Is This Biotech Stock the Best Chance to Make a Fortune in Healthcare?

Investing in smaller biotechs can yield outstanding returns over the long run if they make sufficient regulatory and commercial progress. On the flip side, these companies come with a healthy dose of risk. So, there is a possibility that picking the right drugmaker will make you a fortune, but choosing the wrong one could destroy your wealth. Which camp does Iovance Biotherapeutics (NASDAQ: IOVA) belong in? Let's see whether buying this company's shares could make you a lot richer.

Why the stock seems promising

Iovance Biotherapeutics' shares have significantly underperformed broader equities over the past three years. At first glance, it's hard to understand why. In 2024, the company earned approval for Amtagvi, a treatment for advanced melanoma, whose sales have grown at a good clip since. Last year, Iovance Biotherapeutics' sales, mostly driven by Amtagvi, came in at $263.5 million, up almost 61% from the previous fiscal year.

What's more, Amtagvi was the first medicine of its kind approved for patients with advanced melanoma, and it is slowly expanding its global reach. It was approved in Canada last year and could receive the blessing of regulators in various European countries and Australia over the next couple of years.

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Considering its strong performance so far, Amtagvi could easily exceed the $1 billion in annual sales by 2030 (if not before), which would be quite an accomplishment for a small-cap biotech company. And that's before we consider that Iovance Biotherapeutics will pursue label expansions for Amtagvi. A few weeks ago, it announced positive early results from a pivotal clinical trial of lifileucel (Amtagvi's generic name) in patients with advanced soft-tissue sarcomas, a group of rare cancers.

Iovance Biotherapeutics argues that there is a meaningful opportunity here of more than 8,000 patients diagnosed annually in the U.S. and Europe. A label expansion in advanced sarcomas -- as well as in others it is pursuing -- could help boost the medicine's sales over the next five years.

Consider the risks

Despite Amtagvi's strong trajectory so far, Iovance Biotherapeutics, like every drugmaker (and smaller ones in particular), runs the risk of seeing its shares lose significant value overnight due to clinical or regulatory setbacks. Even beyond that, investors should consider that Iovance Biotherapeutics develops tumor-infiltrating lymphocyte (TIL) therapies that are difficult to administer. TILs are manufactured from patients' harvested cells and then reinfused following chemotherapy. This is typically done in dedicated, authorized treatment centers, and the manufacturing process for Amtagvi takes about 34 days.

Amtagvi's price and cost are quite high. So long as Iovance Biotherapeutics' model relies on therapies of this kind, it will be challenging for the company to turn a profit. In short, Iovance Biotherapeutics is a risky biotech. That's why its shares have significantly lagged broader equities in recent years. Could it make you a fortune? Maybe, but given the heightened risks it faces, it's best to initiate a small position in the stock, at least at first.

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.