to consider Amtagvi early and bring forward the promise of cell therapy within current solid tumor treatment practices. We have a sizable patient population, and we have a tremendous potential to drive earlier patient referrals to our ATCs. For example, a portion of our ATC -- a portion of patients who initiate the Amtagvi journey die in our hospice prior to surgery shortly after committing to Amtagvi.

This is due to late referrals in the community. With our updated plans, we are doubling down on initiatives and medical education efforts with community medical oncologists so we can drive earlier patient referrals and shift the treatment sequence. To do this, we will educate practitioners on the benefits of durable responses with onetime cell therapies like Amtagvi versus temporary responses and ongoing side effects seen with other treatments. We will roll out new disease state educational efforts and amplify our presence at relevant medical meetings to provide a better understanding around TIL and cell therapy. For the first time in advanced melanoma and solid tumors, a cell therapy made from a patient's own immune cells has been shown to induce long-term benefit with curative intent.

For the third area of focus, we are building relationships within community oncology networks that treat our target Amtagvi patients. We are expanding resources within our community field team to increase frequency, speed, and overall timelines for referrals and to identify new ATC targets. Recently, we have seen increased momentum for patient referrals to current ATCs and identify new ATCs. Since my arrival, we've engaged with executive leadership in every major U.S. community cancer network. We are now collaborating with the top U.S. community clinic networks to identify and onboard several preferred centers for Amtagvi. We are also focused on breaking down any remaining access barriers to adoption. For example, we are exploring alternative distribution channels that may offer flexibility and broader acceptance of onetime therapies like Amtagvi while maintaining our current pricing strength.

In addition to Amtagvi, our commercial organization is dedicated to supporting Proleukin across three key business lines: use within Amtagvi, use in manufacturing and clinical use. Aside from the main business tied to Amtagvi, manufacturing and clinical use represent an existing base revenue for Proleukin. My team is focusing on opportunities to increase sales growth in all three areas. As Fred mentioned, strong Proleukin sales in our main channel will resume throughout the remainder of 2025, including two distributors expected to reorder in the second quarter. In summary, I am energized to lead our commercial organization toward a bright future. Launching a first-in-class therapy entails a unique set of opportunities to make a fundamental difference.

I am deeply committed to the Iovance vision of pioneering a new treatment paradigm for physicians who treat patients with solid tumors. We have barely scratched the surface of Amtagvi's potential to globally address more than 30,000 melanoma patients annually. Amtagvi has tremendous promise in solid tumor cancers, which represent 90% of all cancers. I will now pass the call to Igor Bilinsky, our Chief Operating Officer, to highlight our manufacturing progress.

Igor Bilinsky: Thank you, Dan. Today, I will provide an update on our progress in manufacturing. Our Philadelphia-based manufacturing network consists of 2 FDA-approved facilities, our internal manufacturing facility, the Iovance Cell Therapy Center, or ICTC, and an American-owned contract manufacturer. This network serves commercial patients in the U.S. as well as clinical trial patients across Europe, Australia, and Asia. Our experience in supplying TIL cell therapies to clinical patients around the world provides a strong foundation for delivering commercial product in the EU, U.K. and Canada in the near-term. Today, I'm pleased to report a major step forward in the ongoing review of our marketing authorization application, or MAA, for the European Union approval of Amtagvi.

Recently, as part of the MAA process, the European Medicines Agency, or EMA, inspected and confirmed that the ICTC and our contract manufacturers facility are both GMP-compliant. These successful EMA inspections further validate our manufacturing network capabilities to meet regulatory standards from multiple health care authorities as we prepare to serve commercial patients in the European Union. As part of the ongoing launch, we steadily ramped up our staff manufacturing capacity to align with demand while tightly controlling expenses. As a result of our revised revenue guidance and updated demand forecast, as Fred described, we expect to realize additional cost savings by aligning our manufacturing capacity growth plans with demand. Owning our own manufacturing facility provides us with tremendous flexibility to scale up efficiently when needed.

As mentioned previously, ICTC conducted and successfully completed annual scheduled maintenance. Given the three-week manufacturing process for Amtagvi, the network capacity was reduced by more than 50% for approximately one month in December 2024, thus lowering available capacity for Q1 Amtagvi infusions. Following maintenance, production resumed successfully with full capacity available for Q2 Amtagvi infusions. I will also comment on our manufacturing success rate in the first quarter. Delivering final product within defined specifications is critical for treating patients. Throughout the first nine months of the U.S. launch, our commercial manufacturing experience was consistent with prior clinical experience. The rate of patient drop-off in our spec rate increased somewhat in the first quarter, thus impacting our cost of goods and gross margin, as Jean-Marc will further discuss.

Following Q1, manufacturing success rate has since rebounded. During this year, we also expect to shorten our manufacturing turnaround time, which is currently 34 days from receipt of sales at the manufacturing facility to Amtagvi being ready for return shipment to the ADC. In addition, we continue being laser-focused on driving operational efficiencies and economies of scale to optimize the cost of goods and improve gross margin over time. Shifting to the current macroeconomic and geopolitical environment. Iovance is operating at a strategic advantage within the biopharma industry. We expect Amtagvi and Proleukin to see minimal impact from tariffs. Our intellectual property for Amtagvi and investigational TIL cell therapies is domiciled in the U.S. Amtagvi manufacturing is based in the U.S. Most of the Amtagvi cost is U.S.-based with direct materials procured from ex-U.S. vendors currently representing less than 5% of the Amtagvi cost of goods.

For Proleukin, we have also brought sufficient Proleukin inventory to the U.S. that we expect to be sufficient for meeting demand into 2027. Our TIL cell therapy expertise and manufacturing capabilities are protected by robust patent estate domiciled in the U.S. We own approximately 280 granted or allowed U.S. and international patents and patent rights Amtagvi and other TIL-related technologies. We expect these patents to provide exclusivity through at least 2042. I'm available to answer questions during the Q&A, and I will now hand the call to Jean-Marc, our Chief Financial Officer.

Jean-Marc Bellemin: Thank you, Igor. Today, I will review our cash position and results for the first quarter of 2025. I will also highlight our financial outlook, including revenue, expense guidance, and gross margin. As of March 3st1, 2025, our cash position was approximately $366 million. Our current cash position is sufficient to fund current and planned operations, including manufacturing expansion into the second half of 2026. I will now transition to our financial results. Net loss for the first quarter of 2025 was $116.2 million or $0.36 per share compared to a net loss of $113 million or $0.42 per share for the first quarter of 2024. Total product revenue consists of Amtagvi infusion in the U.S. and Proleukin sales.

Total product revenue was $49.3 million for the first quarter of 2025, including $43.6 million for Amtagvi and $5.7 million for Proleukin compared to total product revenue of $0.7 million for the first quarter of 2024 for Proleukin. The U.S. commercial launch of Amtagvi and Proleukin sales drove the revenue increase in the first quarter of this year over the prior year period. I will now highlight our cost of sales, which includes cost of inventory, overhead, and related cash and non-cash expenses that are directly associated with sales of Amtagvi and Proleukin as well as manufacturing costs for Proleukin. Cost of sales for the first quarter of 2025 was $49.7 million, including $15 million in period costs associated with patient drop-off and manufacturing success rates, an increase quarter-over-quarter, as Igor previously described.

$5.4 million for non-cash expenses, including fair market value step-up and intangible asset amortization and $1.3 million in royalties payable on product sales. During the first quarter of 2024, cost of sales was $7.3 million, primarily related to non-cash amortization for acquired intangible assets. The increase in cost of sales in the first quarter of 2025 over the prior year period was primarily attributable to cash and non-cash expenses associated with Amtagvi product sales tied to the U.S. launch, along with period costs associated with patient drop-off and manufacturing success rates. Average standard gross margin is 32% for the first four launch quarters. Standard gross margin for the first quarter of 2025 was 10% or $5 million compared to total product revenue of $49.3 million.

First quarter was negatively impacted by lower revenue and higher cost of sales, as previously described. As we increase volume and capacity utilization, we expect gross margin to surpass 70% in the coming years. Our priorities are to drive revenue while optimizing our cost of sales with a correspondingly higher gross margin as we expand our manufacturing, coordinate and continue our focus on ATC engagement and training and realize efficiencies in manufacturing and release testing. I will now shift to our operating expenses. Research and development expenses were $76.9 million for the first quarter of 2025, a decrease of 4% compared to $79.8 million for the same prior year period that was primarily attributable to the transition of Amtagvi from clinical to commercial manufacturing.

This decrease was partially offset by higher headcount and related costs, including stock-based compensation and clinical trial costs resulting from continued enrollment in existing trials. Selling, general, and administrative expenses were $43.9 million for the first quarter of 2025, an increase of 40% compared to $31.4 million for the prior year period. Higher selling, general, and administrative expenses were primarily attributable to increases in headcount and related costs, including stock-based compensation, to support the growth in the overall business, and related corporate infrastructure, marketing and legal costs, and costs to support the commercialization of Amtagvi and Proleukin. Looking ahead, we revised our guidance to between $250 million and $300 million in total product revenue for the full year 2025.

After aligning our manufacturing slot expansion strategy with our new demand forecast, we are maintaining our current cash runway guidance into the second half of 2026. Cash burn for full year 2025 is expected to remain in line with prior guidance of less than $300 million with a strong focus on optimizing spending and reducing expenses throughout the organization, including flat expenses related to Amtagvi manufacturing headcount expansion for the latter half of 2025. As we grow revenue and as gross margin improves, we expect further reduction in our net cash spend with ample flexibility to control both capital and operating expenses as we approach breakeven. For additional information, please see the company's selected consolidated balance sheet and statements of operations in this afternoon's press release and our Form 10-Q to be filed later today.

I will now hand the call to Friedrich, our Chief Medical Officer, to discuss our clinical pipeline.

Friedrich Graf Finckenstein: Thank you, Jean-Marc. Building on the team's comments about Amtagvi, the durability of responses following one-time treatment is a key differentiator from other available and emerging therapies. We will present five-year results from our C-144-01 trial at the American Society of Clinical Oncology or ASCO Annual Meeting on June 2nd. Compared to prior data updates, these results show consistent trends for overall survival and durability over a five-year period. Our clinical programs and next-generation approaches are the next frontier for TIL cell therapy in solid tumors, which represent more than 90% of all diagnosed cancers in the U.S. Future growth drivers include global label expansion for Lifileucel into frontline advanced melanoma, other solid tumor types such as non-small cell lung cancer, and next-generation therapies.

Today, I will summarize our latest pipeline updates. First, we are making progress towards the broader commercial opportunity for Amtagvi in frontline advanced melanoma. Our global registrational Phase 3 trial, TILVANCE-301, remains on track to support accelerated and full approvals of Amtagvi in combination with pembrolizumab in frontline advanced melanoma as well as regular approval of Amtagvi in our initial indication in post anti-PD-1 melanoma. A proof-of-concept cohort is also investigating Lifileucel in combination with nivolumab and relatimab in the U.S. Our registrational program in advanced non-small cell lung cancer, the single-arm Phase 2 IOV-LUN-202 clinical study is designed to show efficacy and safety of Lifileucel monotherapy in patients progressing after anti-PD-1 therapy.

There is a significant unmet medical need as most patients progress and chemotherapy, the current standard-of-care in this treatment setting provides limited rate and duration of responses. We remain on track as planned to share additional data from IOV-LUN-202 in the second half of 2025. The trial is designed with the potential to support a potential regulatory decision on U.S. accelerated approval in post anti-PD-1 non-small cell lung cancer in 2027. In frontline non-small cell lung cancer, our strategy is to establish a new regimen consisting of Lifileucel plus pembrolizumab following standard-of-care chemotherapy pembrolizumab. Multiple cohorts are investigating patients with EGFR wild-type non-small cell lung cancer who are the majority of patients with an unmet medical need in this treatment setting.

Turning to another significant opportunity, advanced endometrial cancer, our IOV-END-201 clinical trial is investigating Lifileucel as the frontline standard-of-care of chemotherapy and anti-PD-1. We look forward to sharing initial data from END-201 in the second half of this year. As the leader in TIL cell therapy, Iovance is also at the forefront of next-generation approaches to optimize TIL and TIL treatment regimens. I'll briefly summarize our three lead next-generation programs. Our PD-1 inactivated TIL cell therapy, IOV-4001, continues to enroll patients in a trial in previously treated advanced melanoma or non-small cell lung cancer. Building on our successful Proleukin franchise, we are treating patients in a Phase 1/2 clinical trial of IOV-3001, a second-generation modified IL-2 analog for use with the TIL cell therapy treatment regimen.

And lastly, IOV-5001 is a genetically engineered inducible and tethered IL-12 TIL cell therapy with potential for enhanced activity, which could facilitate expansion into a wide range of common solid tumor cancers beyond our current pipeline with significant market opportunity. We plan to submit an investigational new drug application to FDA this year for IOV-5001. I'm happy to address questions about these programs and additional trials during the Q&A session. I'll now turn the call over to the operator to begin the question-and-answer session.

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