Iovance Biotherapeutics(US:IOVA)2021-08-05 21:18PART I FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the three and six months ended June 30, 2021, detailing financial position, operations, and cash flows, with a net loss of $156.8 million and sufficient liquidity for the next twelve months Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $82,763 | $67,329 | | Short-term investments | $573,605 | $562,108 | | Total Current Assets | $666,640 | $636,100 | | Total Assets | $852,790 | $768,458 | | Liabilities & Equity | | | | Total Current Liabilities | $60,534 | $54,871 | | Total Liabilities | $108,377 | $111,960 | | Total Stockholders' Equity | $744,413 | $656,498 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $62,119 | $49,274 | $118,068 | $106,226 | | General and administrative expenses | $19,307 | $14,353 | $38,928 | $28,211 | | Loss from operations | $(81,426) | $(63,627) | $(156,996) | $(134,437) | | Net Loss | $(81,351) | $(63,018) | $(156,800) | $(132,613) | | Net Loss Per Share, Basic and Diluted | $(0.53) | $(0.47) | $(1.04) | $(1.02) | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(116,399) | $(101,927) | | Net cash used by investing activities | $(81,954) | $(323,651) | | Net cash provided by financing activities | $214,346 | $572,298 | - The company is a clinical-stage biopharmaceutical firm focused on developing and commercializing TIL cell therapies for cancer, with lifileucel as its lead product candidate for metastatic melanoma and cervical cancer, utilizing a proprietary Gen 2 manufacturing process25 - As of June 30, 2021, the company held $708.7 million in cash, cash equivalents, and investments, which management deems sufficient to fund operations for at least the next twelve months, despite a net loss of $156.8 million for the first half of 2021 and no commercial revenue2728 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage operations, focusing on TIL therapies, with a BLA for lifileucel in melanoma now expected in H1 2022, alongside increased operating expenses and a strong liquidity position Overview This overview details the company's focus on TIL cell therapies, particularly lifileucel, with a BLA submission for metastatic melanoma now anticipated in H1 2022 pending FDA feedback, alongside progress in other pivotal and combination trials - The BLA submission for lifileucel in metastatic melanoma is now anticipated in H1 2022, pending resolution of FDA feedback on potency assays156 - Lifileucel demonstrated a 36% objective response rate (ORR) in the C-144-01 trial for metastatic melanoma (Cohort 2), with median duration of response (DOR) not yet reached after 33.1 months of median follow-up154 - In the C-145-04 trial for metastatic cervical cancer, lifileucel achieved a 44% ORR in 27 patients, with median DOR not yet reached157 - Combination therapy of lifileucel with pembrolizumab showed an 86% ORR in melanoma (IOV-COM-202 Cohort 1A) and a 44% ORR in HNSCC (Cohort 2A), while LN-145 monotherapy in NSCLC (Cohort 3B) achieved a 21.4% ORR162163164 Results of Operations For the six months ended June 30, 2021, R&D expenses increased by 11% to $118.1 million, and G&A expenses increased by 38% to $38.9 million, leading to an 18% rise in net loss to $156.8 million Change in Research and Development Expenses (in thousands) | Period | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $62,119 | $49,274 | $12,845 | 26% | | Six Months Ended June 30 | $118,068 | $106,226 | $11,842 | 11% | - The 11% increase in H1 2021 R&D expense was primarily due to a $14.0 million increase in payroll, an $8.0 million increase in stock-based compensation, and a $4.0 million increase in commercial manufacturing facility activities, partially offset by a $10.0 million license cost recognized in 2020179 Change in General and Administrative Expenses (in thousands) | Period | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $19,307 | $14,353 | $4,954 | 35% | | Six Months Ended June 30 | $38,928 | $28,211 | $10,717 | 38% | - The 38% increase in H1 2021 G&A expense was mainly due to a $4.7 million increase in payroll, a $3.4 million increase in stock-based compensation, and a $2.3 million increase in intellectual property, insurance, and license fees181 Liquidity and Capital Resources The company has historically funded operations through equity offerings, holding $82.8 million in cash and $619.9 million in investments as of June 30, 2021, with management believing existing capital is sufficient for at least the next 12 months - As of June 30, 2021, the company had $82.8 million in cash and cash equivalents, $619.9 million in investments, and $744.4 million in stockholders' equity193 - In the first six months of 2021, the company received net proceeds of approximately $203.2 million from its "at the market" offering program by selling 6,474,099 shares191 - Management believes that available funds are sufficient to fund anticipated operating expenses and capital expenditures for at least 12 months from the filing date of this report194 Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure is primarily limited to interest income sensitivity from its portfolio of cash and short-term debt securities, with a hypothetical 1% interest rate change impacting fair value by approximately $2.7 million - The company's primary market risk is interest rate sensitivity on its investment portfolio, which consists mainly of short-term U.S. government debt securities206 - A 1% change in interest rates as of June 30, 2021, would cause the fair value of the investment portfolio to change by approximately $2.7 million206 Controls and Procedures Based on management's evaluation, the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the quarter207 - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, internal controls208 PART II OTHER INFORMATION Legal Proceedings This section incorporates by reference the legal proceedings detailed in Note 9 of the financial statements, including a stockholder derivative complaint and two ongoing lawsuits initiated by Solomon Capital, LLC, which the company intends to vigorously defend - The company is facing a stockholder derivative complaint filed in December 2020, alleging breach of fiduciary duty related to excessive compensation for certain non-executive directors115 - Two lawsuits are ongoing with Solomon Capital, LLC, concerning alleged agreements from 2012 for financing services and equity claims, which the company is defending against and has asserted counterclaims116118119 Risk Factors This section details significant risks, including substantial dependence on product candidate success, potential delays in clinical trials and regulatory approval due to FDA feedback on potency assays, complexities in manufacturing cell-based therapies, intense competition, and challenges in market acceptance and reimbursement - The company is substantially dependent on the success of its product candidates, which may never receive regulatory approval or be successfully commercialized220 - The BLA submission for lifileucel has been delayed to H1 2022 due to the need to resolve FDA feedback on potency assays, highlighting regulatory risk and uncertainty268374 - Manufacturing of cell-based therapies is complex and susceptible to product loss, contamination, and scalability issues, with the company relying on third-party CMOs and building its own facility, both carrying significant risks263264269 - The business could be adversely affected by health epidemics like the COVID-19 pandemic, which could disrupt clinical trials, supply chains, and commercial launch preparations352356 - The company faces intense competition from other biotechnology companies with greater resources, and its novel therapies may struggle to gain market acceptance and adequate reimbursement coverage307317 Unregistered Sales of Securities and Use of Proceeds The company reported no unregistered sales of securities or use of proceeds for the period - Nothing to report for this item450 Defaults Upon Senior Securities The company reported no defaults upon senior securities for the period - Nothing to report for this item451 Mine Safety Disclosure The company reported no mine safety disclosures for the period - Nothing to report for this item452 Other Information The company reported no other information for the period - Nothing to report for this item453 Exhibits This section lists the exhibits filed with the quarterly report, including the Amended and Restated Patent License Agreement with the National Institutes of Health, forms of equity award agreements under the 2018 Equity Incentive Plan, and certifications by the Chief Executive Officer and Chief Financial Officer - Key exhibits filed include an Amended and Restated Patent License Agreement with the NIH and forms for stock unit and stock option agreements related to June 2021 retention equity awards456 Signatures Signatures The report was duly signed and authorized on August 5, 2021, by Frederick G. Vogt, Ph.D., Esq., as Interim Chief Executive Officer and President, and Jean-Marc Bellemin, as Chief Financial Officer and Treasurer - The report was signed on August 5, 2021, by Frederick G. Vogt, Ph.D., Esq. (Interim CEO) and Jean-Marc Bellemin (CFO)461