Fledgling Biotech Company's Stock Surges

Iovance Biotherapeutics develops cancer immunotherapy treatments

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Jan 19, 2018
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Shares of fledgling biotech company Iovance Biotherapeutics Inc. (IOVA, Financial) were up almost 12% in early afternoon trading as the company moves forward on some promising cancer immunotherapy treatments.

The stock was trading at $10.75 a share on Friday afternoon, hours before market close. Industry watchers say there is no immediate explanation for the stock’s rally. However, news of the potential acquisition of one of its rivals may be a factor. Rumors have been swirling about ongoing talks between Seattle-based Juno Therapeutics (JUNO, Financial) and pharma giant Celgene Corp. (CELG, Financial).

On Friday, Juno was trading at $69.21 per share, down 2%. Celgene was up 1.25% at $102.99 a share.

The San Carlos, California-based Iovance develops cancer treatments based on tumor infiltrating lymphocytes (TIL). In a process similar to Juno's CAR-T therapies, TIL are extracted from the patient, expanded ex vivo, then re-infused where they attack and kill cancer cells.

The company has announced positive data from a mid-stage study of lead candidate LN-144 in metastatic melanoma.

In the last six months, Iovance stock has surged by 72%, according to GuruFocus data.

Name change

The company faced regulatory issues under its former name, Lion Biotechnologies. In 2014, its former CEO, Manish Singh, resigned amid investigative action by the Securities and Exchange Commission. In April 2017, the SEC issued an order concluding that, "from September 2013 to March 2014, the company’s former CEO engaged in a scheme to mislead investors by commissioning over 10 internet publications and 20 widely distributed emails promoting the company to potential investors that purported to be independent from the company when, in fact, they were paid promotions."

The SEC also found the company had engaged in "improper gun-jumping'" by soliciting orders to buy a new issue before registration of the company's initial public offering was approved by the SEC. The company was ordered to pay a civil monetary penalty of $100,000 to the SEC.

After that, Lion and some of its executives were sued in a securities class-action lawsuit for failing to disclose material information and violating federal securities laws.

In August, its stock hit a low of just under $5 a share.

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Public offering

One month later, in September, it completed a public offering of 8,846,154 shares of its common stock at a price of $6.50 per share, before underwriting discounts, according to the company’s website.

The net proceeds from the offering, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by Iovance, are approximately $54 million.

As of Sept. 30, the company held $163.4 million in cash and cash equivalents and short-term investments, compared to $166.5 million as of Dec. 31, 2016, according to its most recent third-quarter report.

The company has a market cap of $775.3 million.

According to GuruFocus, the company has a financial strength rating of 8 out of 10 and a profitability and growth rating of 4 out of 10.