Shares of Iovance Biotherapeutics (NASDAQ: IOVA) were crashing 46.6% lower as of 10:40 a.m. ET on Friday. The huge decline came after the drugmaker announced its first-quarter results before the market opened.
Iovance reported Q1 revenue of $49.3 million, $43.6 million of which came from its advanced melanoma drug, Amtagvi. Although this result reflected tremendous growth from the $715,000 in revenue recorded in the prior-year period, it was much lower than the average analysts’ revenue estimate of $82.4 million. Iovance also lowered its full-year revenue guidance to between $250 million and $300 million, a sharp reduction from its previous outlook of revenue between $450 million and $475 million.
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How concerning is Iovance’s big Q1 miss?
Iovance interim president and CEO Frederick Vogt blamed the lower-than-expected Q1 revenue on “a significant reduction in capacity during the annual scheduled maintenance at the Iovance Cell Therapy Center (iCTC).” He said that infusion volume should rebound in Q2.
Should investors not be concerned about Iovance’s big Q1 miss with this simple explanation? Maybe not as much as the stock’s steep plunge reflects. However, the company’s full-year revenue guidance cut hints that the problem goes deeper than a temporary capacity issue. Iovance’s Q1 sales were roughly $33 million below Wall Street expectations, but its revised full-year outlook is nearly $188 million lower than the previous forecast.
Image source: Getty Images.
Is Iovance stock a buy on the sell-off?
Despite legitimate concerns following Iovance’s surprising Q1 results, I think the stock is a good pick for aggressive investors to buy on the sell-off. There’s still significant commercial potential for Amtagvi in melanoma. The drug has tremendous opportunities in treating other types of solid tumors, too.
Iovance’s management team seems to be learning lessons the hard way in appreciating the challenges of launching a new cell therapy. However, that doesn’t negate the long-term prospects of this beaten-down biotech stock.
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Keith Speights 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.
