Sweet words are like honey, a little may refresh, but too much gluts the stomach.” ― Anne Bradstreet
Iovance Therapeutics (IOVA) is one of several small biotech holdings making big moves this week for the Busted IPO Forum model portfolio. The company has received some new analyst commentary and more importantly posted some encouraging trial results. We take a look at both events and update on our investment thesis on this developmental concern in the paragraphs below.
Iovance Biotherapeutics is a 'Tier 4' biotech company that is focused on developing and commercializing novel cancer immunotherapies based on tumor-infiltrating lymphocytes. Their approach to cancer therapeutics is referred to as adoptive T-cell therapy. With this week's surge, the stock has a market cap of approximately $1.9 billion and is approaching mid-cap status. The company has progress as follows since coming public in 2010.
The company posted the following updates to its pipeline progression before the bell yesterday.
- Preliminary Phase 2 trial data 'assessing lead candidate LN-145 in patients with recurrent/metastatic/refractory cervical cancer (average of 2.6 prior lines of therapy) showed a 44% response rate (n=12/27) and a disease control rate (DCR) (responders + stable cancer) of 89% (n=24/27). 11 of the 12 responders maintained their responses at a median follow-up of 3 1/2 months. By comparison, the response rate for Merck's (MRK) Keytruda in second-line cervical cancer is 14%.'
- New data from 'Cohort 2 in a the Phase 2 trial evaluating Lifileucel (LN-144) in metastatic melanoma patients (average of 3.1 prior lines of therapy) showed a response rate of 38% (n=21/55) and a DCR of 76% (n=42/55). At a median follow-up of 7.4 months, 19% (n=4/21) of the responders progressed.'
- Finally, the first patient has been dosed in the Phase 2 study evaluating the combination of LN-145 and Keytruda in melanoma.
In February of this year, LN-145 received Fast Track designation from the FDA for the cervical cancer indication
Analyst Commentary & Balance Sheet:
These trial results triggered Jefferies ($29 price target), Chardan Capital ($20 price target) and H.C. Wainwright ($26 price target) to reiterate their Buy ratings on the stock. Here is the commentary from H.C. Wainwright.
Valuation and impediments to achieving price target. We reiterate our Buy rating and price target of $26. Our target is based on our clinical net present value (NYSE:NPV) model, which derives its primary value from LN-144 for metastatic melanoma currently. This model allows us to flex multiple assumptions affecting a drug’s potential commercial profile'
Jefferie's analyst called 'the data reported by Iovance Biotherapeutics the "big winner" for the American Society of Clinical Oncology annual meeting. The ASCO update suggests Iovance's tumor infiltrating lymphocytes therapy could open the door for cell therapy in the "lucrative" solid-tumor market, and points out the company reported that no new patients have progressed in the melanoma trial and offered first evidence of clinically meaningful durability for TIL therapy. Also, its cervical data that reported a 44% overall response rate is three-times greater than reported with Merck's (MRK) Keytruda in a similar patient population'. The analyst also 'believes last night's update could drive a 30%-40% rally in shares of Iovance' which is in the range of the stock's rise on Thursday.
As of the end of the first quarter, the company had $440 million in cash on the marketable securities on the balance sheet. Iovance's quarterly burn rate was approximately $37 million in the first quarter. Therefore, the concern seems more than well-funded at the moment.
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Iovance gave nice confirmation that its pipeline is progressing on a broad front. More data LN-144 study will be presented at the big upcoming ASCO conference, the presentation is scheduled for June 1st. The company will also have a poster for LN-145 for cervical cancer that day as well.
Iovance is well-funded and picked up some positive analyst commentary after its pipeline update as well. The company is aiming at some potentially lucrative niches (see above) Given this, the story continues to be encouraging for this high risk/high return concern.
An efficient way to add exposure or to Iovance is via a Buy-Write order. Using the December $15 call strikes, fashion a Buy-Write order with a net debit in the $11.75 to $11.90 range (net stock price - option premium). This mitigates considerable some downside risk and sets up a great potential return for its approximate seven month hold period.
But the conceited man did not hear him. Conceited people never hear anything but praise.” ― Antoine de Saint-Exupéry, The Little Prince
Thank You & Happy Hunting,
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Disclosure: I am/we are long IOVA.