All right, we'll go ahead and get started with our next session. My name is Ben Burnett, Biotech Analyst here at Stifel. Pleased to be here with some of the management team from Iovance Biotherapeutics. We have Igor Bilinsky, COO. We also have Peter Prieto, CVP, excuse me, SVP of Medical Affairs. Thank you all for being here.
Thank you.
Good to be here.
Thank you.
Let's start off, maybe just give a quick overview of Iovance, then we'll get into Q&A.
Happy to. So good afternoon, everyone. Great to be here. So Iovance is a commercial-stage biotech. Our mission is to innovate, develop, and deliver to patients tumor-infiltrating lymphocyte or TIL cell therapies for treatment of solid tumors. Our first product Amtagvi received the approval in February of this year for treatment of patients with post-PD-1 advanced melanoma. And we're focused on the commercial launch, which is going very well. It's the first product approval for patients in that treatment setting. It is also the first T- cell therapy approved by the FDA for solid tumor cancer. We also market Proleukin, which is used as part of the treatment regimen of these patients with Amtagvi, as well as for other indications. So our main focus right now is, of course, on commercial launch.
In addition, in the U.S., in addition, we've filed in Europe earlier this year in Q2, and we filed in the U.K. as well, and we expect approvals in both of these geographies next year. We plan to file in Canada later this year and Australia second half of next year, Switzerland, Australia first half of next year, Switzerland second half of next year, and all of that is addressing the patient population of approximately 20,000 patients in these regions with advanced post-PD-1 melanoma. That's the market opportunity. In addition, we have a robust pipeline. We are running two pivotal studies. One is in frontline melanoma, and the second one is in post-PD-1 non-small cell lung cancer, and finally, we're expanding our leadership in the TIL space with new technologies. We have a PD-1 inactivated TIL that's in the clinic, IOV-4001.
We recently announced the next generation IL-12 tethered TIL, IOV-5001. That's in preclinical development. Yes, we can find time toward the end to talk about those as well.
Great. Okay. Fantastic. I want to maybe just start and just kind of talk about investor sentiment. Iovance recently reported 3Q earnings. You hit guidance. I think you reiterated guidance for the year, for next year. Stock reacted negatively. What are investors missing?
I think what's very underappreciated is that we may be executing the most successful cell therapy launch in history so far. And from our standpoint internally, the launch has gone very well. We beat the guidance that we gave for Q3. We reported revenue of $55 million against guidance. I believe it was $53 million- $58 million. The guidance was $53 million-$55 million. Consensus was somewhere in that range. So we beat that. The gross margins are improving, which is also important. The gross margin last quarter was 44% compared to 26% the first quarter. That's positive. So early after launch. And the growth in demand and growth in revenue is going very steadily. Month after month, we're growing our manufacturing capacity month- over- month.
We see growth in the Authorized Treatment Centers that came online early, again, month- after- month, over month as they get more familiar with the therapy. And we're bringing new Authorized Treatment Centers online. So we launched with 30. We had 56 at the time of the earnings call on November 7th, and we plan to be at about 70 at the end of this year. So the fundamentals and the execution from our standpoint, that's all going very well. So I think some of that may be missed by the investor community.
The guidance that Iovance has given, so it's two parts, right? It's product sales, but that's Proleukin, and it also includes Amtagvi. So maybe we can kind of address both of those pieces. And I think maybe we could start with Proleukin because I feel like that's probably pretty straightforward. But first of all, Proleukin, how is that sold? Is it sold through mostly specialty distributors?
That's correct. So Proleukin is used as part of the treatment regimen of Amtagvi. And we reiterated the guidance for next year that includes both Amtagvi and Proleukin between $450 million and $475 million. We're confident about achieving that. And Proleukin is sold through SDs. That's correct.
Do you have a sense for how many specialty distributors you would have to work with in the U.S.?
So there are three major ones in the U.S. We brought the first one online in Q2. We brought the second one online in Q3. And we're bringing the third one online in Q4 this quarter. So we're doing it in a staggered fashion.
So I guess given that dynamic, the kind of Proleukin uptake that we saw in Q2 and Q3, could we maybe assume that that's roughly the same for Q4?
We expect Proleukin to be relatively steady this quarter compared to the previous two quarters, plus minus.
Yeah. Great. Okay. Obviously, there's some inventory buildup given that this is a new product launch. But what is your expectation for the amount of inventory that distributors would want to keep on hand, like maybe in terms of kind of the number of months of demand? Is sort of one to two months of inventory, is that a fair assumption?
We don't have perfect visibility into that, but we believe about six weeks is probably a good assumption.
Okay. Okay. And as you're seeing kind of some of the initial use of Proleukin with Amtagvi, do you have a sense for how many vials and doses patients are using in the real world?
So anecdotally, we do. But again, we don't collect as much data as we do from clinical trials. In the clinical trial, in the pivotal trial that led to approval, the average patient received six doses of Proleukin, which is approximately 18 vials. And on the label of Amtagvi, it's also six vials is what's in six doses of Proleukin, what's indicated, which is approximately 18 vials. And we're hearing anecdotally from the treatment centers that that seems to be the consistent approach.
Okay. Excellent. So okay, so very good. So another specialty distributor coming online in the fourth quarter, you expect roughly flat kind of Proleukin sales there. So turning to Amtagvi, I guess ultimately I want to get to what gives you the confidence that you can meet your revenue guidance that you laid out for the year and for next year. And I think starting with that, so you have an Iovance Cares program. And I think that's giving you some sort of insight into who's coming down the funnel. But what kind of line of sight do you have with that Iovance Cares program?
Maybe I'll touch on the approach and then turn it over to Peter for the Iovance Cares. So again, the market opportunity overall in the U.S. for advanced melanoma in the approved setting, it's about 8,000 patients. Overall, we expect it to be more than a $1 billion opportunity for Amtagvi in the U.S. alone. The guidance for next year is between $450 million-475 million combined revenues Proleukin and Amtagvi. We just reiterated that guidance. We're confident about achieving that. I reiterated that on the earnings call two weeks ago. The way we arrive at the guidance, both for 2024 fiscal year and 2025, is really the bottom-up analysis, looking at all the ATCs that we have activated, the trends in patient enrollment across these treatment centers, as well as our month-over-month capacity buildup. So there's a lot of detail that goes into that analysis.
That's what gives us confidence, and so far, these trends are holding up very well, so turning over on the Iovance Cares side, turn it over to Peter.
Yeah. So thanks, Ben. The Iovance Cares system is really a novel comprehensive system, a platform, a portal that ATCs and patients have access to that really documents and keeps in check the entire patient journey from scheduling, from registering to scheduling surgery, and through manufacturing. And our dedicated case management commercial team, our cell therapy account managers, have access to this. And we have full line of sight, with obvious privacy considerations taken into account, of where the patient is in that journey.
Excellent. And do you have a sense for how long that patient journey is taking to get to the point of enrolling in the Iovance Cares program to initiating a manufacturing process?
Yeah. So the financial clearance and the scheduling work in parallel, somewhere on the order of three to four weeks. That process continually is improving through launch. And then we are seeing that we are meeting our benchmark of 34 days of inbound to delivery of product.
Excellent. And we have a question. Oh, no, sorry. And if there are any questions, let me know. I'll work it in. I guess another thing that comes up is, are there any leaks in the funnel? Are you seeing patients enroll into Iovance Cares program and then for whatever reason not make it to the point of manufacturing?
Yeah, I think naturally there will be patient drop-offs, and these are typically related to patient health. But these numbers are improving dramatically through launch with our dedication to patient selection, surgical considerations for lesion selection, really efficiencies at the ATC level. And we have also implemented what we call our peer-to-peer team, which involves a dedicated team of nurse practitioners, two surgeons, myself included, and a medical oncologist that works with the ATCs to help kind of really optimize patient and lesion selection. With those tactics in play, we're seeing that those drop-offs are minimal.
Great. And with regards to manufacturing, have there been any learnings as you've scaled up sort of for commercial volume in terms of manufacturing?
I mean, we're learning a lot. I mean, manufacturing, I think, is somewhat underappreciated, how much of a barrier to entry it is in this field, how complex it is ultimately. Since launch in February, we've learned a lot and we're improving all kinds of small things, large things in the spirit of operational efficiencies, continuous improvement, constantly thinking, what can we do better, what can we do simpler, ultimately with the goal of improving the cost of goods, which we're already seeing as part of the most recent quarterly report. Yeah.
I think one of the things that Iovance talked about ahead of the launch was the potential to use WuXi as a way to kind of streamline some of the demand as you build up, but to have the bulk of the volume come out of the Iovance manufacturing center. Have you used WuXi, and has that been part of the equation for you?
Yes, we have, and we are. So they have approved two sites for commercial manufacturing of Amtagvi. One is, of course, our internal site, the ICTC, the Iovance Cell Therapy Center, which is one of the largest cell therapy manufacturing facilities in the world at the moment. And they have also approved our contract manufacturer, WuXi, which gives us additional flexibility for meeting patient demand for scheduling. And we've been working closely with them.
Okay. Fantastic. I think another thing that was discussed on the earnings call was that Iovance noted that there was $8.3 million in cost associated with patient dropouts, manufacturing failures. I think investors are referring to this as sort of the scrap cost. I guess how does that compare to your expectations sort of prior to launch, that kind of level of scrap cost?
It's in line with expectations. Again, it's improved significantly when compared to the previous quarter. If you look at the gross margins, the gross margin in Q2 was 26%. The gross margin in Q3 was already 44%, which is more than halfway on our journey toward our goal where we believe long-term the gross margin will be at 70% or better in a couple of years. Again, we're already at 44% last quarter.
That's great. And what are you doing to improve that? And I guess as you're at 44% now, what are kind of the steps you take from here to kind of get that to where you want it to be?
Part of that is just sheer volume, the scale curve for manufacturing. And in addition, what I mentioned, the operational efficiencies, continuous improvement philosophy that we're implementing at ICTC to constantly review the process, what can we do more efficiently, what can we reduce cost, whether it's raw material cost, production cost, etc. So that program is very active, and the teams have been doing a great job in that with a number of improvements already implemented since February.
I think a lot of investors are sort of tethered to what we've seen in CAR-T, which is cell therapy, which is not Iovance. But with that, we've seen, I think, some maybe step-ups to some of the efficiency improvements from some of those launches. So should we expect gross margins to just kind of step up and be better every quarter? Or should we expect kind of a linear improvement there?
We expect steady progress. As we are steadily ramping up capacity, the gross margins will steadily improve. Then there may be step functions along the way as we continue to scale up. For example, right now, our manufacturing facility is built to support over 2,000 patients per year. We are now building out additional shell space within the ICTC facility that will bring us to a 5,000 patient per year mark. So that could be associated then with a significant reduction in COGS. Then the longer-term strategy, again, part of capacity build, which is also related to COGS reduction, is we are planning another building on the same campus in Philadelphia, along with automation improvements, which we expect to bring the capacity over 10,000 patients per year while reducing cost of goods at the same time.
Okay. Okay. Fantastic. And then I think you started off in your prepared remarks talking about the number of ATCs, 56 ATCs as of November 7th, and the goal is to get to 70. Are all of those ATCs contributing to volume? Or do you see kind of some of these ATCs are just kind of putting their toe in with a patient or two to see how it goes before really committing to Iovance as a product?
Yeah, I think there's variance there that would be expected. The size of these centers does vary, but they all were vetted through our ATC Cell Therapy Operations team that looked at all the factors that would contribute to a successful and safe center to deliver this therapy. I think we see that some centers are, and this is posted in social media, some centers are treating multiple patients per day. Some centers are, again, as you mentioned in your words, kind of getting their foot in the game and seeing how getting more comfortable with this therapy, and as that happens, as awareness gets out there through our interaction with community referral providers as well as community-oriented physician organizations that are driving demand, we see that these centers are increasing in volume, those that have less experience compared to those that maybe had more of a clinical trial footprint.
But in general, again, it's month-over-month growth with the centers, but there is variability among the centers.
Okay. Okay. I think some of the discussion ahead of the launch was, what are the logistics involved here and how streamlined could something like this ultimately be? You now have seen a couple of quarters, and you've seen some ATCs that have been early adopters and are kind of getting the swing of things. What is kind of the throughput that you're seeing, and kind of Igor, to go back to your point of looking at this from a bottoms-up perspective, what should investors kind of be thinking about when building their bottoms-up model in terms of throughput at ATCs?
So, some of, I mean, you and your colleagues have put together some very impressive models. And I think the theme is that, as Peter mentioned, some ATCs are routinely treating at least one to two patients per week. And so these are the leading ones. And you can kind of, in some cases, guess who they are, some of the leading academic cancer centers. The other ones are just earlier on the journey, and they may be treating one or two patients a month and ramping up. Some of those who are still treating maybe one or two patients a month are big ones. And we expect them to be in the two, three patients per week when they fully ramp up in a few months.
I think the modeling, it's a good way to think about several kind of cohorts of ATCs, the top ones, and then the middle and the ones they're just starting up.
Excellent. Okay.
The other part, I think a lot of them are significantly investing in their cell therapy facilities and capacity because that's where they see the future of treating solid tumors.
Yeah, it's really the next. It's the tip of the iceberg. It's the next big chapter in immunotherapy. 90% of patients who die of cancer are from solid tumors. So these centers that either have therapy service lines in place are building them, and those that don't are continuing to build. In fact, we're seeing that many centers that are not ATCs are reaching out to us and asking, inquiring as to whether they can be an ATC. And we're considering this as it relates to the needs of the launch. The other important point is, as we get to 70 centers, we will see that many patients in this country will be within a two-hour drive of Amtagvi.
Okay. And that is exactly what I wanted to ask about. So it sounds like you're seeing some buy-in on the side of the ATCs to put resources behind this.
Oh, yeah.
I mean, are you seeing teams kind of develop that are focused on implementing this?
Absolutely. I mean, some people are building their entire career, medical oncologists, cell therapists. It's a very unique therapy in the sense that we usually treat cancer in a multidisciplinary fashion, but this is very unique to see an interplay of medical, surgical, cell therapists.
Excellent.
Yeah.
Okay. And then Igor, you mentioned there's potential for this to be kind of a billion-dollar opportunity. What are the number of patients that would kind of reach that level of scale?
So again, the patient population that's eligible, it's about 8,000 in the U.S., post-PD-1 advanced melanoma patients, and the assumption of getting to $1 billion in U.S. sales would correspond to very modest market penetration of that population if you do the math.
Okay. Great. So you also have TILVANCE-301. This is the phase III confirmatory study, frontline advanced melanoma. I guess question number one, what can you say sort of about enrollment and enthusiasm for that study?
I think that there is great momentum, and that continues to be very enthusiastic. The centers and the HCPs that are PIs for that trial continue to enroll patients, and we're seeing that at a pace that we anticipated. We have more than 50 sites currently enrolling in 11 countries in North America, Europe, and Australia, and we have an additional 50 centers coming online very soon in an additional 15 countries. So it really is a global study that we hope will, that has dual primary endpoints of ORR and PFS, and there's the potential for an interim analysis of ORR to really support the full approval of Amtagvi.
What do you think the data needs to show in the frontline to kind of drive adoption?
I think that in the frontline, it's important to recognize that patients do better when they're treated earlier, and we presented recently at ASCO of this year our COM-202, our basket trial that looked at our Cohort 1A, which looked at patients who were PD-1 naive, who received combination TIL and Pembro, and what we saw in those patients was a response rate that was well over 60% and a complete response rate of 30%, which is unprecedented even in combination checkpoint without the added toxicity, so it really is, we feel, that there is definitely a place for first-line TIL, not only in melanoma, but also in non-small cell lung cancer.
Excellent. I think there's also some discussion around where sort of the setting the frontline patients will be treated versus community oncologists versus a specialty center. I'd just be curious, do you have a sense for your ATC footprint that you're building out for late line, kind of what that automatically kind of makes available to you in the frontline? What proportion of frontline patients would you kind of have access to with that ATC footprint you're already building?
Yeah, I think as we build these community partnerships, it's getting awareness out there. It's not saying, "Okay, we're treating with first line now. When the patient progresses, we'll talk about the next options." It's really talking at day one when they are getting first-line therapy, what are the options, talking about Amtagvi early on and getting patient selection, getting patient access to this therapy because that is key. We know regardless of treatment in oncology that patients do better when they're treated earlier. So getting early access to patients is something that we're working again with community partners and our ATCs as well as community-oriented physician organizations.
Okay. Sticking with the ATCs here, when you're speaking to institutions and I guess trying to get them to become an ATC, do you ever have pushback around the data? Or is it, and I'm asking this in the context of TILVANCE, and if that data is positive, does that convert more buy-in from the physician community in that late line setting that this is the future of sort of treatment?
Yeah, I think there's a lot of, again, related to the data that we've showed at ASCO in the first-line setting from our Cohort 1A, that that complete response rate generates a lot of enthusiasm, that this is a one-time therapy that can lead to a meaningful and durable response. In fact, the depth, rate, and durability is unprecedented in that setting. So I think that that speaks for itself when PIs and investigators look at the potential of this therapy.
I would add, I feel that's increasingly well recognized. Again, the 30% complete response rate presented at ASCO, combined with some older data from the National Cancer Institute from Steve Rosenberg's group, who showed that a CR complete response in melanoma in frontline, in that case, translated to disease-free survival of 95% over 10 years. That is remarkable. That is essentially a cure. CR doesn't always mean a cure in oncology, unfortunately, but in this case, it appears to be typically a cure, which brings a lot of attention to this therapy.
Yeah. Excellent. I want to move to lung, but any questions on melanoma before doing so? So let's talk about, so you recently presented some new data from one of your lung studies. It was Cohort 3A, studies called IOV-COM-202. Walk us through the significance of those data.
Yeah, so that was an update from something we had presented at World Lung a year earlier with longer follow-up looking at kind of our Cohort 3A, which was anti-PD-1 naive non-small cell lung cancer patients who could have received chemotherapy but had anywhere from zero to four therapies. And what we saw there was in the EGFR wild type patients, regardless of PD-L1 status, that the response rate was over 64%. When we looked at patients who were actually PD-1 negative EGFR wild type, those patients who are really difficult to treat, PD-1 negative patients, response rate was over 54%. So again, showing that Amtagvi or lifileucel TIL cell therapy in the first line really can have a meaningful depth and durability. The median duration of response in those patients has not been reached with a follow-up of over 26 months.
We're very encouraged by those results to the point that we're actually opening, and we announced this, that we're opening a Cohort 3D in that trial to look exactly at EGFR wild type patients who have failed chemotherapy to see if there is a chance to have that potentially lead to a confirmatory trial depending on the readout of LUN-202, which looks at the later line setting.
Excellent. Let's go there. The later line setting, I guess question number one, do you have a line of sight as to when that study could read out the LUN-202 study? And then what has been the feedback from physicians in terms of the level of efficacy they'd want to see to adopt something like this?
Yeah, the trial continues to enroll with a target of 120 patients. We hope that that will complete enrollment next year. The readout potentially be in 2026, but there's the potential for an accelerated approval in conversations we've had with the FDA in 2027, depending on those results. With investigators and practitioners in that really second plus line setting for really difficult to treat non-small cell lung cancer patients, we believe that the response rate of mid-20s to high 20% really is beating how patients do in standard of care. So we feel that that is an appropriate bar.
Maybe frame for us, what do you see as the commercial opportunity for that post-PD-1 setting?
In non-small cell lung cancer?
In cancer, yeah.
I mean, the numbers are 10 times that you would see globally in the U.S. for melanoma. So we're talking about 50,000 patients in the U.S., another 50,000 ex-U.S., so about 100,000 patients globally who really have no meaningful options after failing standard of care.
Igor, is there any potential overlap between the ATC footprint you're developing for melanoma that you could apply to lung cancer, kind of thinking ahead to that sort of 2027 potentially time point?
Very much so. I mean, just like in clinical trials, we've had a very significant overlap, and we're seeing that a lot of the commercial Amtagvi ATCs are involved in TILVANCE-301, the frontline melanoma trial. They're involved in LUN-202, the second line non-small cell lung cancer studies. So there's a lot of overlap.
Okay. Great. In the last couple of minutes, I just want to touch on some of the next generation TIL therapies. You mentioned IOV-4001.
4001.
So talk about that. Is the bar in your mind, is that essentially set by MTAGV?
Yeah, so IOV-4001 is a first in human trial that has completed a phase I safety run and is now in phase II. It looks at genetically modified PD-1 knockout TIL in patients who are refractory to anti-PD-1 in the melanoma and non-small cell lung cancer space. By knocking out PD-1, it essentially eliminates that checkpoint access and really delivers the checkpoint without the added toxicity of systemic checkpoint. We feel that setting the bar in those difficult to treat patients, looking at IOV-4001 in our basket trial in lung, is appropriate, yes.
Excellent. And then on the other, I think another asset you've mentioned recently is IOV-5001. Where do you plan to position that clinically?
So that is an IL-12 tethered genetically modified cell product that, again, IL-12 has shown pretty significant efficacy, but without the additional toxicity, with a non-trivial amount of toxicity when handled by groups such as the NCI. By tethering this through genetic modification, we can really eliminate the systemic release of IL-12, and this is inducible. This is tethered, and we feel that there is a space for this in terms of efficacy, perhaps with multiple indications.
Okay.
This is the current melanoma.
What we expect to target, that 90% of all deaths from cancer being deaths from solid tumor cancers, that product IL-12 tethered TIL, we expect to give us the potential to go after many tumor types that are much less immunosensitive today.
Okay. Fantastic. I know we're over, but I want to squeeze in one more question here. So if all goes to plan, as you kind of look forward to kind of your potential sales opportunity in melanoma, I know there's an option potentially for lung cancer. You're also investing in the R&D engine. So when do you think that this could push into profitability?
So we have a solid balance sheet with current cash into 2026, and we have actually a clear line of sight with increasing revenues, increasing gross margins toward breakeven and profitability without needing to raise significant amounts of capital.
Great. Okay. Igor, Peter, thank you so much.
Thank you.
Thank you, Ben.