Iovance Biotherapeutics (NASDAQ: IOVA) is a hot biotech stock for a reason: It's almost certainly going to be growing its top line at a snappy pace over the next few years, and there's no other therapy that's quite like the one it recently started to commercialize. But, like most of the companies in its group, there are a lot of caveats and tidbits of industry knowledge that you'll need to appreciate before you can feel confident enough to buy and hold its shares.

Here are three of those things you need to know if you decide to buy it today.

1. Revenue likely won't lead to profits for a good while

The first thing to know if you're going to buy Iovance's stock is that it probably won't be profitable for quite some time, even if it continues to post rapid revenue growth as a result of the launch of its first cell therapy for melanoma, called Amtagvi.

As Amtagvi is a cell therapy that's derived from a patient's cells, which need to be extracted from the patient and subjected to the company's manufacturing process at a centralized site, the biotech has a massive amount of overhead compared to most others. In the second quarter, it brought in total revenue of $32.7 billion, but its cost of goods sold (COGS) was $47.3 million; as it has no other revenue source, it was deeply unprofitable as a result. As the company scales up to reach more patients by opening up new authorized treatment centers (ATCs), that issue will get worse, not better -- at least for a while.

Wall Street analysts on average don't see it reporting positive earnings per share (EPS) within the next two years, though its losses are unlikely to be as high as they probably will be this year. If you decide to buy this stock, be sure to keep track of its progress toward earnings, as it could be as late as 2027 or beyond.

2. Multiple regulatory catalysts are coming up

Between now and the end of 2025, Iovance is planning to commercialize Amtagvi in a handful of areas outside the U.S., including the European Union, the U.K., Canada, Australia, and Switzerland. It already submitted its regulatory package to the European Medicines Agency, and it should hear back sometime in 2025. Securing regulatory approval in these additional markets is key to realizing the largest possible addressable market for Amtagvi, so it has major ramifications for how much and how quickly the company's revenue will be able to ramp up over the coming years.

It's also pursuing further research and development (R&D) of Amtagvi in a late-stage clinical trial with the goal of getting the therapy approved as a first line treatment, rather than one that's only allowed for use in cases where at least one prior intervention has failed. First line status will increase the size of the addressable market, and likely lead to better outcomes for patients, too, as they won't be as sick when they get treated.

3. Ongoing manufacturing refinements are approaching critical points

One of the current challenges Iovance is working around with Amtagvi is that the manufacturing process takes around 22 days to culture the patient's cells before the therapy is ready for delivery.

To loosen that time constraint, it's currently undergoing a trio of phase 2 clinical trials investigating whether it can produce the therapy as effectively with a modified process that takes only 16 days. That would drive costs down substantially, and it might even make the biotech into a case study of what manufacturing success looks like for other cell therapy businesses. The same set of studies is also evaluating a new and less invasive process for taking a sample of the patient's cells to use for manufacturing.

And, while the company hasn't made any claims yet, it is also probable that the new process being tested could increase the manufacturing success rate for Amtagvi to higher than roughly 90%, where management estimates it is today.

Though it may seem odd to laypeople that a manufacturing process might fail sometimes, keep in mind that each patient's cells -- the primary raw material for making Amtagvi -- are different, which introduces a lot of variability that other treatment modalities don't have. Healthier patients are more likely to donate lots of healthy cells, which increases the odds that the company will be able to culture enough of them to constitute a full dose of the therapy as defined by the prescribing guidelines.

Therefore, in the long run, it's important to appreciate that Iovance is working on cutting its manufacturing costs via multiple approaches. If those phase 2 trials progress into the next phase, it's a green light for its profitability improving as planned over the next few years, assuming regulators assent to using the updated protocols once the next set of trials wraps up.

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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics. The Motley Fool has a disclosure policy.

3 Things You Need to Know if You Buy Iovance Biotherapeutics Today was originally published by The Motley Fool