Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) Q3 2023 Earnings Call Transcript November 7, 2023
Iovance Biotherapeutics, Inc. reports earnings inline with expectations. Reported EPS is $-0.46 EPS, expectations were $-0.46.
Operator: Welcome to the Iovance Biotherapeutics Third Quarter and Year-to-Date 2023 Financial Results and Corporate Update Conference Call. My name is Abigail, and I will be your operator for today's call. [Operator Instructions]. I will now turn the call over to Sara Pellegrino, Senior Vice President, Investor Relations and Corporate Communications at Iovance. Sarah, you may begin.
Sara Pellegrino: Thank you, Operator. Good afternoon, and thank you for joining us. Speaking on today's call, we have Dr. Fred Vogt, our Interim President and Chief Executive Officer; Dr. Igor Bilinsky, our Chief Operating Officer; Jim Ziegler, Executive Vice President, Commercial; Dr. Friedrich Finckenstein, our Chief Medical Officer; and Jean-Marc Bellemin, our Chief Financial Officer; Dr. Brian Gastman, Executive Vice President, Medical Affairs; and Dr. Raj Puri, our Executive Vice President, Regulatory Strategy and Translational Medicine are available for the Q&A session. This afternoon, we issued a press release that can be found on our corporate website at iovance.com, which includes the financial results for the 3 and 9 months ended on September 30, 2023, as well as recent corporate updates.
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, pre-commercial activities, clinical trials and results regulatory interactions, plans and strategies, research and preclinical activities, potential future applications of our technologies, manufacturing capabilities, regulatory feedback and guidance, payer interactions, licenses and collaboration, 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.
Frederick Vogt: Thank you, Sara, and good afternoon, everyone. I'm pleased to highlight several recent and important milestones Iovance. We continue to make significant progress towards U.S. commercialization while pursuing opportunities for our TIL therapies in additional geographies in solid tumor cancers. Our top priority is to secure FDA approval on launch Lifileucel in the U.S., a nuclease treatment for advanced melanoma patients with limited options. Overall, the BLA process continues on the priority review with several positive status updates. We remain engaged with the FDA to complete the review as efficiently as possible. As a reminder, the FDA reiterated in September that there are no major review issues and no plans to hold an advisory committee meeting.
In addition, all pre-approval inspections of all clinical sites and internal and external manufacturing and testing facilities have been successfully completed. The FDA has also engaged and has no concerns on the status of the TILVANCE-301 confirmatory trial, which remains on track to be well underway by the PDUFA date. We appreciate the FDA review team's efforts to accelerate the remaining review. We are confident in the potential for Lifileucel to redefine the treatment paradigm for these patients who have no approved options after current standard of care. For the strength of our clinical data, manufacturing capabilities and commercial readiness efforts, Iovance is ready to rapidly serve the U.S. melanoma community immediately following approval, including the potential scenario for approval earlier than the February 24, 2024, PDUFA date.
Beyond the U.S., we plan to submit additional marketing applications for Lifileucel in Europe and other geographies. Based on positive feedback for the European Medicines Agency on cohorts 2 and 4 of the C-14401 clinical trial, we plan to submit a marketing authorization application in the first half of 2024, with a potential European launch in 2025. We are also engaged with regulatory authorities in the United Kingdom and Canada. We plan to submit marketing applications in both countries in the second half of next year, again, with potential launches in 2025. Key markets such as Germany, France and the U.K. have mechanisms for early access and reimbursement that can begin to drive significant additional near-term revenue by the end of 2025.
Next year, we expect to have additional regulatory updates about our expansion plans for Lifileucel in Australia and other countries with a significant number of advanced melanoma patients. Collectively, the advanced melanoma population in Germany, France, the U.K., Canada is slightly larger than the U.S. patient population with the same unmet medical need. Our geographic expansion when complete, can more than double the total addressable patient population for Lifileucel in advanced melanoma. We plan to leverage existing resources to serve the melanoma community in these new geographies without incurring significant additional expenses. For example, our Iovance Cell Therapy Center, or ICTC, has sufficient capacity for these new countries, and we already have an existing options in Amsterdam and field medical support in the region.
As we prepare to launch Lifileucel, we are also integrating Proleukin, a currently marketed IL-2 product used as part of TIL therapy regimen. By owning Proleukin, we can offer alongside Lifileucel and have full control of the IL-2 supply chain. We also expect to lower clinical trial expenses and future costs that goes with Lifileucel. Beyond our regulatory and commercial readiness activities, our robust TIL therapy pipeline continues to advance with 7 active clinical trials. These include 2 registrational trials, Iovance -- TILVANCE-301 in frontline melanoma and LUN-202 in previously treated advanced lung cancer, which Friedrich will highlight in a moment. Completing enrollment in LUN-202 in 2024 is a top priority towards a potential supplemental BLA filing.
Additional clinical trials include the IOV-COM-202 trial in solid tumors and our first in-human trial of our genetically modified cell therapy IOV-4001. Lastly, we are excited to introduce a new Iovance cell therapy program in endometrial cancer. Checkpoint inhibitors are moving into earlier lines of therapy, leaving an unmet medical need for patients who progress more after immunotherapy and chemotherapy. Friedrich will provide more details on this program later in this call. Turning to our organization. We have more than 500 people with experience in developing and commercializing oncology and cell and gene therapy products. They are ready for our initial U.S. launch ex-U.S. expansion and ongoing pipeline developments. We have recently completed headcount growth and significant onetime investments in commercial manufacturing readiness activities to prepare for launch and expand our pipeline.
Following these onetime investments in strategic portfolio prioritization, we can reduce quarterly and annual operating expenses in the remainder of 2023 and full year 2024, while continuing all key clinical programs and internal manufacturing capabilities. In addition, our September 30 cash position of roughly $428 million is expected to fund our operating plan into 2025. Jean-Marc will provide additional color on the expense guidance and cash runway assumptions on today's call. We are excited about the near-term future at Iovance as we advance and broaden our mission to be the global leader in innovating, developing and delivering TIL therapies for people with cancer across multiple solid tumors. I look forward to addressing your questions later in this call.
I will now ask Igor to present our manufacturing updates.
Igor Bilinsky: Thank you, Fred. We are committed to operational excellence and to date have provided TIL therapy to more than 600 patients with the consistent manufacturing success rate of more than 90%. As part of the BLA review process, the FDA completed successful pre-licensing sections of our Iovance Cell Therapy Center facility or ICTC, and our contract manufacturer's facility. Both sites are prepared with sufficient capacity and staffing to supply our commercial launch and clinical trials. Our manufacturing network strategy supports our vision to establish TIL therapy as the next paradigm shifting course of cancer therapy in the U.S. and beyond. The ICTC is currently built to supply TIL products for more than 2,000 patients annually in the U.S. and our planned geographic expansion.
By building out additional existing shelf space, ICTC may ultimately supply TIL products for more than 5,000 patients annually. Longer term, our vision is to build capacity for more than 10,000 patients annually by adding new facilities as well as streamlining and automating manufacturing processes. Intellectual property or IP is also a critical component at Iovance. We currently only 60 granted or allowed U.S. and international patents, including Gen 2 patent rights that we expect to provide exclusivity into 2038. Extensive detail on Iovance owned IP is available on our corporate website and within our annual report on Form 10-K. I would now like to hand the call to Jim Ziegler to highlight our commercial launch preparations. Jim?
James Ziegler: Thank you, Igor. At Iovance, we have the potential to transform the practice of medicine in advanced melanoma and additional solid tumors. In the U.S., approximately 8,000 people die of melanoma annually, and the World Health Organization reports higher mortality in Europe. Lifileucel has the potential to be standard of care for patients who have no currently approved treatment options after standard of care frontline therapy. We have a sense of urgency to deliver Lifileucel to these advanced melanoma patients upon approval. Our commercial and cross-functional teams are on track as we approach our PDUFA date. Today, I will highlight onboarding for our Authorized Treatment Centers or ATCs, payer engagement and commercial operational readiness activities.
First, onboarding is a strong indication of ATC commitment and Lifileucel demand. Today's press release provided our first status update on ATC onboarding. Approximately 30 centers have completed preapproval onboarding steps to establish their TIL service line capabilities. These centers are educated in all aspects of the Lifileucel treatment regimen with staff and processes to begin treating patients pending the approval. Previously, we shared our goal to onboard 40 ATCs within 90 days of the PDUFA date. Based on our onboarding progress, we now expect to onboard approximately 50 centers within 90 days of the PDUFA date. We are also planning a disciplined approach to organize and schedule each ATC for their first treatments with full Iovance support.
We believe a positive initial experience will drive long-term success and peak revenues. Reimbursement is also essential for patient access and provider adoption. Our market access team continues to engage the key national and regional payers to accelerate timely access and appropriate reimbursement for Lifileucel upon approval. We believe payers appreciate the high unmet need, lack of treatment options and clinical value of Lifileucel in advanced melanoma. We expect strong reimbursement for Lifileucel with a payer mix that includes a favorable commercially insured population. More than 3/4 of advanced melanoma patients are currently insured through commercial, Medicare Advantage and Medicare IPPS exempt segment. Based on our payer interactions, we expect coverage similar to CAR-Ts requiring prior authorization with coverage consistent with label, medical coverage policies issued within about 90 to 180 days and single-case agreements for commercially insured patients.
Although pricing will be disclosed after approval, we believe the Lifileucel value proposition supports pricing in the higher range of CAR-T cell therapies. The CAR-T prices range from $424,000 to $508,000 based on current and reported price increases with additional price increases expected in early 2024. In addition to Lifileucel, we will receive incremental revenue from the sales of Proleukin for each patient. As a reminder, revenue recognition for Lifileucel occurs upon infusion like other cell therapies. As we approach the U.S. launch, I would like to highlight the extensive cross-functional launch preparations underway. Our commercial and cross-functional teams are on track as we approach our PDUFA date, and we remain confident in our ability to deliver a successful launch.
I will now pass the call to Friedrich Finckenstein, our Chief Medical Officer, to highlight our clinical progress.
Friedrich Finckenstein: Thank you, Jim. This afternoon's press release highlighted several pipeline updates. On the call today, I would like to focus on our recent data presentations, which are available on our corporate website as well as selected registrational programs in frontline advanced melanoma and non-small cell lung cancer. I will also discuss our new TIL program in endometrial cancer. We are pleased that several recent posters and presentations from our C-144-01 trial continue to support the potential benefit of Lifileucel as a onetime treatment that is differentiated from other immunotherapies for advanced melanoma. In October, during the European Society for Medical Oncology or ESMO Congress and at this week's Society for Melanoma Research or SMR, we highlight clinically meaningful and durable activity for Lifileucel from a subgroup analysis of patients with a rare and difficult-to-treat mucosal melanoma subtype.
During the society of the immunotherapy of cancer, or SITC annual meeting last week, we highlighted the durable efficacy shown in a now 4-year analysis of pooled cohorts 2 and 4 of the C-144-01 trial. Our poster reported the longest follow-up data on Lifileucel treatment outcomes in the largest population of patients with anti-PD-1 refractory advanced melanoma treated with TIL therapy. Our registrational trials continue to advance in additional indications. TILVANCE-301 is designed to support accelerated and full approvals of Lifileucel in combination with Pembrolizumab in frontline advanced melanoma. This randomized trial remains on track to be well underway at the time of potential approval and is designed as the confirmatory trial to support full approval for Lifileucel in post-anti-PD-1 advanced melanoma.
We continue to randomize patients and activate global sites in the TILVANCE-301 in key geographies with a large presence of melanoma patients and the potential for strong enrollment. We recently activated new sites in the U.S. and the first site in Australia. We also have regulatory clearances to open sites in the United Kingdom and Canada. In non-small cell lung cancer, we have also made significant progress with our registrational strategy. IOV-LUN-202 is our registrational single-arm Phase II trial in post anti-PD-1 lung cancer. Following the positive preliminary data analysis from LUN-202, physician interest and momentum for center participation is strong and remain actively activated with the sites. We also have FDA regulatory feedback that the trial design may be acceptable for an accelerated approval of TIL therapy and post anti-PD-1 non-small cell lung cancer.
The preliminary analysis included data from the registrational population in cohorts 1 and 2, which enroll EGFR, ROS, or ALK mutation negative patients who have progressed on or after chemotherapy and anti-PD-1 therapy. 6 patients had a confirmed objective response, representing an ORR of 26.1%. All 6 responses, including 1 complete response and 5 partial responses remained ongoing at the time of the data analysis and ranged from 1.4 plus to 9.7 last month. We remain on track to complete enrollment in LUN-202 in the second half of 2024. Based on this trial, we intend to submit a supplemental BLA for U.S. accelerated approval in post anti-PD-1 non-small cell lung cancer. We are proposing a Phase III registrational trial in frontline lung cancer, which is intended to serve as the confirmatory trial for full approval in the post anti-PD-1 setting and to support an approval in frontline treatment setting.
We plan to meet with FDA early next year to discuss the Phase III registrational trial, where our goal is to improve frontline non-small cell lung cancer therapy by adding TIL therapy to standard of care Pembrolizumab maintenance therapy administered after completion of the initial chemo immunotherapy. Our confidence in this frontline trial design is supported by the encouraging responses and response durations that we have observed with the TIL Pembrolizumab combination compared to standard of care benchmarks even without chemotherapy. Turning toward our new program in endometrial cancer. As Fred mentioned, we are starting an Iovance TIL therapy program in endometrial cancer. The standard of care frontline treatment is shifting, and there is a lack of approved treatment options for patients who progress on or after immune checkpoint inhibitor containing treatment regimens.
Analogous to other tumor types, our onetime TIL therapy may offer benefit in this setting. Based on the TIL mechanism of action, the benefit of TIL therapy is likely to extend across patients with tumors that are mismatched repair mechanism deficient and proficient, and our clinical program will include patients from both subgroups. We look forward to providing more details as we work towards initiating the study in the first half of 2024. I am available during the question-and-answer session. For now, I will hand the call over to Jean-Marc to discuss our year-to-date 2023 financial results.
Jean-Marc Bellemin: Thank you, Friedrich. I will summarize the high-level financial results for the 3 and 9 months ended on September 30, 2023. More details can be found in this afternoon's press release as well as in our SEC filings. Beginning with the balance sheet. Iovance had $427.8 million in cash, cash equivalents, investments and restricted cash as of September 30, 2023 compared to $478.3 million as of December 31, 2022. The current cash position includes approximately [indiscernible] $203.2 million in combined net proceeds from our public offering in July 2023 and the at-the-market equity financing facility. We expect our cash position and anticipated 2024 revenue from Lifileucel and Proleukin to be sufficient to fund the current and planned operation into 2025.
As Fred described earlier, we continue to internally prioritize and optimize our operation and completed many onetime investments. As we carefully manage our operating expenses, we are guiding towards 2024 cash burn in the range of $320 million to $340 million, excluding onetime expenses, and we'll continue to look for opportunities to further streamline spending and drive revenue. Transitioning to financial results. Net loss for the third quarter ended September 30, 2023, was $113.8 million or $0.46 per share compared to a net loss of $99.6 million or $0.63 per share for the third quarter ended September 30, 2022. Net loss for the 9 months ended September 30, 2023, was $327.7 million or $1.44 per share compared to a net loss of $290.6 million or $1.80 per share from the same period ended September 30, 2022.
We began recording revenue from product sales following the Proleukin acquisition in May 2023 and anticipate significant revenue after the launch of Lifileucel. Revenue for the third quarter and 9 months ended September 30, 2023, was $469,000 and $707,000, respectively. There were no revenue for the third quarter and 9 months ended September 30, 2022. Cost of sales for the third quarter and 9 months ended September 30, 2023, was $4.3 million and $6.4 million, respectively. The cost of sales includes cost of inventory associated with sales of Proleukin as well as $4 million and $5.9 million, respectively, of noncash amortization expenses of the required intangible assets of developed technology in the 3 and 9 months periods ended September 30, 2023.
There was no cost of revenues for the third quarter and 9 months ended September 30, 2022. Research and development expenses were $87.5 million for the third quarter ended September 30, 2023, an increase of $15 million compared to $72.5 million for the same period ended September 30, 2022. Research and development expenses were $256.6 million for the 9 months ended September 30, 2023, an increase of $42.4 million compared to $214.2 million for the same period ended September 30, 2022. The increases in research and development expenses in the third quarter and the 9 months ended September 30, 2023, over the prior year periods were primarily attributable to growth of the internal research and development team as well as higher costs related to facilities and the initiation of new clinical trials, including the Phase III TILVANCE trial, which were partially offset by a decrease in stock-based compensation expense.
Selling, general and administrative expenses were $27.0 million for the third quarter ended September 30, 2023, a decrease of $0.9 million compared to $27.9 million for the same period ended September 30, 2022. Selling, general and administrative expenses were $77.0 million for the 9 months ended September 30, 2023, a decrease of $0.6 million compared to $77.6 million for the same period ended September 30, 2020. The decrease in selling, general and administrative expenses in the third quarter and the 9 months ended September 30, '23 compared to prior year periods was primarily attributable to the decrease in stock-based compensation expenses and other costs related to the timing of spend compared to the prior year period, including marketing, advertising and legal costs, partially offset by costs associated with the growth in the overall business.
As of September 30, 2023, there were approximately $255.8 million common share outstanding. Before handing the call back to the operator to kick off the Q&A session, I want to reiterate our 2020 cash burn guidance in the range of $320 million to $340 million, excluding onetime expenses, as we will carefully manage our operating expenses in the coming months and quarters. Operator, we can now start the Q&A session.
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