Iovance Biotherapeutics, Inc. ($IOVA)

Hello, everyone. My name is Etzer Darout, the senior biotech analyst at Barclays. It's my pleasure to have Iovance Therapeutics for our next fireside chat. With me today, I have Brian Gastman, Executive Vice President of Translational Medicine and Research; and Sara Pellegrino, Head of IR. Thank you so much for joining us this morning. Maybe just Brian -- just Sara, just maybe give us an overview of Iovance for those less familiar with the story.

Great. So that's a great place to start. At Iovance, we have 3 key pillars of strength that we are focusing on in 2026 and into the future. Our first pillar of strength is our U.S. commercial business, driven by our commercial product, Amtagvi, which is approved in previously treated advanced melanoma in the United States and has at least a $1 billion U.S. peak sales potential. The next pillar of strength is our pipeline, which we are building as the backbone of immuno-oncology in solid tumors. And our lead program there is a registrational program in advanced non-small cell lung cancer, where we have potential best-in-class profile that Brian can talk more about today. And third, we are honing our operational excellence as we grow revenue, reduce expenses and realize efficiencies on our path to profitability. So we'll talk in more detail about these pillars of strength today. But on the heels of a strong 2025, we are confident in remarkable revenue growth, financial discipline and important pipeline catalysts in 2026.

So I guess, maybe take a step back just in terms of what Iovance was able to accomplish in 2025, around sort of commercial traction for Amtagvi and improving margins. Maybe you can just start with what gives you confidence in the business and your ability to execute on that in 2026?

Well, for me personally, I can just say that we're seeing growth. I think the second half of 2025 is quite strong. The fact that we're penetrating into the community, which we really didn't do prior to that, I give our new CCO, he's not so new anymore, a lot of credit for those initiatives, a number of ATCs have stepped up that were slow to start and now have really not only showing good volume, but also good quality in that volume and the strong commitment to getting these patients early. I think that's the main thing we're seeing across the board. It helps with our manufacturing. It helps with us getting the drug manufactured to the patients. And then ultimately, we'll talk about this for real-world evidence, the results have been dramatically better when we do so. So I think all those give us a lot of confidence. And I think -- and finally, I would just say just the sentiment enthusiasm in the community. I came 18 years in practice with those same people. You can feel probably the change.

Yes. When a new ATC in the community setting comes online, what tends to be the hardest part of the learning curve for that facility?

Yes. So each one has its own challenges potentially depending on their strengths, depending on whether or not they participate in clinical trials. But ultimately, what ends up happening is a trifecta of the medical oncologists who are identifying and referring these patients, the cell therapists who control the floor that the patients can be treated on and the -- all the reimbursement specialists and case management and the surgeons. And when we see them come together and work as a team, not as just technicians as part of something needs to get done, that's when we see the excellence from the centers. Some centers, of course, are built in with gigantic volumes the usual players, so to speak. And when we do so, these really drive our business. And I think each center has its own version of that. So I can't say specifically. I don't want to call it specific means. But you can imagine you can -- we know how to tailor those issues to the center.

Great. And with the real world data that you recently disclosed, obviously, higher responses with earlier use and that was interesting to us. How are you seeing that data sort of update influencing, again, uptake of Amtagvi or just any conversations that you're having based on that data set?

Sure. So let me just remind the audience. What we're talking about here is that our pivotal trial showed a 31% response rate with really -- and I think we may talk about this also incredible durability not seen prior and not seen since. But the question has always been what will happen in the real world. We've seen in immune check inhibitors is actually worse real-world evidence than actually we saw on some of those top line trials that was even Nobel Prizes, for example. So we were pleasantly surprised that, first of all, we saw at least as good, if not better, in all lines of therapy. And ultimately, what we found was a 44% response rate, which was definitely higher than 31%. However, when we broke it down by lines of therapy, the early patients actually drove that to be higher. It was over 50% response rates. And you can see our responses tend to be so durable, sometimes immeasurably durable. So we're very excited that if we can get every patient and almost every melanoma patient in this class is a TIL-worthy patient, if we can get them at the right time, everybody should be able to achieve those kind of responses. And so I think your question then is, what has that data done? Well, first of all, for some centers, it's validated what they already knew, but they didn't have it objectify. Two, it allows centers to question why are they doing so much better than we are to now understand what the gap was. And three, they now can communicate to the non-authorized treatment centers why they need to and should absolutely ethically refer these patients as early as possible because ultimately, we want the best for our patients. And then quite frankly with you, a lot of referring physicians, they may not be giving you the therapy, but they actually get the benefit both the personal satisfaction, but also even the business satisfaction of being able to treat these patients and follow them for many years to come. So there's a lot of win-win for everybody, but ultimately for the patients.

Right. And the deepening of response dynamic, I think you presented some data at ASCO, I think, is another sort of access this. Are you hearing anything around sort of adoption or anything around sort of driving more adoption based on that deepening of responses? Are physicians aware of the data in your conversations with different communities?

Well, for those who are absolutely aware, it is very impactful. First of all, to have a onetime therapy that can work even years later is incredible. And I think that not only goes to the living therapy side of it, but also it's polyclonality. So for example, if the tumor immuno edits one of the targets that our therapy goes after, we have other targets that all of a sudden as that tumor changes, our therapy actually can actually go after. We saw patients go from a partial response to complete response almost 3 years later, but no therapy. They're just sitting at home and the therapy is just working, which is incredible. What it does though, it goes back to my point earlier, many -- especially in the oncology world, a lot of their business -- I mean, sadly, there's palliative care, there's current treatment, but a lot of it's follow-up on these patients. That's what they do. They order scans, they get blood work. Well, when they see that if I can send someone to a center and my patient can come back to me for years on end, always with smiles on each other's faces, and I get to actually run my business by just following them for years, it's very impactful. I think the challenges on our centers and us to get down to the people who need to know this information, ASCO is great, but people go to ASCO for many things, not just the melanoma sessions. But for those who've heard it, it's been very impactful.

Right. For U.K. and Australia, given potential approvals in the first half of '26, do you expect to start generating initial revenues in '26 in those regions?

Great topic. So we're really excited about the opportunity to expand -- to expand Amtagvi beyond the U.S. And there's approximately 30,000 patients globally that could potentially benefit from Amtagvi around the world. We really think that the ex U.S. markets are upside beyond 2026. We're approved in Canada. We're pending in the U.K. and Australia this year, and the reimbursement and pricing discussions are happening in parallel, but they also do continue after the approvals. So the process is a little bit longer than outside of the U.S., and that would be -- something that would be factored in more after 2026.

Great. Maybe we can switch over to lung cancer for cell. So lung cancer, different market than melanoma, it's larger, more heterogeneous, also more competitive. I guess when physicians look at this data later this year, what do you think will matter most for them when they take a look at that data set?

Sure. So let me remind the audience that if you look at the best-in-class frontline therapy for non-small cell lung cancer, essentially the 5-year data shows that everybody is basically progressing. Less than 20% of those patients are alive, let alone not progressing in 5 years. So I think to many in the field, there's really not a cure out there, whereas in melanoma, if you do well in front line, you could do well. So there's less of this. Let's just keep trying these therapies in more what else is next. To have a drug with this potential durability and as you've seen some of the data that we've put out there where in swimmers plots, these patients are swimming for years on and it's reminiscent of melanoma, and there's a deep need for this type of therapy. There's just nothing else out there. It's competitive but most of the competition is just get responses, not for durability. And again, I think that's our strength. And I think that's what's really going to be energizing the community moving forward. So ultimately, bigger unmet need, a lot more patients and then the fact that we hit the unmet need with an incredible amount of durability. I think that's what I would be looking for when we show this data.

Right. And maybe just remind audience around sort of the second-line nonsmall cell lung cancer setting in terms of responses, the duration of responses we've seen historically? And what you sort of view as sort of a benchmark that you would view as a positive update when we get that lung cancer data?

Generally speaking, docetaxel or docetaxel plus something else, which causes lots of toxicity are the benchmarks. But you'll see docetaxel used mostly as your standard. And I think the main thing is whether you see a 10% or more response rate, the median progression-free survival, somewhere between 4 and 6 months. It's very -- it really is a palliative drug. So where we went out on this is less on the responses and more of the fact that if you get a response, it could be immeasurable. And so I think the bar is extremely low. And ultimately, you see that because as I told you in the frontline patients, most of them don't -- aren't really surviving, A lot of them actually got that docetaxel. And then they got some clinical trial and a fourth line. And now they're in that 5-year status where most of them are not live. So whatever it is out there, benchmarked or not, there's a major dissatisfaction in the current options.

Right. And when you think about the ATC network currently in place for melanoma lung cancer significantly bigger opportunity. Is there going to be teaching involved? How are you thinking about expanding sort of the ATC network to be able to meet the demand of a much larger population in lung versus melanoma?

Well, first of all, there's a huge overlap here. I mean, basically, it's the exact same centers. It's the exact same cell therapists, same case management, reimbursement team, cell therapy force, all that's the same. Even surgery, I know centers -- personally, I'm a surgeon, so I could talk to a lot of surgeons who they love if they're going to go for a visceral starting material for Amtagvi to go to the lung. So they're using already the same surgeons. And then finally, there's a growing number of medical oncologists who are like basically saying, yes, I started out melanoma doing TIL, but I really wanted to do TIL and cell therapy in general in solid tumors. And so I'm starting with melanoma, Oh, I can't wait to start with 1, 2. So there's -- I don't want to call it just derisking, but just lack of -- there's a higher floor. So -- and then finally, the manufacturing is literally the same place. In fact, where we do our manufacturing for clinical trials literally will then simply flip a switch and it's the same place and you're doing it commercially. We don't have to now go somewhere else to show it works commercially. It's literally the same place. So there's so much. It's so ready to go, unlike what we had done before. And I don't think there is a single other company that has such a ready-to-go model as we do in solid tumor cell therapy.

Maybe we can just switch to lifileucel and cell tissue on sarcoma. You obviously presented some pretty encouraging data during your last call, particularly given how refractory those patients were. When you think about a registrational study for sarcomas, which I think starts in the second quarter. What does success look like? And what type of population can we expect you to explore in a pivotal study?

Sure. So let me just tell the audience a little background on that. One of the things I get to do is run these ISTs. And in fact, this was not meant to be as fast as it was, and it was a relationship I had with my own CEO, and we did it, and it's been a special relationship with MSK. And we have looked at other soft tissue sarcoma. Sarcoma in general is sort of like this grab bag of all kinds of tumors, they don't want us to call them, right? So although they're called sarcomas, they're not -- they can be very disparate diseases. And there were some reasons why these 2 in particular, which we had not really studied before, despite studying others, look interesting. So we decided to do it. And first thing we know is right away we're able to manufacture, which is terrific. Second thing was our first patient, which was almost a response, patients start telling the doctors, I feel really well. I mean, I'm like really, this is crazy. These patients I've treated them before, they are really sick. And they have very little to treat them with other than things that don't work and make them sick, and they're getting it constantly. Second patient response. And then before you know it, 6 patients -- 3 out of 6 responded. Now let me explain to you, even if one of those was by fluke, that will be 2/6, 1/3. The benchmark in the second line is less than 5% responses. And talk about progression-free survival, it's even worse than long. It's 2 to 3 months. It's basically -- it's -- I'm not sure it's much better than placebo. That's how bad it is. In fact, I would argue that there -- because there are 8,000 frontline patients like this in Europe and the United States, there's about 3,500 of which get second-line therapy. Many of the reasons why it's not 8,000 is because doctors like, look, there's -- you fail your front line, which almost all of them do, you can take the second line or you could just go to hospice. I -- in my mind, that means likely the real number is 8,000 and by the way, it's growing. And these patients are desperate. I mean they wait they succumb to this disease, it should not happen to anybody. So my point is it was exciting to see this level of response. Those are patients that are continuing to respond. Ultimately, patients' quality of life is improving. And remember, it's a onetime therapy. They are just at home with nothing else being treated to them. They're not coming back to infusion chairs every 3 weeks. They're living their lives. And we know patients have gone back to work. I mean it's an early trial, but the benchmarks are exceedingly low. And what we do with our ISTs, I think to answer your other question, is we design them is if they -- because if they're successful, we want them to be used to derisk the experimental arm of a clinical trial. We know that about 40-plus patients is all we need per indication in sarcoma as has been previously approved. Single arm trial is a style that we would do. And that's what we're going to plan on doing in a registrational trial. And it's going to be reminiscent already of what we've done, our IST with some tightening of the restrictions that make it a more homogeneous population to make it easier for an approval pathway. But we're extremely excited because these responses are unprecedented, and it's a huge opportunity for patient, doctors and trial events.

And I would also point out that our current registrational program in non-small cell lung cancer we decided to move that forward because of some early data that we had seen out of the academic setting, and it's now a registrational program. So it's a good model for us.

Yes. In fact, I didn't know when it was going to come up. But we know that our current trial for lung, which is designed to be about 70 or 80 patients, matches very well with 5 recent FDA approvals in lung cancer. So we've really -- we get these questions asked a lot, as I say, why people sweeten up their models, they are -- this is what is getting approved and how it's being approved. And so we're following a similar model here, too. And ultimately, Amtagvi got approved through a 73-patient single-arm trial.

Right. And as far as where sort of TIL can go next, obviously, right now, you can show activity now across 3 tumor types. And there's more to come. And when you think about sort of how you sort of triage the opportunities for TIL, maybe you can talk about sort of what you view as potentially the next opportunities for lifileucel in various solid tumors.

So there's 2 ways of looking at it. The first is our current manufacturing style of making lifileucel. There, we're using certain aspects of tumor such as they get immune checkpoint inhibitors in the front line. There's really no good second-line therapy. And of course, the solid tumors. That's where we tend to focus. And for those kind of metrics, with those kind of qualities, we are using ISTs to help like we did with sarcoma and I can tell you, we have another one that's opened now. You can look at clinicaltrials.gov looking at continuos squamous cell and Merkel cell, as an example. So these are -- that's how we do it. These are sort of like feelers. And if we get responses, you see how fast we turn those responses into an investment. And also, we realize when it doesn't work. We have a large amount of data on where that TIL does not work in. That leads me to the other side of what we're doing, and that is our genetically modified next-generation cell. There is no company that is as advanced in that as we are. We have the first genetically modified 4001 program, which I could say -- I can't give you public data now, but we're very excited about the responses that we're seeing and we're trying to figure out where to apply that to. We want to make sure it's the right setting for the right indication. I think what makes me even more excited is our 5001 program, running research and knowing this came from the research area in Iovance is really exciting. And basically, this is a TIL that is tissue sensing. It actually notices where it is and it only then armors itself with a tethered IL-12. One of the advantage of Iovance over almost anybody else, including [ anemia ] is that we get to work in something that has already worked in humans and then work backwards. So this is based on a trial that was published that had over 60% response rate, very few cells, even as much as 1,000 full cells can give complete responses than our current TIL. The problem was toxicity. And the issue was the TIL that was used secreted IL-12. So we're trying to capture lightning in the bottle by -- instead of secreting it, tethering it. So it only travels with that cell to the tumor. And what's exciting about that is that if we can not only have low safety signal, have incredible efficacy, we can start then going into tumors that don't have a lot of T cells to begin with because we don't need a lot of T cells to end with. And that allows us to go into all kinds of indications that we've tested and not done well with or you haven't even tested, and you will see that happening this year.

And can you remind folks for 4001, 5001 programs, what you're communicating about sort of data disclosures?

Yes. So for 4001, we haven't announced when we're going to present it. I know there's a commitment to do that, but we have to go through phases with the FDA. There's a Phase I., there's a safety run in, there's analyses, and there are reasons to or not to present that data. So I can't give you public timing of that right now. For 5001, I can tell you, I'm presenting it at -- this is SITC spring in a couple of weeks in Tucson, we'll be discussing again the preclinical background of this, including showing that the tumor doesn't -- excuse me, the T cells don't shed the IL-12 and what kind of effects it can do, and they actually head to head against our Gen 2 product. So if anybody is interested, please look out for that presentation. And that's the kind of data we'll have until we'll actually get into patients.

Great. Maybe a last question around margins and the margins improvements that we've seen with Amtagvi, maybe can you speak to sort of maybe where you see sort of further operating leverage coming from? Is it just really is volume increases, other dynamics that we should be thinking about for margins?

Sure. So margin expansion is a top priority at Iovance and there are a lot of key positive drivers. In the fourth quarter, we reported our best ever margin from cost of sales at 50%. That was driven primarily by optimization, disciplined use of capital and high manufacturing volume as well as high manufacturing success, the highest that we have had to date. Now more recently, in the first quarter, we transitioned all Amtagvi into our internal facility. So the in-house manufacturing is going to drive even more improvements on an ongoing basis and over time. And the ongoing execution and more discipline and focus on excellence will also be impacting gross margin on top of that. So stay tuned.

Great. Thank you. Brian, Sara, thank you for your participation. Thank you for our listeners for listening in, and we'll be back soon with our next session. Thank you.

Thank you.