Iovance Biotherapeutics(IOVA) - 2022 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements, management's financial analysis, market risk disclosures, and internal controls Condensed Consolidated Financial Statements (Unaudited) The company experienced increased net losses in Q2 and H1 2022 due to rising operating expenses, despite maintaining a strong cash position Note 1: General Organization, Business and Liquidity Iovance, a clinical-stage biopharmaceutical company, focuses on TIL therapies for cancer, with management asserting sufficient liquidity to fund operations for the next twelve months - The company's mission is to be the global leader in innovating, developing, and delivering TIL therapies for cancer patients. Lead product candidates include lifileucel for metastatic melanoma and cervical cancer, and LN-145 for metastatic non-small cell lung cancer (NSCLC)[35] - As of June 30, 2022, the company had $430.9 million in cash, cash equivalents, investments, and restricted cash. Management believes this is sufficient to fund anticipated operating expenses and capital expenditures for at least the next twelve months[37][38] Note 7: Licenses and Agreements The company maintains key collaborations and license agreements, including extended partnerships with NCI and NIH, and manufacturing agreements with WuXi Advanced Therapies - The CRADA with the NCI was amended in August 2021, extending the term by three years to August 2024. The company is required to make quarterly payments of $0.5 million to the NCI[96][97] - The company entered into an Amended and Restated Patent License Agreement with the NIH, granting additional exclusive, worldwide patent rights to cytokine-tethered TIL technology and expanding non-exclusive rights to all cancers. Milestone payments are anticipated upon BLA approval[99][100] - The company has a manufacturing and services agreement with WuXi Advanced Therapies for two cGMP manufacturing suites. Costs associated with this agreement were $7.1 million for the six months ended June 30, 2022[111] Note 9: Legal Proceedings The company is involved in a stockholder derivative lawsuit with a proposed settlement and is vigorously defending against two breach of contract lawsuits from Solomon Capital, LLC - A derivative lawsuit regarding non-executive director compensation has a proposed settlement, submitted to the court on June 15, 2022, which includes governance changes and a payment for legal fees, subject to court approval[123] - The company is defending two lawsuits from Solomon Capital, LLC related to agreements from 2012. The company is pursuing counterclaims and intends to vigorously defend against the complaints[124][128][129] Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $108,075 | $78,229 | | Short-term investments | $316,383 | $426,181 | | Total Current Assets | $431,593 | $507,956 | | Total Assets | $610,878 | $777,333 | | Total Liabilities | $138,188 | $155,674 | | Accumulated deficit | $(1,363,401) | $(1,172,445) | | Total Stockholders' Equity | $472,690 | $621,659 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $73,406 | $62,119 | $141,706 | $118,068 | | General and administrative | $26,328 | $19,307 | $49,741 | $38,928 | | Net Loss | $(99,349) | $(81,351) | $(190,956) | $(156,800) | | Net Loss Per Share | $(0.63) | $(0.53) | $(1.21) | $(1.04) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(151,437) | $(116,399) | | Net cash provided by / (used in) investing activities | $182,279 | $(81,954) | | Net cash (used in) / provided by financing activities | $(650) | $214,346 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical progress, including an upcoming BLA submission, and analyzes increased operating expenses driven by growth and pre-commercialization efforts, while affirming sufficient liquidity - The company plans to submit a Biologics License Application (BLA) for lifileucel in metastatic melanoma in August 2022, following a pre-BLA meeting in July 2022[139] Change in Operating Expenses (Six Months Ended June 30) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $141,706 | $118,068 | $23,638 | 20% | | General and administrative | $49,741 | $38,928 | $10,813 | 28% | - The increase in R&D expenses was driven by higher payroll and stock-based compensation from increased hiring, facility costs for the iCTC, and lab consumables, partially offset by lower clinical trial and manufacturing costs due to the completion of pivotal trial enrollment[174] - The increase in G&A expenses was due to increased headcount for business growth and commercial readiness, higher stock-based compensation, and increased marketing, travel, and IT infrastructure costs[176] - As of June 30, 2022, the company had $430.9 million in cash, cash equivalents, investments, and restricted cash. Management believes this is sufficient to fund operations for at least the next twelve months[286][290] Quantitative and Qualitative Disclosures About Market Risk The company's market risk is primarily limited to interest income sensitivity from its portfolio of cash and investments in short-term U.S. government debt securities - The company's primary market risk is interest rate risk on its $409.6 million in marketable securities. A hypothetical 1% change in interest rates as of June 30, 2022, would impact the fair value of the investment portfolio by approximately $1.3 million[195] Controls and Procedures Management evaluated the company's disclosure controls and procedures, concluding they were effective as of June 30, 2022, with no material changes in internal control over financial reporting - Based on an evaluation as of the end of the reporting period, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[196] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[197] PART II OTHER INFORMATION This section covers legal proceedings, key risk factors, and other required disclosures including securities sales, defaults, and exhibits Legal Proceedings This section incorporates by reference the information from Note 9 of the Condensed Consolidated Financial Statements - The company refers to Note 9 for details on legal proceedings, which include a derivative lawsuit with a proposed settlement and ongoing litigation with Solomon Capital[199] Risk Factors The company outlines significant risks, including dependence on product candidate success, manufacturing complexities, regulatory hurdles, the need for additional financing, and intense competition - The business is substantially dependent on the success of its product candidates, which may not complete development, receive regulatory approval, or be successfully commercialized[204][212] - Manufacturing of product candidates is complex and subject to risks of production failure, quality control issues, and challenges in scaling up, which could delay or stop supply for clinical trials or commercial use[204][259] - The company may need additional financing to fund operations and commercialization. Raising capital could cause dilution to stockholders or require relinquishing rights to technologies[205][286] - The company faces extensive and costly regulation, and the FDA approval process is lengthy and time-consuming. Even if approved, products will face ongoing regulatory scrutiny[205][211][299] - The company faces significant competition from other biotechnology and pharmaceutical companies, many of which have substantially greater resources and experience[205][314] 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[457] Defaults Upon Senior Securities The company reported no defaults upon senior securities for the period - Nothing to report[458] Mine Safety Disclosure This item is not applicable to the company - Nothing to report[459] Other Information The company reported no other information for the period - Nothing to report[460] Exhibits This section lists the exhibits filed with the Form 10-Q, including the company's amended bylaws, equity incentive plan documents, and officer certifications as required by the Sarbanes-Oxley Act - Exhibits filed include the Third Amended and Restated Bylaws, the 2018 Equity Incentive Plan, and certifications by the CEO and CFO[463]