BiQ Journal: A Few Thoughts About Why I Still Like Iovance Biotherapeutics 07/15/26

It's been a while since I've posted a BiQ Journal entry, but with today's 20% run in Iovance Biotherapeutics (IOVA), I thought it was a good opportunity to highlight why I still like the name.

As a reminder, Biotech iQ is not a short-term or momentum-trading service; we focus exclusively on long-term investing ideas in companies with highly asymmetric risk/reward profiles. These names tend to exhibit significant volatility over short time frames, but my focus is always on the long-term thesis, not on the near-term volatility. As long as the thesis continues to progress, we continue to hold the investment. We typically exit only when the long-term thesis breaks down, or when the share price runs far beyond fair value.

Admittedly, IOVA has been a very challenging investment. Personally, I think the challenges stem from headwinds to commercial adoption – not from any deficiency in Amtagvi or the science behind it. I still see TIL therapy as a novel and elegant way to target certain solid tumor types (most notably ones that express a high degree of antigen heterogeneity). However, the commercial challenges have been daunting for three primary reasons:

• Developing a novel manufacturing process that relies as much on physician skill as it does on manufacturing optimization.
• Convincing community physicians and hospitals to refer patients out to qualified treatment centers to receive the therapy.
• Achieving adequate scale to offset high fixed manufacturing costs.

This could be said of many autologous cell therapies, but the additional difficulty Amtagvi faces is the need for surgical tumor resection, rather than a much simpler leukapheresis process. Physicians must be able to identify the right patient population and then perform a proper tumor resection to provide IOVA's manufacturing process with an adequate supply of host TILs for cell expansion. To add to the difficulty, many physicians may not consider a patient for Amtagvi until the patient's condition is extremely advanced and the patient is already severely immunocompromised, making it difficult to procure an adequate supply of TILs. This also creates challenges with MHC-I downregulation resulting from repeated exposure to prior anti-PD-1 therapy, which I will discuss in more detail below.

In the interest of keeping this article short and to the point, I will assume that most readers are already familiar with IOVA and Amtagvi. For readers who are new, I strongly suggest spending some time on IOVA's website to familiarize themselves with the basics. Also, this article is not meant to be a complete investment thesis. I don't plan to discuss the financials or provide a detailed pipeline analysis. The purpose of this article is specifically to share my thoughts around what I see as the advantages of IOVA's TIL technology.

In brief, Amtagvi is IOVA's lead product and is currently approved for the treatment of post-PD-1 advanced cutaneous melanoma. Unlike hematological tumors, where multiple cell therapies have already successfully established themselves, cell therapies face significant challenges in solid tumor indications, the most important of which for the purposes of this discussion are:

• Trafficking and infiltration.
• A highly immunosuppressive tumor microenvironment (TME).
• Antigen heterogeneity.
• Off-target toxicity.
• T-cell exhaustion.

Autologous CAR-T therapies start by taking a patient's cells, obtained through leukapheresis, engineering them to target a specific surface antigen (HER2, EGFR, etc.), and then reintroducing them into the body. This approach faces several challenges specific to solid tumors:

• Infiltrating the fibrous tissue around many solid tumors remains a major challenge.
• The toxic TME makes it difficult for CAR-Ts to survive and function, though recent advances in armored CAR-Ts have shown some early promise.
• Engineered CAR-Ts typically target a very specific antigen, making antigen heterogeneity a major challenge.
• The same antigens that CAR-Ts target are also expressed on healthy cells, leading to off-target toxicity. (To address this, some next-generation investigational CAR-Ts employ strategies such as logic gating using AND, OR, and NOT logic.)
• CAR-Ts face significant challenges due to T-cell exhaustion, which is amplified by the toxic TME.
• Antigen downregulation is a major escape mechanism that limits efficacy and duration of response (DoR).

Amtagvi takes a very different approach. TILs, or tumor-infiltrating lymphocytes, are first isolated from the patient's own tumor tissue and then amplified ex vivo. In essence, Amtagvi leverages the body's own intelligence to engineer T-cells that target the patient's specific tumor, amplifies them, and then reintroduces them into the body in massive numbers. By taking this approach, Amtagvi demonstrates several key benefits over autologous CAR-Ts in solid tumors:

• The isolated T-cells have already demonstrated their ability to infiltrate the tumor and survive in the tumor-specific toxic TME.
• Amtagvi TILs do not target a specific antigen or HLA-type; instead, they target a wide variety of antigen fragments presented by the MHC-I complex, helping to overcome antigen heterogeneity and limit antigen escape.
• By amplifying TILs ex vivo, the reintroduced T-cells are highly active, with a subset also expressing a high degree of stemness, which helps achieve the significantly longer DoR observed with Amtagvi therapy.
• Off-target toxicity is less severe because the TILs do not target a specific antigen that is also expressed on healthy cells, but rather target a specific set of neoantigen-presenting MHC-I complexes that are expressed only (or at least mostly) on tumor cells and not on healthy cells.
• When TILs flood the TME, IFN-gamma causes a signaling cascade that typically upregulates MHC-I expression, further increasing TIL efficacy.

To be fair, MHC-I downregulation or elimination can also be a challenge for Amtagvi. Tumor cells can downregulate or eliminate MHC-I expression through a variety of mechanisms when exposed to TILs. However, MHC-I downregulation is a double-edged sword for tumor cells. While MHC-I downregulation can make cells less visible to CD8+ TILs, it also makes them more vulnerable to attack by NK cells, which specifically target cells lacking MHC-I expression (more on this below).

As we have discussed, MHC-I expression is critical for Amtagvi to function. One challenge faced by Amtagvi, especially in the post-PD-1 setting, is that the post–PD-1 setting is enriched for MHC-I–low tumor clones through immunoediting. This means that patients who are post-PD-1, the setting in which Amtagvi is currently approved, should theoretically receive less benefit from Amtagvi therapy than patients who have not already been exposed to PD-1 therapy. In my opinion, this likely limits Amtagvi's efficacy and durability in the post-PD-1 setting. Despite this, however, Amtagvi demonstrated an unprecedented median DoR of 35.6 months in its pivotal trials. In the 5-year follow-up analysis, 31.3% of patients who responded to Amtagvi continued to show benefit at 5-years, with many patients showing continued improvement over time after a one-time infusion of Amtagvi.

While other cell therapy modalities, such as TCR-T therapies, autologous CAR-Ts, gamma-delta CAR-Ts, are still struggling to match Amtagvi's DoR, IOVA is already advancing next-generation TIL therapies.

• IOVA is running clinical trials for lifileucel (i.e. Amtagvi) + PD-1 as a 1L therapy. If successful, this would open up a much larger TAM, and would target patients that are less immuno/MHC-I compromised, potentially improving long-term outcomes.
• IOV-4001 is a PD-1 inactivated TIL (using TALEN gene-editing technology), which would potentially render the TILs less susceptible to PD-1 blockade while avoiding PD-1 toxicity.
• IOV-5001 is an IL-12 "armored" TIL, which uses TALEN technology to express membrane-tethered IL-12. IL-12 is a highly potent pro-inflammatory cytokine that recruits and activates host T-cells and NK-cells directly to the tumor. In the past, while IL-12 has shown significant anti-tumor activity, it has been associated with severe toxicity; however, IOVA hopes that by tethering IL-12 directly to the membrane of the tumor-targeting TIL, off-target toxicity can be avoided or significantly reduced. Furthermore, since IL-12 recruits both T-cells and NK-cells, this could limit the ability for tumor cells to escape through MHC-I downregulation.
• Gen 3 TIL uses a 16-day manufacturing process instead of the 22-day manufacturing process of the current Gen 2 TILs. Shortening the manufacturing time has two potentially beneficial effects. First, it reduces the time to vein. Second, and perhaps more importantly, IOVA's theory is that the reduced manufacturing time would increase the proportion of stem-like TILs, which could, in theory, improve both efficacy and DoR.

Currently, in addition to cutaneous melanoma, IOVA is running clinical trials in NSCLC and cervical cancer. However, I believe that lifileucel could be ideally suited for several other solid tumors that exhibit a high degree of antigen heterogeneity, which includes SCLC, bladder/urothelial, and HPV-negative HNSCC. I am purely speculating here; so far, IOVA does not have any advanced programs in these indications. The company has, however, recently launched a P2 registrational trial in advanced UPS & DDLPS soft tissue sarcoma. The current 2L SoC in this indication has a <5% ORR with very short durability.

In my opinion, it is a telling sign of management confidence that IOVA retains 100% ownership of its pipeline and technology; so far, the company hasn't licensed out any indications in any geographies. The downside is that the company has also continued to dilute shareholders to finance itself, both through public offerings and use of the ATM, and will likely continue to do so until it reaches self-sustaining cash flow.

Besides dilution, competition is another risk to consider. CAR-Ts continue to advance, and other companies, most notably Immatics (IMTX), are advancing competing therapeutic modalities.

IMTX, likely IOVA's closest competitor, is currently advancing anzu-cel (IMA203) in advanced post-PD-1 cutaneous and uveal melanoma. However, the data is still immature, with P3 interim data expected later this year. Also, IMA203 is limited to patients who are positive for PRAME expression and HLA-A*02:01. Early P1b data demonstrated 50% cORR vs lifileucel's 31.4% cORR; however, DoR was 17.9 months vs lifileucel's 35.6 months. Still, putting cross-trial comparisons aside for a moment, the data is early and limited to 14 pre-selected patients. It will be interesting to see what the interim P3 data reveals.

There's a lot more to dig into, but hopefully this article is helpful as a starting point for those exploring Iovance Biotherapeutics. I remain bullish long-term and plan to continue holding my position.

IOVA share price at time of publication: $4.74
BiQ ACB: $3.08

Please note that the BiQ ACB (adjusted cost basis) includes shares and all open options positions, which are accounted for using a "worst case scenario" assumption, plus realized trading profits (and losses) around my core position.

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