Iovance Biotherapeutics shares took a quick pair of hammer blows on Tuesday and Wednesday, dropping nearly 40% on bad news from the U.S. Food and Drug Administration, followed by the unexpected departure of the company's CEO.
The CEO's departure shocked investors, and leaves questions about the future of the company, and of the cancer drugs it is developing. Iovance has said little about the news. The company's general counsel is filling in as interim CEO.
Some analysts have cut their price targets on the stock, though they seem to agree that the company's lead drug candidate, a cancer treatment called lifileucel, will eventually make it to market.
Iovance (ticker: IOVA) had a market value of $4 billion on Tuesday. That was down to $2.5 billion as of Thursday morning, with the stock a bit below $17 compared with a closing price of nearly $27 on Tuesday.
Iovance's unfortunate stretch started Tuesday night, after the market closed, when the company announced that it would delay the submission of an application to the FDA for approval of lifileucel. The delay came after feedback from the agency over Iovance's potency assays for the drug, tools used to validate it during manufacturing.
Iovance said it would continue to develop and validate the potency assays, and now expects to submit the drug for approval in the first half of next year. It had planned to make the submission in the second half of this year.
The news didn't concern analysts much, at least at first. In a note out late Tuesday, Cowen analyst Boris Peaker wrote that the news was a disappointment, but that he still believed that lifileucel would eventually be approved.
Truist analyst Robyn Karnauskas wrote that she still believed that the company would be the first to bring to market a drug from the new category that lifileucel represents. She reiterated her Buy rating on the stock, though she dropped her price target to $48, from $50.
The shock came on Wednesday, when the company filed a statement with the Securities and Exchange Commission , saying that its CEO, Maria Fardis, had told it that she would resign "to pursue other opportunities." It said that the board had appointed the general counsel, Frederick Vogt, as interim CEO.
Shares tumbled. The stock, which closed Tuesday at $26.97, dropped to $16.33 by the end of trading on Wednesday.
Iovance didn't immediately respond to a request for comment on the departure.
Analysts said that they hadn't seen it coming. "Given our frequent communication with management …Maria's resignation does come as a surprise to us," Truist's Karnauskas wrote on Wednesday. "It is not illogical to think that this came from a disagreement with the Board."
Jefferies analyst Michael Yee acknowledged that the news would give the impression of a problem with lifileucel. "The optics of a CEO leaving the day after announcing a delay in the BLA filing are challenging and bring up questions about whether something else is behind the change or whether the Board chose to make the change," he wrote. Still, he said he thinks the drug works, and will eventually receive FDA approval.
Mizuho analyst Mara Goldstein, meanwhile, cut her price target to $30 from $55, while maintaining her Buy rating.
"We recognize that the combination of these factors places an overhang on shares that will likely persist, and we await further guidance from management, though we remain focused on the commercial potential for lifileucel based on clinically meaningful results produced thus far," Goldstein wrote.
Shares of Iovance were up 3.6% in premarket trading on Thursday, to $16.92.