As the rising star of cell therapy biotechs, Iovance Biotherapeutics (IOVA 3.76%) is a hot stock that’s capturing a lot of attention, and for good reason. Iovance’s one-of-a-kind medicine is already selling like hotcakes, and there’s reason to believe that plenty more growth is on the way.
Let’s take a look at why this stock is worth purchasing today and never looking back.
Today, Iovance has a trio of bullish drivers are the legs of the stock’s investment thesis.
A rapidly growing market
First, Iovance’s first cell therapy to be approved for sale, Amtagvi, is quickly finding its home in the market. This year, management estimates that sales of the therapy will bring in at least $160 million in revenue, with 2025’s sum totaling at least $450 million. So investors who buy the stock soon will be, in theory, exposed to a tripling of the top line in the near term, which is bullish.
In practice, the biotech is taking the actions needed to deliver on that ambitious goal for next year. Amtagvi is intended to treat patients who have advanced melanoma and who have already been treated with a common immunotherapy drug called pembrolizumab.
Per management, its total addressable market is thus roughly between 20,000 and 30,000 patients annually. Serving those patients will require expanding the company’s network of authorized treatment centers (ATCs). It’s targeting a total of 70 ATCs in the U.S. before the end of the year, and progress is on track.
Expanding manufacturing capability
Another major initiative is expanding the company’s manufacturing capacity for Amtagvi. Its current plans call for the expansion of one of its current facilities so it can generate doses for around 5,000 patients annually within the next few years, but it’s also building up a network of contract manufacturers such that it can eventually treat an additional 15,000 patients per year.
If those efforts are successful, it’ll support Iovance’s margins by controlling its cost of goods sold (COGS). It might also be feasible for it to license out its facilities to produce cell therapies for other biopharma businesses, if it demonstrates exceptional competency in cell manufacturing.
So the odds that Iovance will make good on its revenue estimates are decidedly favorable, and there’s a clear runway for organic growth to continue after meeting them.
A possible expansion of indications
Finally, with a bit more research and development (R&D) work in the form of clinical trials testing Amtagvi in different oncology contexts, and in combination with pembrolizumab instead of only after a course of treatment, management thinks that it could one day treat as many as 70,000 patients with advanced melanoma globally. That’d expand its total addressable market by more than double, and likely require more manufacturing investments. Still, this is another bullish catalyst that is hard to ignore.
The most important clinical trial is a study that’s in phase 3 right now, investigating whether Amtagvi can be administered alongside pembrolizumab as a first line treatment. Being a first line treatment would lead to faster adoption of the therapy, rewarding shareholders in the process.
The long haul could be even better
Next year, Iovance will sync with regulators in Australia and Switzerland to see if they’re willing to approve Amtagvi. It should also hear back from regulators in Canada, the U.K., and the E.U. in the same period, making for three potential catalysts and more revenue down the line.
While it’s true that there will be some lingering long-term execution risks relating to its cell manufacturing platform, the unique nature of its therapy means that it will likely retain the ability to draw on additional capital by taking out loans or issuing more shares of its stock. It’ll probably need to do that before it becomes profitable at some point in the next few years.
Nonetheless, as more and more patients globally gain access to Amtagvi, this company will have a lot of room to continue growing. Given Iovance’s strong start to the therapy’s commercialization, it’s worth buying this stock.
Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics. The Motley Fool has a disclosure policy.
