These are exciting times to be an Iovance Biotherapeutics (NASDAQ: IOVA) shareholder. The biotech has made encouraging clinical and regulatory progress in the past year. Its most important product is helping it generate strong revenue growth, and although it has been a bit of a wild and volatile ride, its shares have performed much better than the broader market over the trailing 12-month period.

It might be worth investing in the stock if the company can maintain this momentum. Let's find out whether that's the case, or if it's best to avoid Iovance.

Iovance Biotherapeutics' approach

Iovance Biotherapeutics is an oncology specialist. The company's platform focuses on tumor-infiltrating lymphocytes (TILs), a type of immune cell that can recognize and kill cancer cells. Iovance's TIL-based cancer therapies work by removing a patient's own TILs, creating personalized treatments, and reinserting them into the patient.

The manufacturing process for Amtagvi, a TIL therapy and one of Iovance Biotherapeutics' two approved products, takes 34 days.It must be produced in specialized authorized treatment centers. Amtagvi was approved in February for the treatment of advanced melanoma (a type of skin cancer). It is already helping Iovance Biotherapeutics improve its financial results.

In the second quarter, the company's revenue was $31.1 million compared to just $238,000 in the year-ago period. True, $31.1 million in revenue isn't all that much for a company whose market cap is $3 billion, but Amtagvi has been approved for less than a year. Furthermore, it is the first cellular therapy approved for advanced melanoma, which makes up 1% of cases of skin cancer. Iovance estimates that there are more than 20,000 annual cases of advanced melanoma in the U.S. and other markets it plans to target.

The company has likely captured a tiny percentage of that total in the eight months since Amtagvi earned approval from the U.S. Food and Drug Administration. Iovance Biotherapeutics is planning regulatory submissions for Amtagvi in other countries, including Canada, the U.K., Australia, and Switzerland. So, the company's addressable market will expand.

The path forward

Iovance Biotherapeutics is currently unprofitable although its second-quarter net loss per share of $0.34 was better than the loss per share of $0.47 it reported in Q2 2023. It's not surprising for a mid-cap biotech with just two products on the market to have red ink on the bottom line, nor is it a cause for concern. The question is, can Iovance Biotherapeutics eventually turn a profit? That will depend on its approved medicines' success and clinical and regulatory progress. Things are looking reasonably promising on both fronts.

Although estimates vary, some analysts think Amtagvi could make $846 million in revenue by 2029. Iovance projected total revenue of $162.5 million at the midpoint for its fiscal 2024. That includes both its commercialized medicines. Even assuming the $162.5 million was solely from Amtagvi, that would amount to a compound annual growth rate of 39.1% in the next five years.

Iovance's pipeline looks pretty impressive for a biotech worth just $3 billion. The company has over a dozen mid-stage programs and several ongoing phase 3 studies. Many could lead to label expansions for Amtagvi, but Iovance Biotherapeutics does have brand-new products it is working on. There is always the risk that the company will run into clinical setbacks -- a risk all biotech companies face. It's also worth noting that Iovance Biotherapeutics' TIL therapies are somewhat challenging to manufacture, making its commercialization efforts more expensive than if they were oral tablets.

So, although Iovance Biotherapeutics' prospects look somewhat promising, the stock carries slightly above-average risk. Investors who are comfortable with that should strongly consider initiating a position in the stock.

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Prosper Junior Bakiny 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.

Is Iovance Biotherapeutics Stock a Buy? was originally published by The Motley Fool