Iovance Biotherapeutics Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2024

There are 13 speakers on the call.

Operator

Thank you for standing by. My name is Mandeep, and I'll be your operator today. I'd like to welcome everyone to the Iovant's 3rd quarter 2024 financial results

Speaker 1

call.

Operator

I would now like to turn the call over to Sarah.

Speaker 2

Thank you, operator. Good afternoon, and thank you for joining this conference call and webcast to discuss our Q3 and year to date 2024 financial results as well as recent corporate and development program updates. Doctor. Fred Voth, our Interim Chief Executive Officer and President, will provide an introduction and summarize the latest progress with our U. S.

Speaker 2

Commercial launch of AMTEGVI, including revenue and revenue guidance, patient demand and market access, an update on our global regulatory submission and a high level summary of our key pipeline. Doctor. Brian Gaston, our Executive Vice President, Medical Affairs will highlight adoption and demand at authorized treatment centers or ATCs as well as our community outreach initiatives to drive additional growth for the U. S. Commercial launch of AMTAPI in advanced melanoma.

Speaker 2

Doctor. Igor Belinsky, our Chief Operating Officer will cover our commercial manufacturing experience and the status of our ongoing capacity expansion. Jean Marc Bellamy, our Chief Financial Officer, will review our financial results, including revenue and revenue guidance, gross margin and the strength of our balance sheet. And Doctor. Frederick Grafinkenstein, our Chief Medical Officer, will review key pipeline highlights, including recent updates related to our clinical program in frontline non small cell lung cancer.

Speaker 2

Doctor. Raj Puri, our EVP of Regulatory Affairs and Anne Brooks, Senior Vice President, Commercials are also on the call and available for the Q and A session. Earlier this afternoon, we issued a press release that can be found on our corporate website at iovance.com. 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, revenue and revenue guidance, commercial activities, clinical trials and results, regulatory approvals and interactions, plans and strategies, research and preclinical activities, potential future applications of our technologies, manufacturing capability, regulatory feedback and guidance, payer interactions, licenses and collaboration, 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.

Speaker 2

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 hand the call to Fred.

Speaker 3

Thank you, Sarah. I am pleased to host this afternoon's conference call to discuss our financial results for the Q3 year to date of 2024 as well as our recent corporate highlights. Iovance is nearing the end of successful year following our 1st FDA approval and a strong start to the U. S. Commercial launch of Emtekbee for patients with advanced melanoma.

Speaker 3

We are rapidly advancing our robust pipeline of current future generation Till cell therapies across all stages of development to expand our commercial opportunities. I would like to begin by highlighting the exceptional continued demand for untagbe. Our 3rd quarter total product revenue was $58,600,000 surpassing the top end of our Q3 total product revenue guidance of $53,000,000 to $55,000,000 Total product revenue in the Q3 included $41,000,000 for AMPEGVI and $16,500,000 for Proleukin. As a reminder, AMTAGVI revenue is recognized upon infusion to the patient. Proleukin revenue is recognized upon delivery to distributors or hospitals, typically a few months prior to AMTAGVI infusion.

Speaker 3

Year to date total product revenue was $90,400,000 through September 30, including $54,900,000 for AMTAGBI and $35,500,000 for PROLUCEKIN. 3rd quarter and year to date revenue reflects robust initial uptake and increasing strong demand and adoption of AMTAPI as well as sales of Proleukin use with AMTAPI. Since the first infusion in April through today, 146 patients have been infused with AMTAPI keeping us on track towards our 2024 guidance and representing about $75,000,000 2024 revenue from AMTAPI alone with more to come. Infusions over time also reflect an increasing rate of adoption with 25 in the 2nd quarter, 82 in the 3rd quarter and 39 in the 4th quarter to date. Our team's successful execution as well as the unmet medical need in advanced melanoma, high awareness, broad patient access and a motivated and expanding network of authorized treatment centers or ATCs continue to drive strong adoption and uptake of AMTEGVI and PROLUCEK.

Speaker 3

With 56 current ATCs, we remain focused on our goal of onboarding approximately 70 total ATCs by year end. Our community referral initiatives are also driving additional demand as our ATCs continue to scale up to treat more patients. In addition to robust demand, favorable medical coverage policies and reimbursement are facilitating broad access to AMTEGBI. Approximately 75% of AMTEGBI patients are covered by private payers, More than 250,000,000 lives or more than 95 percent of U. S.

Speaker 3

Covered lives currently have access to reimbursement through positive medical coverage policies or pharmacy benefit plans. And positive payer coverage has been consistent with the label, clinical trials and National Comprehensive Cancer Network or NCCN guidelines. As Igor will further summarize, we are manufacturing and delivering EmtekVI to patients at an increasing pace. We can meet current demand while increasing capacity and headcount each month to match ongoing growth. As the launch continues, the treatment journey is also speeding up for patients.

Speaker 3

Financial clearance currently averages approximately 3 weeks, representing a significant reduction from 4 to 6 weeks at initial launch. ATCs are saving additional time by scheduling in parallel with financial clearance and we're initiating the preconditioning regimen in conjunction with or several days prior to product arrival. Are consistently delivering on our turnaround time of 34 days for manufacturing and release testing and expect this turnaround time to decrease as the launch continues. Looking ahead, we are reaffirming our full year 2024 total product revenue guidance of $160,000,000 to $165,000,000 We also reiterate our full year 2025 guidance of $450,000,000 to $475,000,000 in total product revenue. We expect a significant increase in year over year growth as ATCs broaden utilization and new ATCs as well as community referral networks contribute to additional demands.

Speaker 3

We anticipate significant additional revenue growth in 2026 and beyond. In the currently approved advanced melanoma indication alone AMTAGI and ProLukin represent

Speaker 4

more than

Speaker 3

$1,000,000,000 peak opportunity in the U. S. Market. Globally, AMTAGI represents a multi $1,000,000,000 opportunity to address more than 20,000 previously treated advanced melanoma patients annually in the U. S.

Speaker 3

And in our initial ex U. S. Markets. Gross margin which Jean Marc will highlight in a few minutes is also expected to increase to greater than 70% over the next several years. And our Q3 gross margin is more than halfway towards that target.

Speaker 3

With a fully integrated infrastructure and growing interest in AMPEGGY outside the U. S, iVance is well positioned to continue scaling globally. Our ex U. S. Teams are being built and regulatory dossiers are under review, submitted or planned across multiple international markets with potential for our first ex U.

Speaker 3

S. Approval in the first half of twenty twenty five. The European Medicines Agency validated and accepted our marketing authorization application or MAA for review for all EU member states with potential approval in the second half of twenty twenty five. The Medicines and Healthcare Products Regulatory Agency in the United Kingdom is reviewing a separate MAA submission for potential approval in the first half of twenty twenty five. Our new drug submission is also underway for near term submission in Canada and will include a prioritized review process for potential approval in mid-twenty 25.

Speaker 3

Additional regulatory adopters remain on track for submission in Australia and Switzerland in 2025. We'll target additional markets with highly concentrated populations of advanced melanoma patients in the future. IVANS is poised to remain the global leader in innovating, developing and delivering current and future generations of Till cell therapies for patients with cancer. The first approval launch and large scale manufacturing with Till cell therapy together with our intellectual property position and deep pipeline provide us with distinct competitive advantages. Future growth drivers include global label expansions in the frontline advanced melanoma, other tumor types and next generation programs that we'll discuss in more detail today.

Speaker 3

I'll hand over now to Brian, our Executive Vice President of Medical Affairs, who will summarize our ATC network in U. S. Field activities. Brian?

Speaker 5

Thank you, Fred. We're excited about the potential for EmtekVI to improve the lives of thousands of patients with advanced melanoma. Our ATCs continue to share positive feedback and stories about their patients who have benefited from MTAG V since approval. My objectives today are to highlight, 1, demand and adoption and utilization across our expanding ATC network and 2, our field support for ATCs as well as targeted community oncologists. First, our ATC network is scaling and expanding as planned and we expect robust demand growth to continue.

Speaker 5

And TagV's early inclusion in the NCCN guidelines combined with strong clinical data, has supported broad and successful market access. Today, EMTAGV is available at 56 United States ATCs, and our goal is to reach approximately 70 total ATCs by the end of 2024 with more to come in 2025. Our field medical team is composed of highly experienced medical science liaisons and former health care providers including oncologists and surgeons. They understand the unique needs of each ATC and proactively provide support, training and peer to peer conversations around patient selection and surgical resection to maximize successful outcomes with the IMTAGV treatment regimen. As we expand our ATC network to bring treatment closer to patients, more than 90% of treated patients are located within 200 miles of an ATC today.

Speaker 5

Nearly all melanoma patients will be within a 2 hour drive to the closest center by year end. Community referrals are also driving patient volume and demand growth across our networks of ATCs. Iovance field teams are currently targeting top community practices and large community focused professional organizations. The primary objective is to drive earlier referrals by identifying patients with advanced melanoma who are currently receiving frontline treatment and may be eligible for Emtekbee upon disease progression. In summary, we are extremely pleased with the early launch performance as our ATCs successfully adopt and broaden utilization of Emtekbee.

Speaker 5

I will now pass the call to Igor Balinski, our Chief Operating Officer, to highlight our manufacturing progress.

Speaker 6

Thank you, Brian. Today, I'd like to highlight our commercial and clinical manufacturing capabilities, the progress of our commercial launch and the status of our ongoing capacity and facility expansion. Our manufacturing capacity continues its steady ramp up month over month to support the growing MTAG B commercial demand. We continue to actively hire manufacturing and quality control staff as well as supporting functions and have significantly increased our staff capacity at Hyovance Cell Therapy Center or ICTC since launch in February. We have 2 manufacturing facilities approved by the FDA for commercial manufacturing of onctagney.

Speaker 6

1 is our internal manufacturing facility, Hyatt and Cell Therapy Center located in the Navy Yard in Philadelphia. It is one of the largest cell therapy manufacturing facilities in the world. In addition, our contract manufacturer's facility provides us with further capacity and scheduling flexibility to serve untag the patients. We are pleased with our commercial manufacturing experience to date, which remains consistent with prior clinical experience. The medical affairs team is doing a tremendous job, sharing best practices among ATCs such as optimal tumor selection and sample procurement for manufacturing, which contribute to improving manufacturing success rates.

Speaker 6

The turnaround time has been consistent at 34 days from receiving cells at the manufacturing facility to untagbe being ready for return shipment to the ATC. As Fred mentioned, we are working on optimizing our processes to further shorten the turnaround time. As we scale up, we also expect to improve the cost of goods over time through economies of scale and operational efficiencies as well as by leveraging our competitive advantage and unique position as the leader in the Till cell therapy space. Our manufacturing network is currently running at high capacity utilization, while ensuring slot availability for our ATCs. In anticipation of potential regulatory approvals of untagvi outside the U.

Speaker 6

S, we are establishing logistics and distribution to support a successful commercial launch in new markets such as the EU, UK and Canada. The ICDC already serves patients in our clinical trials in Europe, Australia and other geographies, and we intend to manufacture global commercial product from our Philadelphia sites as well. In anticipation of the longer term growth of global commercial demand in melanoma and other indications, we are expanding our manufacturing network. ICDC as built today has the capacity to provide Till products for more than 2,000 patients annually. Building out the existing shelf space at ICDC is expected to bring that capacity to over 5,000 patients annually upon completion, which we expect within a couple of years.

Speaker 6

Further expansion of our manufacturing campus in Philadelphia, along with process optimization and automation is expected to bring the capacity to over 10,000 patients annually. The iVent manufacturing supply chain and quality team is committed to operational excellence in providing IMTAPI to patients in the spirit of doing everything right first time every time. I'd like to thank them for their continued dedication 20 fourseven, three sixty five in serving our patients who need this paradigm changing and potential life saving therapy. Importantly, our expertise in Till cell therapy as well as manufacturing capabilities are protected by a robust intellectual property portfolio. IVent currently owns more than 230 granted or allowed U.

Speaker 6

S. And international patents and patent rights for untagb and other Till related technologies that are expected to provide exclusivity through at least 2,040 2. I'm available to answer additional questions during the Q and A, and I will now hand the call to Jean Marc, our Chief Financial Officer.

Speaker 7

Thank you, Yigal. Today, I will review our current cash position as well as our results for the Q3 9 months ended September 30, 2024. I will also highlight our financial outlook, including revenue and expense guidance as well as our gross margin. As of September 30, 2024, our unaudited cash position was approximately $403,800,000 including approximately $200,000,000 in net proceeds from the Natt the market equity financing facility during the second and early third quarters of 2024. We expect the current cash position and anticipated product revenue to be sufficient to fund current and planned operation into 2026.

Speaker 7

I will now transition to our financial results. Net loss for the Q3 of 2024 was $83,500,000 or $0.28 per share compared to a net loss of $113,800,000 or $0.46 per share for the Q3 ended September 30, 2023. Net loss for the 1st 9 months of 2024 was $293,600,000 or $1.03 per share compared to a net loss of $327,700,000 or $1.44 per share for the 9 months period ended September 30, 2023. Transitioning to revenue, which Fred previously summarized, our total product revenue includes AMTOGV infusion in the U. S.

Speaker 7

And global sales of Proloquine primarily used in the AMTOGV treatment regimen and other commercial and clinical settings. As previously discussed, product revenue is recognized upon delivery to distributors and hospitals and generally purchased several months in advance of anticipated infusions and EmtekV revenue recognition. Total product revenue was $58,600,000 for the Q3 of 2024, including $42,100,000 for EmtekV and $16,500,000 for Proloquine. Total product revenue for the 1st 9 months of 2024 was $90,400,000 and consisted of $54,900,000 for MTAG V and $35,500,000 for Proloquine. Revenue for the 1st 3 9 months of 2023 was $500,000 $700,000 respectively for global sales of Proloquine.

Speaker 7

Revenue increases in both period of 2024 over the prior year periods were primarily attributable to the U. S. Commercial launch of Entagvi and the related strong demand for Proleukin for use with Entagvi beginning in the Q2 of 2024. I will now highlight our cost of sales, which includes cost of inventory, overhead and related cash and non cash expenses that are directly associated with sales of MTAGVI and Polluting as well as manufacturing cost of MTAGVI. Cost of sales for the 3 months ended September 30, 2024 was $39,800,000 primarily attributed to $8,300,000 in period costs associated with patient drop off and manufacturing success rates, dollars 6,900,000 for non cash expenses, including fair market value step up and intangible asset amortization and $3,900,000 in royalties payable on product sales.

Speaker 7

Notably, our 3rd quarter cost associated with patient drop off and manufacturing success rate have decreased over previous quarters report of $8,700,000 even though volume and activity greatly increased. In the prior year 3 months period, cost of sales was $4,300,000 primarily related to non cash amortization for intangible assets. Cost of sales for the 9 months ended September 30, 2024 was $78,500,000 primarily related to $17,200,000 in certain costs associated with patient drop off and manufacturing success rates, dollars 20,300,000 in non cash expenses, including fair market value step up and intangible assets amortization and $8,200,000 in royalty payable on product sales. In the prior year 9 months period, cost of sales was $6,400,000 primarily related to non cash amortization for intangible assets. The increase in cost of sales in the Q3 and year to date 2024 over the prior year periods were primarily attributable to the U.

Speaker 7

S. Commercialization of EmtekVI beginning in the Q1 of 2024 as well as related increase in sales of ProLukin, including the initiation of product sales, commercial manufacturing and related cash and non cash expenses tied to Amtagvi and Proloqui. Since the initial launch of Amtagvi, cost of sales is improving as we increase volume and capacity utilization due to continued strong demand and launch ramp up. In addition, as Brian and Igor mentioned, the ongoing support, education and training with our ATCs as well as our continued focus on operational efficiencies in manufacturing and release testing can further optimize our cost of sales and translate to a higher gross margin over time. I will briefly comment on our Q3 gross margin.

Speaker 7

Our cost of sales in the 3rd quarter includes $6,900,000 of non cash expenses such as fair market value and amortization related to the ProLukin acquisition, resulting in the 3rd quarter gross margin of $25,600,000 against our revenue of $58,600,000 The improvement in gross margin over the 2nd quarter reflects our ongoing focus on profitability and positions us more than halfway towards our target of a gross margin above 70% in the coming years. I will now shift to our operating expenses. Research and development expenses were $68,200,000 for the Q3 of 2024, a decrease of $19,300,000 compared to $87,500,000 for the same period ended September 30, 2023. Research and development expense were $210,100,000 for the 9 months ended September 30, 2024, a decrease of $46,500,000 compared to $256,600,000 for the same period ended September 30, 2023. The decrease in research and development expenses in the Q3 and 1st 9 months of 2024 over the prior year periods were primarily attributable the transition of Emtekrete to commercial manufacturing and lower clinical cost and lower cost resulting from the completion of pre commercial qualification activities in 2023.

Speaker 7

This decrease in research and development were partially offset by increase in headcount and related costs, including stock based compensation. Selling, general and administrative expenses were $39,600,000 for the Q3 of 2024, an increase of $12,600,000 compared to $27,000,000 for the same period ended September 30, 2023. Selling, general and administrative expenses were $110,500,000 for the 1st 9 months of 2024, an increase of $33,500,000 compared to $77,000,000 for the same 9 months period ended September 30, 2023. The increase in selling, general and administrative expenses in the 3rd quarter and 1st 9 months of 2024 compared to the prior year periods was primarily attributable to increase in headcount and related costs, including stock based compensation to support our overall business and related infrastructure growth, as well as legal cost and commercial related cost. Looking ahead, I would like to briefly summarize our financial outlook.

Speaker 7

As Fred mentioned, we reiterate our guidance for total product revenue within the range of $160,000,000 to $165,000,000 for the full year of 2024 and $450,000,000 to $475,000,000 for the full year 2025. Regarding our operating expenses, we reiterate full year 2024 cash burn guidance in the range of $320,000,000 to $340,000,000 excluding one time expense. We will also keep leveraging opportunities to optimize spending in the coming quarters. For additional information, please see the company's selected consolidated balance sheet and statement of operation in this afternoon's press release and our Form 10 Q to be filed later today. I will now hand the call to Frederic, our Chief Medical Officer, to discuss our clinical pipeline.

Speaker 8

Thank you, Jean Marc. As my colleagues have conveyed, emtagli is only the tip of the iceberg for the potential of Till cell therapy in solid tumors, which represent more than 90% of all diagnosed cancers in the U. S. Today, I will focus on our clinical programs in lung, frontline melanoma and endometrial cancers as well as our exciting next generation pipeline. This week, we are attending the Society For Immunotherapy and Cancer Conference or SITC Annual Meeting in Houston.

Speaker 8

Here we have a number of invited presentations focused on Emtekbee and our pipeline. In a late breaking poster, we are presenting updated preliminary results from Cohort 3a in the IOV COM-two zero two trial, including additional patients and longer term follow-up. Cohort 3a is investigating lifileucel plus pembrolizumab in patients with advanced non small cell lung cancer who are naive to checkpoint inhibitor therapy. I'll review an analysis of Cohort 3a patients with EGFR wild type disease regardless of PD L1 status who represent the majority of patients in the frontline non small cell lung cancer setting. The confirmed objective response rate or ORR was 64.3% among these patients, including 54.5 percent ORR in patients who had difficult to treat PD L1 negative disease, which is higher than reported responses in these patients to currently approved therapy.

Speaker 8

Remarkably, 5 of the 6 responses in AGFR wild type tumors were ongoing as of the last follow-up visit with 4 ongoing for more than 20 months until infusion. In addition, median duration of response was not reached at a median study follow-up of 26.5 months. The robust response rates and meaningful durability for Cohort 3a demonstrate the potential for the lifileucel regimen to drive meaningful benefit when added to of care frontline non small cell lung cancer treatment. The results are available in the late breaking poster as well as in our corporate deck at iovance.com. Based on Cohort 3a data, we plan to open a new Cohort 3d in the IOV COM202 clinical trial.

Speaker 8

Cohort 3d will investigate a regimen that adds lifileucel to the frontline standard of care of chemotherapy and pembrolizumab for patients with EGFR wild type non small cell lung cancer. CORE-3d results will inform the design of a planned confirmatory trial in frontline non small cell lung cancer. We expect that the integration of the lifelusa regimen into current frontline standard of care with chemo and pembrolizumab will further augment the strong efficacy seen in CORE-3a and has the potential to establish a new frontline regimen in non small cell lung cancer. To address unmet medical need among patients with advanced non small cell lung cancer in the post anti PD-one setting, we are investigating lifileucel monotherapy in the single arm registrational Phase II IOV LUN-two-two clinical trial. Single agent chemotherapy, the current standard of care in this setting provides limited rate and duration of responses.

Speaker 8

Investigators are excited about the opportunity to advance the first cell therapy for patients with non small cell lung cancer in the IOB LUN22 trial. Site activations and enrollment continue to accelerate. We are also confident in our approval strategy based on the positive preliminary data and prior FDA feedback for IOB LUN-two zero two. We expect to report additional data for the registrational cohorts in 2025 and achieve a potential accelerated U. S.

Speaker 8

Approval for lifileucel in non small cell lung cancer in 2027. Expanding the commercial opportunity for ipagvib into frontline advanced melanoma is also a top priority at Iovance. Our global registrational Phase 3 trial TILVANTS301 remains on track to support accelerated and full approvals of emtagvii in combination with pembrolizumab in frontline advanced melanoma as well as regular approval of Emtaghvian post anti PD-one melanoma. We continue to see strong momentum with enrollment and high enthusiasm among clinical sites. Nearly 50 sites are currently active across 11 countries in North America, Europe and Australia.

Speaker 8

And more than 50 sites across 50 new sites across 15 additional countries are lined up to join Till then 301. As a reminder, TILDANCE-three zero one is supported by results from IOV COM202 Cohort 1a in patients with advanced melanoma naive to immune checkpoint inhibitors. In the most recent cohort 1a data presentation at ASCO, lifileucel plus pembrolizumab demonstrated an unprecedented rate, depth and durability of responses, including a 30% confirmed complete response rate as well as a safety profile that is differentiated from combination checkpoint inhibitor therapies. In addition, we are exploring a potential best in class frontline alternative for physicians in the U. S.

Speaker 8

CORT1D in the IRV COM202 trial will investigate alifilutin in combination with nivolumab and rilazlimab in patients with frontline advanced melanoma. Moving along the pipeline, we are excited about our first clinical trial in advanced endometrial cancer. Recent approvals of immune checkpoint inhibitors in combination with chemotherapy for frontline endometrial cancer have created an unmet need for patients to progress. There are no currently approved therapies after anti PD-one, which represents a significant new opportunity for Till cell therapy. Patient enrollment has commenced in our IOV END-two zero one Phase 2 trial to investigate lifileucel after frontline standard of care of chemotherapy and anti PD-one therapy in patients with both mismatch repair or MMR deficient and proficient tumors.

Speaker 8

This trial is supported by published preclinical and manufacturing success data as well as positive feedback from gynecological oncology experts. As the leader in Till cell therapy, Iovance is also at the forefront of next generation approaches to optimize Till and Till treatment regimen. We are investigating a next generation PD-one inactivated Till cell therapy, IOB-four thousand and one in the IOB GM-twelve zero one clinical trial. Genetic modification using the TALEN technology to inactivate PD-one may enhance the efficacy of IOV-four thousand and one in place of systemic anti PD-one therapy, which is associated with short and long term systemic adverse events for AEs. IOV GM-twelve oh one has cleared the Phase 1 safety lesion and currently enrolling 2 Phase 2 courts of patients with previously treated advanced melanoma or non small cell lung cancer with high interest by investigators to contribute to this trial.

Speaker 8

The pace of enrollment is increasing and this trend is expected to continue through 2025. Building on our successful Proleukin franchise, IOV-three thousand and one is a 2nd generation modified IL-two analog designed to enhance tilt survival and cellular proliferation. IOV-three thousand and one favorable pharmacodynamic and pharmacokinetic characteristics may result in a better safety profile and may support less frequent dosing compared to Perleukin. An investigational new drug or IND application was allowed to proceed for a Phase III clinical trial of IOV-three thousand and one for use in the TILT therapy treatment regimen and clinical enrollment is expected to begin soon. Lastly, IND enabling studies are proceeding for IOV-five thousand and one, the genetically engineered inducible and tethered IL-twelve Till cell therapy.

Speaker 8

The prior generation IL-twelve Till product demonstrated an impressive ORR of 63% in advanced melanoma patients at doses 10 to 100 fold lower than conventional Till products. However, the product secreted IL-twelve, which resulted in adverse events. IOV-five thousand and one's design includes inducible IL-twelve expression restricted to the tumor and tethering of IL-twelve to the cell surface, which prevents IL-twelve secondretion. We expect IOV-five thousand and one to allow higher cell doses over the prior generation product and improve Till efficacy while ensuring safety, potentially allowing for expansion into a wide range of common solid tumor cancers beyond our current pipeline with significant market opportunity. Preclinical results supporting IOV-five thousand and one will be featured in a poster at SITC on Saturday, November 9.

Speaker 8

We plan to submit a pre IND meeting request to FDA this year to support clinical development of IOV-five thousand IOV-five thousand and one in many common solid tumor cancers with large populations and unmet need in 2025. Preclinical results for IOV-five thousand and one will be featured in a poster at SITC on Saturday, November 9. Additional details about our development programs are included in today's press release as well as the corporate slide deck and the data presentations I mentioned are currently available to view on the Scientific Presentations and Publications page on our website. I'm happy to address questions about these programs and additional trials during the Q and A session. I would like to acknowledge the significant progress we have made in advancing our clinical and preclinical pipelines this year and thank our talented multidisciplinary team and research partners.

Speaker 8

I'm excited to see what's next as we continue to develop and deliver Till cell therapy to cancer patients in additional therapeutic settings and with additional tumor types. I'll now turn the call over to the operator to begin the question and answer session.

Operator

Thank you. We will now begin the question and answer session. You. Our first question comes from the line of Taylor Van Buren with TD Cowen. Please go ahead.

Speaker 6

Hey guys, thanks very much. Congratulations on the quarter and all the progress. So the 39 patients treated to date are 30% above the 30 infusions reported at the same time point last quarter. And so if you just simply apply that to Q3 sales to Q4 and ProLukin sales are stable, you should obviously meet your annual guidance. However, there are significant holidays coming up next quarter.

Speaker 6

So can you talk about the potential impact of the holidays? And have you seen any infusion scheduled around those holidays yet?

Speaker 3

Yes, Tyler. We can talk about that a bit. We actually project infusions out over to the entire quarter and we can see them far in advance. And yes, of course, during the holidays there is going to be some patients that either put their try to get their infusion or caregivers to try to get the infusion ahead of the holidays or after the holidays for family reasons as well as the physicians wanting to take time off. So there is a bit of a lull during that period.

Speaker 3

But I think what you've calculated there is a fair estimate regardless of any lull. I think we'll still perform quite well in the quarter. We've accounted for that when we do our projections.

Operator

Our next question comes from the line of Peter Lawson with Barclays. Please go ahead.

Speaker 1

Got you. Thank you so much. I guess just a question around the IL-two stocking level, kind of how does that change over time? I assume there's kind of going to be less stocking each quarter, but just if you kind of walk through the dynamics of what you think the IL-two number would look like for both use and then the stocking level? Thank you.

Speaker 3

Thanks, Peter. The level we're currently stocking up 3 specialty distributors, which represent the 3 large distributors in the United States, the big three. We primarily focused on 1 in Q2, another one in Q3 and there'll be another one we expect in Q4. I think as I said before, the numbers will be steady. They could go down and up 10% or so.

Speaker 3

You see we did more last quarter, we did less this quarter. I would strongly advise against anyone thinking we can't do more. We can do more for ILUVIEN in the Q4 and that may be the case. We'll see. But after that we'll have all the main distributors stock up.

Speaker 3

And as I said on the last earnings call, we expect after that growth to then start in 2025 and go up more traditionally quarter over quarter.

Speaker 1

Great. Thanks so much.

Operator

Our next question comes from Andrea Newarkirk with Goldman Sachs. Please go ahead.

Speaker 9

Thanks so much for taking my question. Fred, I was wondering if you could provide more color on your comment that preconditioning is happening sometimes in parallel or before MTAGV actually arrives at the ATC. Just curious how common this is? And does this suggest that your manufacturing out of spec rates are improving sufficiently such that ATCs are willing to do this at risk? Thanks so much.

Speaker 3

Yes, that's right, Andrea. The ATCs have a lot of experience with both our manufacturing process and are out of specs as well as with their patients are getting more and more comfortable doing this. So yes, I think you're correct. That does reflect that kind of confidence. I can't tell you exactly how common it is, but I can tell you is it's more common the larger ATCs that are more sophisticated that have more experience.

Speaker 3

I think many quarters in the launch we'll probably see that for a good number of patients. I don't know, I can't really guess, but it's either a majority or significant minority as we go out in time because what we know is that everybody is getting the message and the sooner you get this product into the patient the better. So I think it's a lot of them build confidence, they want to do this more generally.

Speaker 9

Great. Thank you.

Operator

Our next question comes from the line of Yanan Zhu with Wells Fargo. Please go ahead.

Speaker 10

Great. Thanks for taking our questions. Congrats on the quarter. I was wondering about the 82 infusions in the last quarter. How are they how were they distributed across the month?

Speaker 10

And is there a clear trajectory of growth? And going into Q4, how do you feel about the month to month prospects? And if I may, also wondering, like the month to month growth, is that mainly from demand growth and ATC center number increase? Or are there any elements of improved manufacturing and logistics that makes you comfortable about forecasting growth? Thank you.

Speaker 3

So yes, Jan, in cross EZ2 infusions in the 3rd quarter there is month over month growth that basically plotted on a chart, you would see it go up month over month and we expect that to continue through Q4 with the 39 that we've already reported. With respect to your question about whether that's true by ATC growth, meaning growth in demand at the ATCs or adding new ATCs. Yes, that's a big factor in driving that. And the availability of slots above all is what drives that. So the fact that we're scaling up manufacturing is really what's driving that growth.

Speaker 3

It links up with the manufacturing capacity. Now I can add since you asked, yes, I think we're getting better and better with our out of spec rate. I can't say it's month over month, but quarter over quarter I think that's what's happening. And I expect that to continue into 2025 and beyond. So yes, month over month you see growth and we expect it to continue.

Speaker 3

It's largely driven by capacity, but I'm sure there's an element of approved out of spec rate and stuff like that also adding some wins to the sales.

Speaker 10

Great. Thanks for the color.

Operator

Our next question comes from the line of Ben Burnett with Stifel. Please go ahead.

Speaker 11

Just a question on just the profitability and kind of the gross margin goals, where you think you mentioned getting to 70%, sounds like you're halfway there. How are you realizing that? And I guess what are the operational levers that will get you to that 70% goal?

Speaker 3

Maybe I can start, Ben and then Mark can jump in and help you a little bit. So as we scale up a launch, especially using our ICTC facility, COGS goes down very quickly just on the capacity utilization. So that's a big factor in improving gross margin at the end of the day because that's a major component of COGS, major component of cost of sales and that will drive margins up from where they are right now, which is in the mid-40s to margins up from where they are right now which is in the mid-40s to somewhere up closer to 70%. We've got all sorts of other initiatives including operational excellence type work that we use to conduct projects to also improve margins. This includes some things that are quite confidential obviously the things that we do to improve our manufacturing process, things that we do to scale things up.

Speaker 3

A lot of those things have to be filed with the FDA and take some time to go through, but they're all in progress right now. And then I think we have pretty good management of our expenses too. We try to bring those down and keep those steady at least as we expand our clinical portfolio. Jean Marc maybe able to add a little bit more on the accounting side of that as well.

Speaker 7

Yes. Thank you, Fred. No, I think you said it all. And then if you think about the margin, we do expect the cost of sales I mean, the cost of goods sold in general to improve over time. We are only in the Q2 of launch.

Speaker 7

So obviously, there is a lot of optimization, which is currently happening. And as you have seen in terms of the significant jump of improved gross margin between Q3 and Q2, we know that in the future by as mentioned by Fred, with automation, optimization also working on some of the cost even related to raw material, the cost of goods sold from particularly from Mt. AGVI will help. That's the beauty of having your own ICTC and being in charge and control of the cost. So we that's why we are confident and expect the gross margin to go to the 70% above 70% in the future years.

Speaker 11

Okay. Thank you very much.

Operator

Our next question comes from the line of David Dye with UBS. Please go ahead.

Speaker 3

Some things you did to improve dropout rate? We got we only caught part of that, David. Could you please repeat that question? My apologies. So just curious about the dropout rate.

Speaker 3

What are some of the activities you did to improve the dropout rate that you saw this quarter compared to last quarter? I don't think we really did anything in particular. We are optimizing the launch as we go. We're teaching ATCs how to get patients through better. We're teaching them how to do better quality surgical resections.

Speaker 3

You heard a lot of that in the script from all of us, including Brian's part of the script. But we are I think just seeing the benefits of the launch, it's ongoing. It's really only 2 quarters in the launch. So I think you can expect to see this improve quarter over quarter and eventually get up to what we think will be the manufacturing success rate that we had or at least manufacturing experience that we had during the clinical studies. So there's nothing I can really point to that we did specifically.

Speaker 3

We're just optimizing across the board. Got it. Thank you very much.

Operator

Our next question comes from the line of Michael Yee with Jefferies. Please go

Speaker 4

ahead. Great. Thanks. Fred, can you remind us about reimbursement? I know that since launch, it's been sort of coverage by patient in single case deals.

Speaker 4

Can you remind how does it work for commercial if you wanted a more broad based contract where you can get approval very quickly days or weeks rather than a month? I was just wondering how that's going and if that's it could be a significant accelerator of the business? The second question relates to the lung cancer. Can you just remind us of your ongoing pivotal study in second line? Is that something that could possibly read out next year?

Speaker 4

Maybe just right size my expectations? Thanks.

Speaker 3

Yes. So on the point of reimbursement, like we did we noted during the prepared remarks there that we have cut the average reimbursement time from 4 to 6 weeks down to 3 weeks. That's the financial clearance time that includes prior authorization as well as the single case agreements. That's probably we think the sweet spot going forward. That's really realistically what the ATCs can do.

Speaker 3

The good news is they can select the manufacturing slot in parallel, schedule the operating room time and bring the patient pack back in which takes typically about 3 weeks even at high speed given their operating room capacity and stuff like that. So it really I don't think it's a drag at all. We don't anticipate really needing to further optimize that. If you take a look at our corporate deck that we posted today, you'll see a new slide that summarizes this I think that really helps highlight where we're going and where other areas we can optimize, but that's not really one of them. We're already there, I think, on that one.

Speaker 3

On non small cell lung, yes, our press release today talked about us having data out next year 2025 and us getting approval in 2027. That's what we think can happen based on the data and based on the study as it's running right now.

Speaker 8

Perfect. Thank you.

Operator

Our next question comes from the line of Asthika Gvardin with Truist Securities. Please go ahead.

Speaker 12

Hey, guys. Asaf Guggenwal, Truist here. Thanks for taking my question. I want to double click on to the improvement to the out of spec rate. And now that you've had several centers treat a good number of patients, Are you seeing that any trends or factors that influence the OS?

Speaker 12

I'm particularly wondering, is it just a factor of centers having more experience? Or are you now getting new centers coming online that are just getting better and are just much better at performing the resections and producing the product rather at the gate?

Speaker 3

Well, it's both. We're trying at the beginning, we had centers come on that were good and some that struggled to do resections and select patients. We help them out. They got better and now we learn from that as well and are teaching the new ATCs as they come on, the benefits of all that early learning so that they don't make the same mistakes. We plot out actual run charts for each ATC to see what they did.

Speaker 3

Look patient by patient for each ATC, give them a scorecard as to how they're performing and help them with our peer to peer team that Brian's team oversee Brian oversees the team, Peter Frieder's team that does that. And others they go out and they talk to the surgeons and they make sure the patient selection is correct and they work with them on resection quality. And now I think I would just say that we're just gaining momentum and building momentum here. It's been a big rush and it's stepping up and up and going faster and faster. There's nothing really magical to it.

Speaker 3

It's hard work. But once it's done, they can get the experience. And I think what we're seeing is that any ATC can really get these skills to do AMPEGGY therapy.

Operator

Thank you. That does conclude today's Q and A session. I would now like to turn the call over to Fred Voigt, Interim CEO for closing remarks.

Speaker 3

Thank you again for joining the Iovance Biotherapeutics 3rd quarter year to date 2024 financial results and corporate updates conference call. We're pleased to provide an update on our launch of the first commercial Till cell therapy and look forward to providing further IMTEGV launch updates as well as continued developments on our pipeline in the near future. Already been transformative year for IVANS and we continue to be motivated as we hear frequent feedback from ATCs about advanced melanoma patients benefiting and finding hope with AMTOG B in the commercial setting. As always, we're thankful to the patients, healthcare and advocacy communities, our partners and our exceptional IVANS team. I would also like to thank our shareholders and covering analysts for their support.

Speaker 3

Thank you.

Operator

This does conclude today's call. You may now disconnect.

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Key Takeaways

  • Q3 total product revenue reached $58.6 million, surpassing guidance, with year-to-date sales of $90.4 million, and Iovance reaffirmed full-year 2024 guidance of $160–165 million and 2025 guidance of $450–475 million.
  • Since April launch of AMTEGVI in advanced melanoma, 146 patients have been infused across 56 authorized treatment centers (targeting ~70 by year-end), with infusions accelerating each quarter (25 in Q2, 82 in Q3, 39 YTD in Q4) and 95 % US covered lives under positive reimbursement policies.
  • Iovance operates two FDA-approved manufacturing sites with a consistent 3–4-day turnaround and is expanding capacity from >2,000 to >5,000 and eventually >10,000 patients annually while driving gross margin toward its >70 % target.
  • Pipeline momentum includes a 64.3 % objective response rate in frontline NSCLC (lifileucel plus pembrolizumab in Cohort 3a), initiation of pivotal melanoma and endometrial trials, and multiple next-generation TIL programs (PD-1–inactivated IOV-4001, IL-2 analog IOV-3001, inducible IL-12 IOV-5001).
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Earnings Conference Call
Iovance Biotherapeutics Q3 2024
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