Is Iovance Biotherapeutics Stock Your Ticket to Becoming a Millionaire?

Most investors don't truly expect a single, relatively small trade to explode into a seven-figure holding. On the other hand, the prospect can't be entirely ruled out either. It's certainly been done before by the right company in the right place at the right time with the right product.

Enter Iovance Biotherapeutics (NASDAQ: IOVA). The up-and-coming biopharma outfit's science is turning a lot of heads these days, and for good reason. But does it actually have millionaire-making potential?

Image source: Getty Images.

Iovance Biotherapeutics' science works

Biopharmaceuticals can be a tricky industry for investors to navigate. These companies' scientific premises don't always pan out as hoped, and even when they do, marketability of that new drug isn't always guaranteed. Factors like pricing, competition, and safety always come into play as well.

Still, there's nothing wrong with looking at a drug developer's risk and potential reward.

With that as the backdrop, know that Iovance Biotherapeutics brings plenty of both to the table, even if the market is pricing in too much of one and not enough of the other.

In simplest terms, Iovance has successfully created a new way of treating unresectable or metastatic tumors. Its tumor-infiltrating lymphocyte (TIL) called Amtagvi (or Lifileucel), in fact, is the world's first approved tumor-infiltrating lymphocyte, as well as the first immune cell/T-cell therapy approved to treat any solid tumors, winning the FDA's approval early last year thanks to its 61% response rate for patients who had already tried two or fewer treatment options.

Although Amtagvi's only approved for one specific purpose now, know that the company's got 12 other trials of the same drug underway at this time, a couple of which are late-stage. Meanwhile, its tumor-infiltrating lymphocyte science is being tested in nine other trials. Several of these tests are showing good promise too, aimed at diseases that have proven difficult to treat using the healthcare industry's existing medicines.

Making it make sense

All of this begs the question: If Iovance Biotherapeutics' TIL biotechnology is so promising, why is its stock underperforming when it seems like the company's never had more going for it?

There are a couple of reasons, one of which is quite cut and dried. That's cost.

While Amtagvi is a one-time treatment, it's anything but cheap. Since each cancer patient's treatment is custom-created using tissue from their own tumor (the process essentially reproduces a patient's T cells by the billions, which are then reinjected back into their body to overwhelm the tumor), it's expensive. Like, really expensive, at just over $500,000 a pop. Health insurers often end up paying more for drawn-out treatment of a single cancer patient. However, this is a relatively new drug with a sizable upfront cost that may not have yet convinced everyone that its results are worth the cost. Investors aren't convinced, anyway.

And the other reason Iovance shares are struggling despite last year's approval of Amtagvi and this year's expected top-line growth of 68% to be followed by a 58% improvement next year? This is where things get complicated, but understandable.

As you likely know, the biotechnology industry inspires a great deal of investor speculation. Traders are trying to "beat the rush," so to speak, by piling into a stock before everyone else recognizes just how big of a breakthrough a particular drug will be.

It rarely works as hoped, of course. The market is very efficient as disseminating information, and the truth is, traders often get too excited too soon without fully understanding a new drug's potential and marketability. That's what happened with Iovance Biotherapeutics shares back in 2020, when Lifileucel first started showing serious promise as a tumor treatment. Investors plowed in, but it would still be years before an actual approval. Interest waned in the meantime; the COVID-19 pandemic didn't help any, either.

The irony? This company's never been more promising than it is right now. Most of the market's just lost interest, perhaps bored as well as burned by the story.

Just don't get lured into that same mindset. Sooner or later (and for better or worse), a stock reflects its company's value.

Just understand what this stock really is, and how to handle it

So back to the original question...is Iovance Biotherapeutics stock your ticket to becoming a millionaire?

Obviously there's no guarantee as to its future performance, and its millionaire-making potential is of course a function of how much money you're willing to commit to a position in the stock right now. But we can reasonably say this high-risk name does exhibit many of the hallmarks associated with mega-winners. Chief among them is the potential of Amtagvi itself.

While there's measurable uptake so far, the $250 million to $300 million in sales the company expects the drug to drive this year isn't going to be enough to get the job done.

It's coming, though. The company believes annual Amtagvi revenue could eventually reach $1 billion, while a handful of other observers put the figure closer to $1.5 billion. Even reaching the lower of those expectations would be impressive enough. For perspective, the company's current market cap is a modest $830 million, which arguably doesn't fully reflect the value and potential of the tumor-treating drug even after factoring in the stock's above-average risk.

Then there's the potential beyond Amtagvi, with Iovance's broader tumor-infiltrating lymphocyte technology.

Although other biopharma outfits are also now tinkering with TILs, Iovance arguably enjoys a sizable lead. As was noted, nine of its current clinical trials aren't looking at the efficacy of its flagship drug, but rather, other tumor-infiltrating lymphocytes that could win approval for indications that Amtagvi doesn't treat. Although any approvals of these drugs are years down the road, it's conceivable that Iovance Biotherapeutics will eventually be capable of producing $2 billion in annual sales...or perhaps even more.

This might help complete the bullish case: While investors as a whole aren't overwhelmingly bullish, Wall Street is. Analysts' current consensus target stands at $9.10, which is more than 300% above the stock's present price.

Just don't lose sight of the risk you'd also be taking here. While Iovance has the potential to turn into a triple-digit (if not quadruple-digit) winner, like many biopharma names, it could also turn into a complete bust, with little hope for anything in between. The risk of such all-or-nothing stocks is usually best controlled by keeping positions in them relatively small.

James Brumley 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.