Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) Q1 2023 Earnings Call Transcript

Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) Q1 2023 Earnings Call Transcript May 9, 2023

Iovance Biotherapeutics, Inc. beats earnings expectations. Reported EPS is $-0.5, expectations were $-0.74.

Operator: Hello and thank you for standing by. My name is Andrew and I will be your conference operator today. At this time I would like to welcome everyone to the Iovance Biotherapeutics First Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. It is now my pleasure to introduce Senior Vice President, Investor Relations and Corporate Communications, Sara Pellegrino.

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, our Executive Vice President, Commercial; Dr. Friedrich Finckenstein, our Chief Medical Officer; and Jean-Marc Bellemin, our Chief Financial Officer. Dr. Raj Puri, our Executive Vice President, Regulatory Strategy and Translational Medicine, is also 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 three months ended on March 31, 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, 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 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 introduction, I will turn the call over to Fred.

Fred Vogt: Thank you, Sara. Good afternoon everyone. I’m pleased to update you on a productive start to the year at Iovance in 2023. We successfully completed our Biologics License Application, or BLA, for our lead TIL therapy, lifileucel, in advanced melanoma at the end of the first quarter. This represents a critical step forward in our journey to deliver the first individualized one-time T-cell therapy for a solid tumor. I would like to acknowledge the patients and physicians who participated in the C-144-01 clinical trial and the FDA review team for their commitment and support as well as our internal team for their tremendous effort in completing the first BLA submission for Iovance. We look forward to continued collaboration with the FDA as they review this new class of treatment for advanced melanoma patients with limited options.

In terms of next steps, the FDA has 60 days from when we completed the submission to determine the acceptability of the BLA for review, which is approximately May 26th. We will provide an update as soon as we can, accepted for a six month priority review that would result in a decision on approval by late November. We feel confident going into the BLA review process given the unmet medical need and strength of our clinical data, as well as several positive interactions with and feedback from the FDA. As we prepare for potential commercialization, we’re also developing our robust immuno-oncology pipeline and plan to execute integration plan for Proleukin. Earlier this year, we entered into a strategic transaction with Clinigen to acquire worldwide rights to Proleukin, an IL-2 product with currently approved indications that is importantly also used to promote T-cell activity following TIL infusion.

We expect Proleukin to provide revenue and full control of the IL-2 supply chain and logistics surrounding TIL therapy, as well as a reduction in both clinical trial expenses and future cost of goods for lifileucel. We expect to close this transaction imminently and we will file our Form 10-Q tomorrow afternoon with more information. In addition, our robust TIL therapy pipeline includes seven active clinical trials and multiple solid tumor types with the potential to create significant value for cancer patients and shareholders. As we grow our organization to transition to a commercial company, we currently have more than 500 Iovance employees experience in developing and commercializing oncology and cell and gene therapy products. I look forward to addressing your questions later during this call and will now ask Igor to present our manufacturing updates.

Igor Bilinsky: Thank you, Fred. Manufacturing is essential for us to successfully launch and deliver lifileucel to patients. We’re committed to operational excellence and have provided TIL therapy to more than 600 patients to date with a consistent manufacturing success rate of more than 90%. Right now, our top priority is to support the FDA DLA review process, prepare for the pre-approval site inspections, and scale up our internal capabilities and staffing to meet patient needs for commercial supply to launch. We have done significant work to thoroughly prepare the iCTC and our contract manufacturers’ facility for commercial launch as well as for ongoing clinical supply in our trials. The iCTC, which is expected to supply most of the commercial TIL therapies upon approval, has been supplying clinical studies since the third quarter of 2021 while supporting expanded access and preparing for commercial readiness.

In addition, our contract manufacturers provide further flexibility to optimally balance capacity and patient demand. We’re also planning for future commercial and clinical capacity needs as we look to establish TIL as the next paradigm shifting class of cancer therapy. The iCTC has built to supply TIL products for more than 2000 patients annually. We’re on track with our hiring plan to support our forecasted demanded launch. Ultimately, by building out the additional existing shelf space, the iCTC is designed to 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 through the addition of new facilities, as well as streamlining and automating manufacturing processes.

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Turning to our intellectual property or IP, we currently own at least 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, which is a critical component to support and protect our proprietary manufacturing processes and knowhow, is available on our corporate website and within our annual report on Form 10-K. Now I’d like to hand the call over to Jim Ziegler to highlight our commercial launch preparations. Jim?

Jim Ziegler: Thank you, Igor. Our commercial launch readiness activities with authorized treatment centers, or ATCs, and payers are on track and aligned with our regulatory milestones. Our cross-functional teams are making steady progress towards onboarding and developing TIL cell therapy service lines at our ATCs. Our leadership team has also been visiting several ATCs as part of the onboarding process, and we are hearing strong enthusiasm to offer TIL cell therapy as a new treatment option upon approval. In conjunction with our capacity planning for lifileucel, our onboarding process also includes market research and assessment of bed capacity at each hospital. Our targeted ATCs have given consistent feedback that they have inpatient hospital beds to support cell therapies including lifileucel, and we believe our ATCs can accommodate our expected demand for lifileucel at launch.

Our payer engagement also remains strong following our completed BLA submission. Reimbursement and access expectations for lifileucel are consistent with other CAR T-cell therapies, which often includes prior authorizations and single case agreements between hospitals and payers. Our goal is to ensure patients have timely access to lifileucel and our Iovance care’s reimbursement and patient support programs will offer support for ATCs and patients. In closing, we remain on track for commercial launch including operational readiness for Proleukin. I want to thank our dedicated cross-functional teams, who are working tirelessly because patients are counting on us. I will now pass the call to Friedrich Finckenstein, our Chief Medical Officer, to highlight our clinical progress.

Friedrich Finckenstein: Thank you, Jim. Today I would like to summarize recent updates with our TIL therapy pipeline and next generation technologies. As Fred mentioned, we completed our BLA submission for lifileucel in post-anti-PD-1 advanced melanoma in late March. We are confident in the potential for FDA accelerated approval. We have RMAT designation positive results from our C-144-01 trial, which is the largest single clinical study ever conducted for cell therapy in post ICI melanoma and FDA agreement for the Phase 3 TILVANCE-301 trial. TILVANCE-301, which we expect to be well underway at the time of potential approval, is designed to service our registrational trials for accelerated and full approvals of lifileucel and combination with pembrolizumab in frontline advanced melanoma, as well as a confirmatory trial to support full approval of lifileucel in post-anti-PD-1 advanced melanoma.

We recently activated TILVANCE-301. The trial is now actively enrolling patients and we will randomize the first patient soon. As a reminder, we plan to randomize 670 patients who are naive to therapy in the advanced setting to either lifileucel combination with pembrolizumab in the experimental arm or pembrolizumab monotherapy in the control arm. The trial is expected to include an appropriate number of global sites and key geographies with a large presence of melanoma patients and the potential for strong enrollment including the U.S., Australia, Canada, and Europe. Additional information on participating sites, trial design outcome measures and eligibility criteria are available on clinicaltrials.gov. We also continue to execute on our non-small cell lung cancer or NSCLC pipeline at Iovance with six cohorts across three Iovance studies to investigate multiple treatment regimens in various populations at various stages of disease.

In the first quarter, we shared positive initial data for our TIL therapy, LN-145 in combination with pembrolizumab from Cohort 3A of the IOV-COM-202 trials in patients with advanced NSCLC who are naive to ICI treatment. Based on these positive results, particularly within the treatment naive and post chemotherapy subsets of patients, we plan to meet with FDA in 2023 to discuss data and a potential registration test for lifileucel frontline advanced NSCLC patients. Enrollment to Cohort 3A is ongoing and we plan to present detailed and updated results at a medical meeting in the second half of this year. For patients with non-small cell lung cancer who are more advanced than the disease IOV-LUN-202 trial is investigating LN-145 monotherapy after prior anti-PD-1 and chemotherapy.

This trial, which includes an option for pre progression tumor harvest as well as TIL product manufactured from starting core biopsy tumor material is expected to continue enrollment throughout this year. Moving to cervical cancer, our expanded Cohort 2 in the ongoing C-145-04 trials is investigating lifileucel following progression on or after chemotherapy and anti-PD-1 therapy. Based on our dialogue and feedback from FDA, Cohort 2 is intended to be pivotal to support regulatory submissions and we look forward to continuing enrollment this year. We are also excited about our next generation TIL therapies, particularly IOV-4001 and other genetically modified TIL therapies that utilized the gene editing TALEN technology licensed from Cellectis to optimize TIL therapy by inactivating immune checkpoint proteins that inhibit antitumor response.

We’re investigating IOV-4001, a PD-1 inactivated TIL therapy candidate in our first inhuman IOV-GM1-201 trial in patients with previously treated advanced melanoma or NSCLC. Additional programs using the TALEN technology are expected to enter clinical development in 2024, including genetically modified TIL therapy with multiple inactivated immune checkpoint targets. Our research and preclinical studies also include IND enabling studies for our novel interleukin two analog IOV-3001 and approaches to increase TIL potency including the selection of CD39/69, double negative TILs and enhancements such as tethered cytokines. I am available for questions during the question-and-answer session. For now, I will hand the call over to Jean-Marc to discuss our first quarter 2023 financial results.

Jean-Marc Bellemin: Thank you, Friedrich. My comments will summarize our planned acquisition of Proleukin as well as the high level financial results for our first quarter ended on March 31, 2023. More details can be found in this afternoon’s press release as well as in our SEC filings. At the end of January, we announced that we have entered into an agreement to acquire Proleukin from Clinigen. Terms of the agreement include an upfront payment of £167.7 million, the £41.7 million milestone payment upon first approval of lifileucel in advanced melanoma and double-digit Proleukin global sales royalties from Iovance to Clinigen. The transaction will be financed with existing cash and is expected to close imminently. As Fred mentioned, we expect Proleukin to provide revenue and full control of the IL-2 supply chain and logistics surrounding TIL therapy.

We anticipate significant revenue for Proleukin to begin after the launch of lifileucel. We continue to invest in launch preparations, internal manufacturing and pipeline activities. As of March 31, 2023, we held $632.7 million in cash, cash equivalents, investments and restricted cash compared to $478.3 million as of December 31, 2022. Our current cash positions includes approximately $260 million of net proceed raised through at the market or ATM financing facility during the first quarter of 2023. Cash position is expected to found our operating plan into the second half of 2024, including the Proleukin acquisition, manufacturing activities, launch readiness and execution, ongoing and planned clinical trials and pipeline advancement. Transitioning to the financial results for the first quarter ended on March 31, 2023, our net loss was $107.4 million of $0.50 per shares compared to a net loss of $91.6 million or $0.58 per share for the first quarter 2022.

Research and development expenses were $82.7 million for the first quarter of 2023, and an increase of $14.4 million compared to $68.3 million for the first quarter 2022. This year-over-year increase in research and development expenses was primarily attributable to growth of the internal research and development team, as well as clinical trial costs, cost to support commercial manufacturing readiness and facility related costs, which were partially offset by lower stock-based compensation expense. General and administrative expenses were $28.1 million for the first quarter 2023, an increase of $4.7 million compared to $23.4 million for the first quarter 2022. The increase in general and administrative expenses in the first quarter 2023 compared to the prior year period was primarily attributable to growth of the internal, general and administrative and commercial teams in preparation for launch.

Fees to support the Proleukin acquisition, as well as cost associated with pre-commercial activities, which were partially offset by lower stock-based compensation and marketing expenses. As of March 31, 2023, there were approximately $224.4 million common share outstanding. I will now hand the call back to the operator to kick off the Q&A session.

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Q&A Session

Operator: Thank you. And our first question comes from the line of Michael Yee with Jefferies.

Michael Yee: Hi, guys. Thanks for the questions and congrats on the progress. We had two areas of questions. One was as you go about the regulatory process, can you just shed some light on your expectations for an AdCom and what discussions you may have had about that, as well as your expectations for an FDA inspection for the factory, and how that process would go about during the regulatory timelines that you laid out? And the second question is about preparation for launch. Can you just remind me how many ATC centers you expect at the start and whether you feel comfortable about reimbursement? I know you’ve mentioned you have J-codes and all of those sorts of codes before. And if you go back to CAR T, that was a real gaining factor for the launch. So could you just talk about whether you expect that to be an issue or not, and you would expect it to be pretty straightforward due to the codes? Thank you.

Fred Vogt: Yes, Mike. Regarding an AdCom right now, as we’ve said before, we don’t expect an AdCom. We think FDA is seeing enough T-cell therapies at this point. However, if we get one, we’ll get word of that fairly soon, and we would could talk more about that at that time. Typically that comes after acceptance of the BLA. Regarding inspection and timing for inspections, what we call PLI, or pre-licensing inspections, those are things that occur typically towards the end of the review cycle. They will occur around late third quarter or something like that this year. Potentially we don’t know FDA might tell us, give us more detail and give us more insight in to that at some point, but we are preparing today heavily at all of our sites including our manufacturing site at iCTC, as well as the WuXi and everywhere else in our organization for the PLI, as well as for what’s called the BIMO, or Bioresearch Monitoring GCP audit.

So we intend to be in very good shape when that happens. And for the ATCs at start we said, as we said publicly, we’re aiming for 40 ATCs at start. That’s something we’ll launch with either 40 at the time of launch or shortly thereafter. You mentioned J-codes that J-codes don’t apply in our space. We’re more interested in what’s called MS-DRG for Medicare, as well as getting ourselves in in line with single case agreements with the private payers before they issue their coverage policies. All that is going very well. Maybe Jim, if you want to – maybe you want to add anything to that?

Jim Ziegler: No, I think you covered most of it. Just a reminder, our goal is to launch with top 40 ATCs within the first 90 days of approval. And on the reimbursement front over the past couple of years, we’ve had a team out there engage in payers. We engage payers responsible for 90% of covered lives for commercial and Medicare patients. And we’re confident in our approach and that payers understand the unmet need and the clinical data that we’ve shared thus far. Thanks, Fred.

Operator: Thank you. And our next question comes from the line of Peter Lawson with Barclays.

Peter Lawson: Great. Thanks so much. The TILVANCE-301 trial, just kind of how we should be thinking about that as regards to the balance of U.S. versus ex-U.S. sites?

Fred Vogt: Yes, we’re going to be international fully there, Peter. Maybe I can say a few words and then Friedrich can add, but we are intending to have European sites. We’re intending to have Australian sites and beyond. These are some stuff we talked about. You can see this in the script and elsewhere from today’s call, but we are intending it to be a very international trial and we we’re well underway in those respects. Friedrich, do you want to add anything?