Iovance Biotherapeutics, Inc. (IOVA) Earnings Call Transcript & Summary

All right. Great. Thank you so much. My name is Peter Lawson. I'm one of the biotech analysts at Barclays. I had a great pleasure for covering Iovance for at least 5, 6 years, I think, maybe longer. And up on stage with me I've got Igor Bilinsky, Chief Operating Officer; Brian Gastman, EVP of Medical Affairs; and Dan Kirby, Chief Commercial Officer.

First questions I've been asking really have just been around kind of the impact of the broader economy and change in government and cost cutting. If there's been -- if there's any longer-term worries you're thinking about through supply chain and if that impacts the business in any way, whether it's the near term or longer term as we think about tariffs, et cetera?

Yes. Thanks, Peter. Good question. So we don't anticipate any meaningful impact. We've made our supply chain quite robust during COVID and, as you know, we manufacture Amtagvi in the U.S. in Philadelphia and most of the raw materials come from the U.S. So the impact on tariffs, if any, we would expect to be very minimal.

Got it. And then as we think about the FDA potential cuts and disruptions, have you seen any kind of slowdown in communication patterns, whether it's with existing products or products in front of the FDA, et cetera, where there's a dialogue and/or if you're even seeing inbound resumes that suggest there's a disruption?

Well, I don't want to comment on the resumes. But as far as the interactions with the FDA, we have not seen any impact, not at this point. We have a very active pipeline. We have a number of ongoing positive discussions with the agency, and the FDA is there in full force and been very active and very supportive. So no change so far that we can report.

Okay. Is there any longer -- I assume there's a longer-term impact of NIH cuts, but any other near midterm effects that could trickle through to whether it's clinical trial sites or other things that we're not really thinking about?

Well, Amtagvi is a very unique product. I mean it's for patients who really had no other treatment options. So it positions it in a way that -- for example, we expect approvals in Canada and U.K. and EU this year. And I would say regardless of any macroeconomic trends, we expect Amtagvi to be well received in those markets because these patients have no other option. So again, I don't think we're anticipating a significant impact from geopolitical trends.

Okay. Perfect. And then just as we -- you've mentioned the product and the launch, just how should we think about the factors influencing guidance, what brings you to the top and bottom end of those ranges and what are the moving parts?

Sure. So the factors for the guidance really are our existing ATCs. We have 70 ATCs that are stood up right now. And of those, over 3/4 have done a tumor tissue procurement. Over 2/3 have done an actual infusion to a patient and over half of them have infused multiple patients, 13% are at that expert level of 10 plus. Our guidance really is about maximizing for this year their progress through that spectrum to keep treating more and more patients and to maximize the potential inside of those accounts. We also simultaneously this year with the upper end, we have other initiatives that are getting into the referral patterns with the community and looking at where they're sending patients, sending those to the expert accounts and standing up new ATCs where we know patients are flowing in. So that's the perspective on the guidance with it. We can do it with our existing ATCs, but we're also being opportunistic to see if we can get more volume of patients by increasing the referral patterns into them.

Got it. How should we think about -- what's the right number of ATCs? Where does it kind of tap out? When do you get kind of diminishing returns?

It's a great question. If you look at the cell therapy launches, mainly the CAR-Ts, about 75 centers make up the majority of the volume for them patient-wise. There are roughly 175 to 200 centers inside of the U.S. that could treat, but the tail is very long. So as you look at it, we have a core 70, which are the bigger cell therapy centers that are already ATCs authorized to give Amtagvi. And so maximizing those give us our best chance. As we look at adding additional ATCs, as I mentioned before, it's quality over quantity, we want to make sure the patient flow is coming into them. So if we were to go and spend effort to put 20, 30 more ATCs on, if they're not the right ATCs, that's a lot of focus for our field and resources that may not yield the return that we want. So we believe we have the core right now, and we'll add strategically.

Got you. What's the overlap we should think around ATCs for TIL versus CAR-T cell?

I think in the initial phase of launch, it's quite strong because those are the centers that have almost like an IQ for treating cell therapies. And that's not only the cell therapy lab and the cell therapy physicians that are advanced, but they're the infrastructure with the finance and the POs, they're used to working with that. So in the initial phase of launch, what we saw was that those were the centers that were easily accessible for launch. As we branch out the differences between liquid tumor and solid tumor, we feel are going to meet difference in some of the centers, and that's just based on geography referral patterns, et cetera. But I think we'll start to deviate the liquid and solid tumor as we get into future years of launch. But initially, it was very similar.

And so over time, do you think there's going to be areas where they're not doing CAR-T and that's what you're breaking into or...

We'll eventually get into that. And we're starting to see some conversations [indiscernible]. There are some entities that want to stand up in ATC for TIL because they see the fact of the matter that we're in melanoma right now as we get future indications, that's where their patients are, whereas with liquid tumor patients, they have a tendency to send those quicker to the academic institution based on the stem cell transplant experience.

Got it. And then as we think about the number of infusions, I mean, there was kind of -- it seemed to be around 13% incremental number of infusions from 3Q to 4Q. How should we think about that rate of growth changing over time? Is it kind of -- is it plateauing in any way? Is it slowing down in the rate of growth?

What you see with cell therapy launches, it's not linear quarter-to-quarter. So as you look at ATC's coming on board, you'll see ebbs and flows as far as the quarters go. So looking at that, smoothing out a 4-quarter rolling average over time is the better way of looking at it than looking at it from quarter-to-quarter.

Okay. Got you. So the idea of kind of -- I mean are things positioned where 1Q could show an acceleration of growth? Or is it more back-end loaded? How should we be thinking about it?

It's a great question. We don't want to talk about first quarter right now until we have the earnings call. But what I would say is if you look at our initiatives with the accounts that are ramping up, we're having more enter into that expert level of 10-plus infusions. And then the other ones are ramping along and progressing with it. We're expecting significant growth in the second half of this year with it, but we do feel that it will be more of a yearly look than a quarterly look.

Got you. And then, what are the positives and negatives that kind of came out from the launch, what surprised you negatively or positively?

Well, based on the fact I'm newer with the company, I think the most impressive thing watching this being in cell therapy for over 9 years is how many ATCs were stood up at day 1. There were 30 ATCs at the launch of Amtagvi, which was extremely impressive. I don't think any other cell therapy company had that many stood up in the initial phases with it. And then the progression as looking at the launch and where the patients went into, and the fact the company was able to supply where the demand was, was very impressive. With it as far as the challenges, I'll hand over to Peter -- sorry to Brian to talk about that since he was there.

Well, I would like to start first with -- and thank you, Peter, for having us -- with some of the positive surprises, one of the biggest for me personally is someone who just treated patients recently was the fact that we're seeing this refocus of young medical oncologists wanting to become cell therapists in solid tumor. And we're the only company that provides that route for them. I'm hearing about hirings and job postings all over the country right now merely be -- or I shouldn't say merely, but because of what we are accomplishing. So that to me is not only a big surprise, but it's wonderful to watch us be part of shaping the medical field. In terms of some of the challenges, I think some of it is just getting -- and I'm guilty of it too as a physician, getting physicians to listen. And sometimes it takes another physician to explain to the physician what we're seeing. Once it resonates, we see incredible positive changes. I mean, some of the trends we saw from -- that were challenges are now successes, and I think that gives me a lot of enthusiasm because that represents our future. And if what we're -- if those positive changes persist and continue as we're seeing right now, I mean, we should be able to hit all the marks that you and your -- and the people listening to you would be -- would want to see from us.

Got it. What percentage of the ATCs are driving like 80% of the volume, is it kind of -- is it like 10 major centers or 20 major centers we should be thinking about?

Really, as we look at it, the centers that hit that 10% plus, as we've talked about, are the expert level for us. So we had 13% at the end of last year with it. We've added to that in Q1. We have separate others that are ramping to that. So when you think about where the volume is, as you get to that expert level, you figured out tumor tissue procurement, you figured out the POs and the financial aspect of it. And then you have a comfort level on the patients with Amtagvi. So as we look at it, those centers are leading the way, but other ones are catching up to them very quickly.

Got it. The short period of time that's been launched, are you seeing sites getting better at delivering the product or delivering tissue to you and getting better response rates?

The short answer is yes. Brian works with the surgery side, but I think that's one of the keys. So I'll hand it over to him.

Yes. So we actually track ATC by ATC performance. We actually -- we now have on-site business reviews where a cross-functional team meets with their cross-functional team and gives them sort of a scorecard, so they can understand where they're at and where we think they could be. But there are centers that have, I would call it, knocking out of the park already. We're very excited. And a lot of those are some of our best volume centers as well. And I think ultimately when you start hearing from them about the response they're seeing and how that's driving their enthusiasm, that tells me there's been a big impact. But there were some infrastructure things. For example, one hospital, they wanted only pathology to do the pro section after the tumor resection. And once they realized the surgeon was the best person to do it, that was an automatic change, for example. And there's been another just sort of coordination things that once we got the surgeon to talk to the cell therapy coordinator, we fixed internal issues within those centers, they didn't even know they had. But because they're engaging and having bilateral communication and what I would call true partnership with Iovance, we were able to make distinct changes and I think they've, I think, ubiquitously have appreciated that.

Got you. So you kind of use those higher volume centers to kind of essentially teach the lower volume centers. So over time, their experience gets -- day 1 experience is better and better?

Yes. And then one of the things to think about when you look at the other cell therapy launches, they're relying on apheresis to get the raw material. So our process is different because we're doing tumor tissue procurement. So that was an educational curve that as they get better, and Brian's team has done a great job, they teach each other where the experts start bringing the other ones along. And of course, we have staff there with them on the medical affairs side helping them do that.

Okay. So it's like the quality of the tumor sample improves over time from sites?

Well, it's the -- choosing the tumor, it's being willing to go after tumors that weren't necessarily the lowest tree -- lowest fruit on the tree, it's the preparation because the better they prepare it for our technicians, the better we can do for them. And I think that -- and what we actually do is bring back pictures of the tumors they send to us. And that bilateral exchange, you can see that in their eyes, like, wow, I really realized I could have done a little differently there. And it really tightens things up, and we've seen a great improvement. And just to add one more thing, in our new centers, not just our existing centers that make the lower volume centers better, but the new ones before they even get started, we're applying those year-long knowledge that we have. Remember, we've done way more probably than our clinical trials in just a short period of time, we'd be able to get centers at a much higher level on day 1 than we ever have before, and that continues to get better and better.

Do you think the real-world response rates are going to be higher than the clinical trial or lower? Or how do you think that shakes out with that experience curve?

Well, you and I have discussed this before. If you look at data, we presented our IA data, which is the naive population with nearly 67% response rate, 30% patients had complete responses. And in the adjacent similar trial, if you got a CR, you have 10-year survivability of almost 100%. You go in the second line, again, it's a similar, not our product, but very similar. It was a 50% response rate. And our 3 up to 10 lines of therapy, we had 31%. So I really think it depends on where they choose the patients along that spectrum. But I think the physicians are starting to get it. And as we get these patients the same exact patients just earlier in their journey and not only it's easier to give the drug but also they're going to see those kind of increased responses. And that's the exciting part because a lot of patients come in having the terrific Amtagvi patients [indiscernible] just waited too long post progression and once they get it and they see what we can bring to those patients, you're going to see that shift to the left, so to speak. And that's where you're going to see those response rates go up and up. And that's why I do believe in the real world as time goes on, we should outpace what we saw in our trials.

And then how should we think about -- in 4Q, you had this manufacturing maintenance work that was conducted that kind of slowed you down somewhat, at least that was our impression. Did it slow you down and is that [indiscernible] something going to happen regularly on every Q4, you go through maintenance?

So yes, our Iovance Cell Therapy Center or iCTC completed its annual scheduled maintenance in Q4. It went well, no surprises. We restarted production promptly at full volume and it was well managed from the standpoint of ATC. I mean all the slots are in the system, and they just saw that there were fewer slots for a period of time. So it will have some limited impact on Q1. But again, this is something that you see cell therapy companies do routinely, and we've managed it well from the standpoint of the ATCs to make sure they're prepared and patients still get care because, as you know, we have a contract manufacturing side as well. And so some of the volume was shifted to the CMO during that time.

Okay. And sorry, on your comment, it won't have an impact in Q1?

It didn't have much of an impact in Q4. We expect it to have some limited impact in Q1. Yes.

And that's because you shift over to the...

Because the total capacity of our internal manufacturing site, iCTC is higher than the contract manufacturer. So when we have maintenance on the internal site, it will have some impact on the total network capacity.

Is there any way of quantifying how much of an impact...

We don't want to go there quite yet. So we'll report that with the Q1 earnings.

Okay. And I mean do you make up that delta with running longer shifts? How are you kind of thinking about managing that kind of dip, especially if it's maybe on an annual basis?

So in the future, as you know, we're expanding the iCTC. We're building out the shelf space in the existing buildings that will take our internal site capacity to over 5,000 patients per year. The design, when that's completed, we can operate half of the facility and do maintenance in the other half. So that's the design. As soon as that capacity is up in operation for commercial production, we should not have this maintenance issue anymore that impacts scheduling.

Got it. I wonder if you could remind us the current capacity and where you think that can go over the next couple of years?

So the -- with the total network capacity today, staff capacity that actually we operate at is more than 1,200 patients per year, more than 100 per month across commercial and clinical, that's the staff capacity. The build capacity is more than 2,000 patients per year at the iCTC today, and we're expanding building that out to more than 5,000 patients and most of the construction will be completed actually this year, and that's included -- all of that's included in our cash burn guidance for the year on the $300 million total for 2025.

Got it. And then Proleukin, kind of, how should we read the revenue number coming from Proleukin as kind of a forward projector? And I know there was an additional distributor that came online in 4Q and would we see -- are there additional distributors we should think about? And how should we think about the flow?

So if you look at Proleukin, it was a great acquisition from the company with it and really was to augment and to not only control but grow Proleukin regarding the Amtagvi utilization with it. With the 3 wholesalers that we have, if you look in the U.S., really, it's Cencora, which was AmerisourceBergen for a long time with the name changed to Cencora, Cardinal and McKesson, all 3 of those were not holding Proleukin in the past with it. So in Q4, we fixed that, and we had them all 3 stock. And there are some advantages at the center level that they can pick because, again, it's a biologic, not a cell therapy. So we were easier to work with by going through all 3 of the distributors. I don't see us really adding on in the U.S. more distributors as we come on because those are the 3 that deal with all the centers and their preference is 1 of the 3 usually.

Got it. And what's the revenue number you're kind of thinking or percentage of revenues do you think will come for Proleukin over the long run? And how quickly does it kind of get to that...

I think we've stated 10% to 15% on the long run with it. So looking at that, that is the consistent contribution from Proleukin. There are 3 channels that we sell Proleukin. One is the channel that goes -- and that's the commercial channel that goes along with Amtagvi. So as Amtagvi grows, Proleukin grows, we also have it in clinical trials, and we also have it in manufacturing of cell therapies with it. All 3 have revenue changes for us, but it usually has been 15% is what we project Proleukin's contribution.

Got it. And then price increases for the TIL and IL-2 products?

We've announced previously that we have a 9% price increase both for Amtagvi and Proleukin effective April 1.

Okay. Does anything -- do the distributors kind of preorder ahead of those increases, typically?

I think they have their own algorithms when they order with it. A lot of it has to do with existing stock on hand, how they forecast demand. And then if there is an opportunity for them to make a buy-in before price increase, they have done that with other products. I can't comment on anything that they would do with Proleukin. But it all depends on the other 2 factors. They don't just buy to buy. So they want to make sure that they have the stock on hand that they need, if they have an order that they're going to place in the near future and they see a price for any product that's a biologic that they stock, they will factor that into their buying decisions.

And then how should we think about the expansion internationally, the time course around when we get the approvals and when you actually get to market?

Well, we're right now pending in the U.K., Canada and EU as Igor mentioned, and we have not baked that into our forecast. So we do see from the history and looking at the Yescarta launch, for instance, where they started early but didn't really generate revenue for the first few quarters and then it ramped up. They've been the most successful outside of the U.S. So we want to follow that pattern. So we went for earlier approvals in those regions. After you receive approval, then you have to negotiate price. So health technology assessments that you submit to government and then you have your price negotiations with single-payer countries or single-payer entities with it. Those -- that process has already started in those regions. So we will see patients coming online, you'll have main patient programs, some private pay while we're getting those decisions outside of the U.S. with it, but we did not put that in our forecast for this year, anything that we would see for that would be upside.

Got you. And then just quickly moving on to the lung data in the second half of this year, kind of what we should expect to see?

Yes. So we expect to complete enrollment by the end of the year. As you know, one of our strengths is duration of response. So we won't be able to report on all aspects of the trial by the end of the year. But we do intend to have enough data to have it large enough to be stable that it should persist to the end of the actual registrational package that we submit to the FDA. We fully intend that this will be a positive package that we can apply for full -- excuse me, accelerated approval similar as an SBLA that we did for LN-144 and ultimately Amtagvi.

Got you. What's the bar for success in lung?

Well, actually, it's quite low, to be frank. But if you look at the comparator that usually people use like docetaxel has a very short durability. And the response rates that we need to be are somewhere in the 20s. The early data that we presented over a year ago to the Street was already there. And there are median duration of response, although it was early, had not been reached, which is similar to what we saw in melanoma. More than 70% of patients already had a duration of response over 6 months. And some weren't in that category because they were so early on the trial. So again, we know this is a living therapy, and we are very enthusiastic because we also know these responses tend to deepen. And one other comment I should make based on what we heard before is some centers are so enthusiastic about it in their minds, it is actually used as a therapy because that trial is not just a research tool, but they believe in it enough already to have it as an option because there's really no options for these second line patients.

Perfect. With that, we've got like 20 seconds on the clock. So thank you so much. Always a pleasure speaking to you.

Thank you for having us.

Thank you for having us. Thank you.