What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 64 added, 47 removed, 181 unchanged (38% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The management’s discussion and analysis of financial condition as of June 30, 2020 and results of operations for the three and six months ended June 30, 2020, should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2019 which was filed with the Securities and Exchange Commission, or SEC, on February 25, 2020.

The management’s discussion and analysis of financial condition as of September 30, 2020 and results of operations for the three and nine months ended September 30, 2020, should be read in conjunction with management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2019 which was filed with the Securities and Exchange Commission, or SEC, on February 25, 2020.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

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This proprietary and scalable manufacturing method is being further investigated in multiple indications.

Our lead product candidates include lifileucel for metastatic melanoma and LN-145 for metastatic cervical cancer.

Our lead product candidates include lifileucel for metastatic melanoma and metastatic cervical cancer.

Lifileucel for metastatic cervical cancer was formerly known as LN-145.

In addition to metastatic melanoma and metastatic cervical cancer, we are investigating the effectiveness and safety of TIL for the treatment of squamous cell carcinoma of the head and neck, non-small cell lung cancer, and peripheral blood lymphocyte, or PBL, therapy for chronic lymphocytic leukemia through our sponsored trials, as well as in other oncology indications through collaborations.

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Initial results from the pivotal Cohort 4 are available for 68 patients with two radiological assessments, as determined by investigator.

Lifileucel shows a 32.4% ORR, including 1 complete response and 21 partial responses, 2 of which are yet to be confirmed with follow up visits, and a DCR of 72.1% as of the data cut off of March 16, 2020,

corresponding to 5.3 months of median study follow up.

Lifileucel shows a 32.4% ORR, including 1 complete response and 21 partial

responses, 2 of which are yet to be confirmed with follow up visits, and a DCR of 72.1% as of the data cut off of March 16, 2020, corresponding to 5.3 months of median study follow up.

This data is highly consistent with the Cohort 2 data read out at a similar median duration of study follow up.

The ORR of Cohort 2 at a median study follow up of 6 months was 33%.

We are also conducting a Phase 2 clinical trial, C-145-04, which is a multicenter pivotal trial that will assess the safety and efficacy of LN-145 for the treatment of patients with recurrent, metastatic or persistent cervical cancer.

In February 2019, LN-145 received Fast Track designation from the FDA for development in the treatment of cervical cancer with disease progression on or after chemotherapy.

In October 2020, after a Type B meeting with the FDA, we announced that we had delayed our BLA submission for lifileucel in metastatic melanoma until a date now expected to occur in 2021 as a result of FDA feedback, in order to allow us to simultaneously refine existing and develop new potency assays.

At the same time, we also announced that we had reached agreement with the FDA on the duration of follow up for Cohort 4 to support our BLA submission for lifileucel in the treatment of metastatic melanoma.

We are also conducting a Phase 2 clinical trial, C-145-04, which is a multicenter pivotal trial that will assess the safety and efficacy of lifileucel for the treatment of patients with recurrent, metastatic or persistent cervical cancer.

In February 2019, lifileucel received Fast Track designation from the FDA for development in the treatment of cervical cancer with disease progression on or after chemotherapy.

In March 2019, the protocol for this trial was amended to modify the primary endpoint of ORR to be determined by IRC.

In May 2019, LN-145 received Breakthrough Therapy designation, or BTD, from the FDA for the development in the treatment of cervical cancer.

In May 2019, lifileucel received Breakthrough Therapy designation, or BTD, from the FDA for the development in the treatment of cervical cancer.

Updated results from the C-145-04 clinical trial were reported at the ASCO annual meeting on June 1, 2019.

In 27 patients with metastatic cervical cancer, treatment with LN-145 resulted in an ORR of 44%.

At the time of study data cut, there were 3 complete responses and 9 partial responses.

In 27 patients with metastatic cervical cancer, treatment with lifileucel resulted in an ORR of 44%.

At the time of the study data cut, there were 3 complete responses and 9 partial responses.

The DCR was 85%.

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The adverse event profile was generally consistent with the underlying advanced disease and the profile of the lymphodepletion and IL-2 regimens.

Based on an EOP2 meeting held with the FDA in June 2019, we believe that results from the C-145-04 clinical trial may be sufficient to support registration of LN-145 for the treatment of patients with metastatic cervical cancer.

Based on an EOP2 meeting held with the FDA in June 2019, we believe that results from the C-145-04 clinical trial may be sufficient to support registration of lifileucel for the treatment of patients with metastatic cervical cancer.

In accordance with the FDA’s recommendations, the protocol was amended to further define the patient population.

In November 2019, in order to position LN-145 for potential future use in broader lines of therapy in cervical cancer, we have further amended the C-145-04 trial to collect additional data on early-line patients as well as late-line patients by adding additional cohorts, in anticipation of a changing landscape in this indication, including Cohort 2 for patients that had previously received anti-PD-1 therapy.

These additional cohorts also allow access to TIL therapy when the pivotal Cohort 1 is completed and we believe may support expanded access to LN-145.

In November 2019, in order to position lifileucel for potential future use in broader lines of therapy in cervical cancer, we have further amended the C-145-04 trial to collect additional data on early-line patients as well as late-line patients by adding additional cohorts, in anticipation of a changing landscape in this indication, including Cohort 2 for patients that had previously received anti-PD-1 therapy.

These additional cohorts also allow access to TIL therapy when the pivotal Cohort 1 is completed and we believe may support expanded access to lifileucel.

Cohort 2 of the C-145-04 trial continues and is expected to complete enrollment during the second half of 2020.

We intend to initiate a dialog with the FDA subsequent to such completion to discuss BLA submission plans.

C-145-03 is our ongoing Phase 2, multicenter trial that we are conducting to assess the safety and efficacy of LN-145 for the treatment of patients with recurrent metastatic squamous cell carcinoma of the head and neck.

C-145-03 is our ongoing Phase 2, multicenter trial that we are conducting to assess the safety and efficacy of our product candidate LN-145 for the treatment of patients with recurrent metastatic squamous cell carcinoma of the head and neck.

In October 2018, we reported that, to date, preliminary data for 13 patients in the C-145-03 clinical trial yielded an ORR of 31% with a DOR ranging from 2.8 to 7.6 months.

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The patients receive lifileucel in combination with pembrolizumab.

In Cohort 2A, we are enrolling advanced, recurrent, or metastatic head and neck squamous cell carcinoma patients who are naïve to prior immunotherapy including anti-PD-1/anti-PD-L1 therapy.

In Cohort 2A, we are enrolling advanced, recurrent, or metastatic head and neck squamous cell carcinoma, or HNSCC, patients who are naïve to prior immunotherapy including anti-PD-1/anti-PD-L1 therapy.

The patients will receive LN-145 in combination with pembrolizumab.

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In addition to its ongoing enrollment in the U.S., the IOV-COM-202 trial has also received regulatory approval in Canada and in certain European countries.

In October 2020, we disclosed an abstract that was accepted for presentation at the Society for Immunotherapy in Cancer, which included interim results from ongoing Cohort 2A of the IOV-COM-202 trial as follows.

Nine HNSCC patients have received LN-145 plus pembrolizumab with a median duration of follow up of 6.9 months.

Nine and eight patients were evaluable for safety and efficacy, respectively.

Four patients had a confirmed, objective response with an ORR of 44% including 1 complete response and 3 partial responses.

Median DOR was not reached.

disease control rate at data cutoff was 89% in 9 patients, and 7 of the 8 evaluable patients (87.5%) had a reduction in target lesions.

The mean number of prior therapies was 1.1 with 89% of the patients having received prior chemotherapy.

Four patients were human papilloma virus, or HPV, positive, two patients were HPV negative, and three patients had unknown HPV status.

The treatment emergent adverse Event, or TEAE, profile was consistent with the underlying advanced disease and the known adverse event profiles of pembrolizumab, lymphodepletion, and IL-2 regimens.

The most common TEAEs were chills, hypotension, anemia, thrombocytopenia, pyrexia, fatigue and tachycardia.

In November 2019, we announced that our investigational new drug application, or IND, for our PBL therapy, IOV-2001, was authorized by the FDA and our sponsored clinical trial using this therapy, IOV-CLL-01, was cleared to proceed.

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Both trials are sponsored by MDACC.

The first trial, NCT03449108, is intended to allow for investigation of LN-145

manufactured by Iovance using our manufacturing processes to treat patients with soft tissue sarcoma, osteosarcoma and platinum resistant ovarian cancer.

The first trial, NCT03449108, is intended to allow for investigation of LN-145 manufactured by Iovance using our manufacturing processes to treat patients with soft tissue sarcoma, osteosarcoma and platinum resistant ovarian cancer.

A second trial under the collaboration with MDACC, NCT03610490, is active as well.

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The financial terms of these contracts are subject to negotiations and may vary from contract to contract and may result in uneven payment flow.

We accrue and expense costs for clinical trial activities performed by third parties based upon

estimates of work completed to date of the individual trial in accordance with agreements established with contract research organizations and clinical trial sites.

We accrue and expense costs for clinical trial activities performed by third parties based upon estimates of work completed to date of the individual trial in accordance with agreements established with contract research organizations and clinical trial sites.

We determine our estimates through discussions with internal clinical personnel and outside service providers as to the progress or stage of completion of trials or services and the agreed upon fee to be paid for such services.

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2020 and 2019

We did not generate any revenues during the three and six months ended June 30, 2020 or June 30, 2019.

Comparison of the Three and Nine Months Ended September 30, 2020 and 2019

We did not generate any revenues during the three and nine months ended September 30, 2020 or September 30, 2019.

Research and Development expenses (in thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

Stock-based compensation expense included in research and development expense

Research and development expense for the three months ended June 30, 2020 increased by $10.0 million, or 25%, compared to the same period in 2019.

The increase was attributable to (i) a $6.9 million increase in clinical trial costs due primarily to higher costs for the purchase of drugs used in the clinical trials, specifically IL-2, (ii) a $4.6 million increase in payroll and related expenses driven by a higher number of full-time research and development employees, and (iii) a $2.7 million increase in stock-based compensation expenses.

These increases were partially offset by a $3.1 million decrease in manufacturing costs due to decreased production runs during the three months ended June 30, 2020.

Research and development expense for the six months ended June 30, 2020 increased by $36.0 million, or 51%, compared to the same period in 2019.

The increase was primarily attributable to (i) a $12.0 million increase in clinical trial costs due to an increase in enrollment across all the trials, (ii) a $10.0 million increase for the license to further develop IOV-3001 obtained from Novartis, (iii) a $9.9 million increase in payroll and related expenses driven by a higher number of full-time research and development employees, and (iv) a $4.4 million increase in stock-based compensation expenses.

Research and development expense for the three months ended September 30, 2020 increased by $1.5 million, or 4%, compared to the same period in 2019.

The increase was primarily attributable to (i) a $5.3 million increase in payroll and related expenses driven by a higher number of full-time research and development employees, and (ii) a $1.9 million increase in stock-based compensation expenses, which were partially offset by a $5.6 million decrease in manufacturing costs due to decreased production runs during the three months ended September 30, 2020.

Research and development expense for the nine months ended September 30, 2020 increased by $37.5 million, or 34%, compared to the same period in 2019.

The increase was primarily attributable to (i) a $15.2 million increase in payroll and related expenses driven by a higher number of full-time research and development employees, (ii) a $11.8 million increase in clinical trial costs due to an increase in enrollment across all the trials, (iii) a $10.0 million increase for the license to further develop IOV-3001 obtained from Novartis, and (iv) a $6.3 million increase in stock-based compensation expenses.

These increases were partially offset by a $4.3 million decrease in manufacturing costs due to decreased production runs in 2020 due to completion of enrollment in the melanoma pivotal program.

General and Administrative expenses (in thousands)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

General and administrative

Stock-based compensation expense included in general and administrative

General and administrative expenses for the three months ended June 30, 2020 increased by $3.5 million, or 32%, compared to the same period in 2019.

General and administrative expenses for the three months ended September 30, 2020 increased by $5.9 million, or 59%, compared to the same period in 2019.

The increase was primarily attributable to a $1.9 million increase in payroll and related expenses and a $2.2 million increase in stock-based compensation expenses driven by a higher number of full-time general and administrative employees and a higher average stock price.

General and administrative expenses for the six months ended June 30, 2020 increased by $8.3 million, or 41%, compared to the same period in 2019.

General and administrative expenses for the nine months ended September 30, 2020 increased by $14.2 million, or 47%, compared to the same period in 2019.

The increase was primarily attributable to (i) a $5.4 million increase in payroll and related expenses driven by a higher number of full-time general and administrative employees and a higher average stock price, (ii) a $5.5 million increase in stock-based compensation expenses, and (iii) a $1.7 million increase in director’s and officer’s insurance premiums.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net interest income

Net interest income for the three and six months ended June 30, 2020 and 2019 decreased by $2.0 million or 77% and $3.8 million or 68% respectively, due to interest income earned on the lower cash balance, and a decrease in interest rates for the three and six months period ended June 30, 2020 as compared to the same period in 2019.

Interest income earned on the net proceeds received from the public offering in June 2020 was minimal during the three months ended June 30, 2020 due to the timing of investment.

Net interest income for the three and nine months ended September 30, 2020 and 2019 decreased by $1.7 million or 81% and $5.6 million or 71% respectively, due primarily to a decrease in interest rates for the three and nine months period ended September 30, 2020 as compared to the same periods in 2019.

Net Loss (in thousands)

Three Months Ended

Six Months Ended

Net loss for the three and six months ended June 30, 2020 increased by $15.5 million or 33% and $48.1 million or 57% compared to the same periods in 2019.

Nine Months Ended

September 30,

Net loss for the three and nine months ended September 30, 2020 increased by $9.1 million or 18% and $57.2 million or 43% compared to the same periods in 2019.

The increase in our net loss was due to the continued expansion of our research and development activities, increased clinical trials and manufacturing activities, and the overall growth of our corporate infrastructure.

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The 2017 Shelf Registration Statement was declared effective on January 19, 2018.

On January 29, 2018, we sold 15,000,000 shares of our common stock at a public offering price of $11.50 per share pursuant to

the 2017 Shelf Registration Statement.

On January 29, 2018, we sold 15,000,000 shares of our common stock at a public offering price of $11.50 per share pursuant to the 2017 Shelf Registration Statement.

We received gross proceeds of approximately $172.5 million and net proceeds of approximately $162.0 million, after deducting underwriting discounts and offering expenses.

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On June 2, 2020, we sold 19,475,806 shares of our common stock at a public offering price of $31.0 per share pursuant to the 2020 Automatic Shelf Registration Statement.

We received gross proceeds of $603.7 million and net proceeds of approximately $567.0 million, after deducting underwriting discounts and offering expenses.

We received gross proceeds of $603.7 million and net proceeds of $567.0 million, after deducting underwriting discounts and offering expenses.

Following the public offering, the 2020 Automatic Shelf Registration Statement remains available for the future issuance of an indeterminate amount of Shelf Securities.

In the future, we may periodically offer one or more of the Shelf Securities in amounts, prices and terms to be announced when and if the securities are offered.

If any of the Shelf Securities covered by the 2020 Automatic Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of such offering at that time.

If any of the Shelf Securities covered by the 2020 Automatic Shelf Registration Statement are offered

for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of such offering at that time.

We are currently engaged in the development of therapeutics to fight cancer.

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We currently do not anticipate that we will generate any significant revenues from the sale or licensing of any products during the 12 months from the date these financial statements are issued.

We have incurred a net loss of $132.6 million for the six months ended June 30, 2020 and used $101.9 million of cash in our operating activities for the six months ended June 30, 2020.

As of June 30, 2020, we had $160.6 million of cash and cash equivalents, $611.3 million of short-term investments, $5.5 million of restricted cash, $758.3 million of stockholders’ equity and had working capital of $727.7 million.

We have incurred a net loss of $191.2 million for the nine months ended September 30, 2020 and used $142.4 million of cash in our operating activities for the nine months ended September 30, 2020.

As of September 30, 2020, we had $68.3 million of cash and cash equivalents, $645.8 million of short-term investments, $5.5 million of restricted cash, $711.8 million of stockholders’ equity and had working capital of $659.2 million.

We expect to continue our research and development activities, initiate pre-commercial activities and to begin construction on our tenant improvements to our new production facility, which will increase the amount of cash we will use during 2020 and beyond.

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The following table summarizes our cash flows for the periods presented from Operating, Investing and Financing Activities (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by:

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Operating Activities

Net cash used in operating activities for the six months ended June 30, 2020 was $101.9 million compared to $62.9 million for the same period in 2019.

Net cash used in operating activities for the nine months ended September 30, 2020 was $142.4 million compared to $105.1 million for the same period in 2019.

The increase of $37.4 million was primarily due to increased costs in research and development activities.

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Investing Activities

Net cash used in investing activities for the six months ended June 30, 2020 was $323.7 million compared to net cash used provided by investing activities of $59.7 million for the same period in 2019.

Net cash used in investing activities for the nine months ended September 30, 2020 was $376.6 million compared to net cash provided by investing activities of $63.2 million for the same period in 2019.

The increase in cash used in investing activities of $439.8 million was primarily due to the purchase of short-term investments to invest the net proceeds from our June 2020 public offering.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2020 was $572.3 million compared to $3.4 million for the same period in 2019.

Net cash provided by financing activities for the nine months ended September 30, 2020 was $573.5 million compared to $4.0 million for the same period in 2019.

The increase of $569.4 million was primarily due to net proceeds of $567.0 million from our June 2020 public offering.

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To date, the COVID-19 Pandemic has not had significant effects on our clinical trial enrollment.

Given the nature and type of our short-term

investments in U.S.

Given the nature and type of our short-term investments in U.S.

government securities, we do not believe that the COVID-19 Pandemic will have a material impact on our current investment liquidity.

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Off-Balance Sheet Arrangements

At June 30, 2020, we had no obligations that would require disclosure as off-balance sheet arrangements.

At September 30, 2020, we had no obligations that would require disclosure as off-balance sheet arrangements.

Significant Accounting Policies and Recent Accounting Standards

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis