Shares of Iovance Biotherapeutics (IOVA) are sliding on Wednesday after the company discussed its receipt of feedback from the FDA on potency assays and pushed out guidance for a BLA filing on tumor infiltrating lymphocyte therapy lifileucel to the first half of 2022. Iovance also disclosed that President and CEO Maria Fardis had notified the company that she will be resigning to pursue other opportunities. Following the news, Stifel analyst Benjamin Burnett downgraded the stock to Hold as a "messy situation" gets "messier" amid "what now seems like a massive regulatory overhang."
REGULATORY UPDATE, CEO DEPARTURE: Iovance Biotherapeutics has announced receipt of regulatory feedback from the Food and Drug Administration regarding its potency assays for lifileucel. Previously, the company reported the submission of assay data to the FDA and it said that it recently the FDA provided comments regarding the data package. Following the agency's feedback, Iovance will continue its ongoing work developing and validating its potency assays and plans to submit additional assay data and to meet with the FDA in the second half of 2021. The company's biologics license application, or BLA, submission for lifileucel is now expected to occur during the first half of 2022.
In a regulatory filing subsequent to the above announcement, Iovance disclosed that on May 18, Maria Fardis has notified the company that she will be resigning as President, CEO and a director of the company to pursue other opportunities. "The company will immediately begin a search for a successor. In the meantime, effective upon Dr. Fardis' departure, the Board of Directors of the company will appoint Frederick G. Vogt, Ph.D., the company's current General Counsel, as the company's interim President and CEO," the filing stated.
'MESSY SITUATION' GETS 'MESSIER': Following both pieces of news, Stifel analyst Benjamin Burnett downgraded Iovance Biotherapeutics to Hold from Buy with a price target of $19, down from $33. He believes the departure of the company's CEO implies that Iovance "doesn't have a clear line of sight into the potency assay issues with the FDA." While he likes the company's technology, Burnett does not expect clarity on the situation anytime soon and does not expect data from new indications, even if positive, to drive the stock given "what now seems like a massive regulatory overhang." The analyst is once again lowering his view of the probability of success for melanoma and cervical cancer indications to 50%, while also removing non-core indications from his model. The abrupt departure of the CEO during what was already a sensitive situation adds "too much hair to recommend shares," Burnett contended.
Meanwhile, JMP Securities analyst Reni Benjamin also downgraded Iovance Biotherapeutics to Market Perform from Outperform.
TARGET CUTS: Keeping an Outperform rating on the shares, Oppenheimer analyst Mark Breidenbach lowered the firm's price target on Iovance Biotherapeutics to $51 from $57. The analyst pointed out that "unfortunately," Iovance's assay data package submitted in the first quarter was insufficient to fully satisfy FDA reviewers, with the company planning to submit additional assay data and meet with the agency in the second half of 2020. However, citing the strength of lifileucel's clinical data, Breidenbach would add to Iovance positions on expected near-term weakness.
Voicing a similar opinion, Truist analyst Asthika Goonewardene lowered the firm's price target on Iovance Biotherapeutics to $48 from $50 but kept a Buy rating on the shares. The feedback that the company received from the FDA regarding its potency assays for Lifileucel is a "slight setback," but Iovance is working on submitting additional assay data and plans to meet with the FDA in the second half of the year, the analyst contended. Goonewardene added that the stock price drop offers a "buying opportunity."
Chardan analyst Geulah Livshits also lowered his price target on Iovance Biotherapeutics to $51 from $54, keeping a Buy rating on the shares after the company discussed its receipt of feedback from the FDA on potency assays and pushed out guidance for a BLA filing on tumor infiltrating lymphocyte therapy lifileucel to the first half of 2022 from 2021. The analyst believes Iovance's delay may shift competitive dynamics, enabling newer TIL players like Instil Bio (TIL) and Achilles Therapeutics (ACHL) to gain ground in post-PD1 melanoma, where "Iovance has been the clear leader."
Piper Sandler, H.C. Wainwright and Barclays have also cut their price targets on Iovance's shares.
PRICE ACTION: In Wednesday afternoon trading, shares of Iovance have dropped almost 38% to $16.79.
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