Iovance bulls should focus on execution

The cell therapy player, aiming to take TILs out of academia into a commercial setting, has surged on unsubstantiated takeover rumours.

Corporate strategy

When your stock closes up 27% on a day when the markets haemorrhage 3% it’s fair to say you’ve done well. Iovance pulled off this trick yesterday, meaning that its market valuation now stands at a jaw-dropping $4bn.

But investors betting on the cell therapy player would do better to focus on clinical execution and economic potential than on vague takeover chatter. This is especially so given that Iovance said virtually nothing about M&A on its fourth-quarter call, a day after Bloomberg claimed the company had “held preliminary talks with potential buyers”.

All eyes should instead fall on the viability of Iovance’s tumour-infiltrating lymphocyte (TIL) approach, whose lead exponent, lifileucel, should yield potentially registrational clinical data imminently. This will come from the fourth cohort of the C-144-01 melanoma trial, which completed dosing last month.

Baseline expectations were set at the SITC meeting last November, when the second cohort of this study showed a 35% overall remission rate among 66 subjects, and crowned a year in which the stock surged 213%.

This was quite a performance for a group that, in its previous incarnation as Lion Biotechnologies, became embroiled in litigation over a stock promotion scandal that saw its then-chief executive, Manish Singh, suspended by the SEC. However, with a new name and new leadership – Maria Fardis became chief exec in 2016 – Iovance looks to have drawn a line under the past.

But that does nothing to allay fears over a technology whose economic viability is still far from proven. TILs are simply extracted from a person’s tumour and expanded before being reinfused, and academics have been working on the procedure for years.

Most importantly, the NCI lab of Dr Steven Rosenberg has reported striking remissions by using TILs in melanoma. This cancer is known to be particularly immunogenic, so the proof of the TIL approach lies in generating efficacy in additional tumour types, though admittedly a 35% remission rate in PD-(L)1 refractory patients is not to be sniffed at.

Iovance is shortly to complete enrolment into a cervical cancer study of a TIL regimen it codes LN-145, and this should also read out this year, likely after the melanoma trial.

Iovance TIL projects with sellside consensus estimates
TIL regimen Detail Trial 2024e sales
Lifileucel Monotherapy in post-PD-(L)1 melanoma Cohort 4 (2nd-gen manufacturing) of 178-subject C-144-01 trial reads out in 2020 $665m
LN-145 Cervical cancer; includes monotherapy (post PD-(L)1) and Keytruda combo 138-subject C-145-04 trial reads out in 2020 $451m
Source: company presentation & EvaluatePharma.

Importantly, because unlike Car-T cell products TILs are not genetically modified, they are not patentable per se. Rather, Iovance relies on IP covering methods of expanding TILs, while a novel process taking manufacturing down from several weeks to 16 days could provide an important barrier to competitor entry.

Patentability issues have not curbed enthusiasm over Achilles Therapeutics, which is using an advanced variation of the TIL approach and is understood to be close to filing for an IPO.

But they are important when considering the likelihood of an Iovance takeover, especially at close to $5bn. Stifel analysts yesterday cautioned that cell therapy acquisitions are difficult to “tuck in”; Gilead and Celgene found out as much with Kite and Juno respectively.

With Car-T therapy still struggling to prove itself commercially, the fact that TILs look even less like a drug product and even more like a hospital procedure should provide a reality check.

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