Iovance Biotherapeutics, Inc. (IOVA): Short Seller Sentiment is Bearish on This Cancer Stock
We recently compiled a list of the 10 Worst Cancer Stocks To Buy Now According to Short Sellers. In this article, we are going to take a look at where Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) stands against the other cancer stocks.
Cancer is the second leading cause of death globally, just behind cardiovascular disease, making oncology one of the largest sectors in the life sciences. As of 2024, 11 of the top 15 diseases globally by the number of active drugs were cancer-related. Breast cancer led the pack with approximately 1,031 active drugs in development. According to WHO, by 2050, over 35 million new cancer cases are projected, marking a 77% increase from the estimated 20 million cases in 2022. This sharp rise in the global cancer burden is driven by an aging and expanding population, along with increased exposure to various risk factors, many of which are linked to socioeconomic development. Additionally, low- and middle-income countries have access to less than half of the cancer medications deemed essential by the World Health Organization (WHO), while the cancer burden in these areas continues to grow. Without action, nearly 75% of global cancer deaths are projected to occur in these regions within the next decade.
Traditionally, cancer drugs were designed to slow cell replication or kill cancer cells more quickly than healthy ones. While effective for certain cancer types, new methods are now emerging, such as modifying immune cells, utilizing mRNA, and enabling early detection through simple blood tests. Advancing the understanding, prevention, screening, and treatment of cancer is critical to reducing its global burden, but it comes at a rising cost, with global oncology spending projected to surpass $250 billion this year.
With this in mind, biotech and pharmaceutical companies are racing to develop cutting-edge therapies for cancers such as lung, breast, and prostate. As no single cure for cancer exists, developing a cancer drug that can treat multiple types of the disease is highly lucrative. For instance, Merck’s Keytruda generated $25 billion in revenue last year alone. Even in its fourth year on the market, back in 2018, the drug brought in $7.2 billion for the company. Moreover, In 2023, German biotechnology company BioNTech SE and the UK government signed a Memorandum of Understanding (MoU) to deliver personalized mRNA-based cancer immunotherapies to up to 10,000 patients by 2030.
These factors are driving ongoing breakthroughs in the oncology market and enhancing its prospects. Back in 2023, over 25 new oncology active substances were introduced globally, along with the initiation of more than 2,000 new clinical trials. These trials span innovative treatments such as cell and gene therapies, antibody-drug conjugates, multispecific antibodies, and radioligand therapies. In 2023, the global oncology market was valued at around $201.75 billion and is projected to surpass $518.25 billion by 2032, with a compound annual growth rate (CAGR) of 11.3% from 2024 to 2032 (as per estimates by Fortune Business Insights). This growth is driven by the increasing prevalence of cancer, the introduction of new drugs, product approvals, and expanding research in the field.
Our Methodology
To compile our list of the 10 worst cancer stocks to buy according to short sellers, we focused on cancer-related stocks with substantial short interest (at least 10%). Despite this, these stocks remain favored by hedge funds and market analysts. The list is ranked based on the percentage of outstanding shares that have been sold short, in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A medical staff in white coats monitoring the progress of cancer immunotherapy trials.
Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)
Short % of Float: 24.47%
Number of Hedge Fund Holders: 33
Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), based in San Carlos, California, focuses on developing cell therapies using autologous tumor-infiltrating lymphocytes to target metastatic melanoma and other solid tumors.
Despite being heavily shorted, Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) has delivered an optimistic outlook in its second-quarter 2024 earnings report, showcasing impressive revenue growth fueled by strong demand for its product, Amtagvi. The company recorded Q2 product revenue of $31.1 million and forecasts revenues of $53 million to $55 million for Q3 2024, with full-year expectations ranging from $160 million to $165 million. Looking ahead to 2025, Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) anticipates a significant increase in product revenue to between $450 million and $475 million. These projections have led TD Cowen to reaffirm its Buy rating on IOVA.
The company is also expanding its manufacturing capabilities and advancing its clinical pipeline, with ongoing trials for Amtagvi targeting advanced melanoma and non-small cell lung cancer. Additionally, Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) plans to expand its network of authorized treatment centers to at least 70 by year-end. Despite reporting a net loss of $97.1 million for Q2 2024, the company's cash position of approximately $449.6 million as of July 24, 2024, is projected to sustain operations through 2026.
In Q2, 33 hedge funds held long positions in Iovance, with a combined stake valued at $712.7 million.
Artisan Small Cap Fund stated the following regarding Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) in its Q2 2024 investor letter:
“Among our top detractors for the quarter were Lattice Semiconductor and Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). Iovance Biotherapeutics is a biotechnology company focused on innovating, developing and delivering novel polyclonal tumor-infiltrating lymphocyte (TIL) cell therapies for cancer patients. The stock rallied significantly in Q1 after announcing that the FDA approved AMTAGVI™ (lifileucel) for advanced melanoma. Now that the scientific risk is behind the company, investor focus has shifted to the company’s commercial execution, and shares experienced weakness after the company reported earnings results. It announced the enrollment of more than 100 patients for therapy; however, this was not enough to alleviate investor concerns about patient attrition. In our view, there is no issue with the efficacy of its life-saving treatment. Headwinds have been caused by challenges in ramping production, which is understandable in the early days. We view these concerns as overblown and remain invested.”
Overall IOVA ranks 3rd on our list of the worst cancer stocks to buy according to short sellers. While we acknowledge the potential of IOVA as an investment, with the artificial intelligence revolution just beginning, there are lesser-known AI stocks trading at attractive valuations that could offer even greater promise for portfolio diversification. If you're seeking an AI stock with even more promise than IOVA and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.