Down More Than 75% This Year, Should Investors Throw in the Towel on Iovance Biotherapeutics Stock?

Entering trading this week, shares of Iovance Biotherapeutics (NASDAQ: IOVA) have crashed by nearly 78% since the start of the year. It has been an abysmal start to 2025 for a company that does possess some attractive long-term growth prospects.

But despite the optimism, a wave of bearishness has taken over, with Iovance's stock in the midst of a deep free fall. What's behind this sell-off, and can this be a good buying opportunity for long-term investors, or are you better off avoiding the stock?

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The company's recent financial performance wasn't encouraging

Iovance's stock has been falling for the bulk of the year, and it hasn't been just a single event that has weighed on its valuation. The risk around the business centers on its financials, and unfortunately, Iovance did little to calm those concerns when it posted its most recent earnings numbers.

On May 8, the company reported its first-quarter numbers for 2025. It experienced significant growth as sales totaled $49 million for the period ending March 31 (versus less than $1 million in revenue in the prior-year period), as the company has benefited from the launch of Amtagvi, a cellular therapy approved for melanoma.

But the big, more concerning news, was that Iovance was slashing its guidance for the year, projecting between $250 to $300 million in product revenue for 2025. That's down sharply from the $450 to $475 million range it was projecting previously just a few months earlier. The company didn't identify a clear single reason for the adjustment, but it appears timelines and "growth trajectories" at treatment centers (i.e. hospitals, medical centers) may have changed.

Iovance posted a loss of $116 million for the quarter, and with lower-than-expected revenue growth, that's going to make it more difficult for it to get to breakeven anytime soon.

The potential is there, but so, too, is the risk for ongoing cash burn

The company's management remains optimistic that Amtagvi can be a blockbuster for the company and generate over $2 billion globally. However, investors appear to be underwhelmed with the early rollout of Amtagvi (it was approved in 2024). And the problem is that the company may require frequent cash injections to keep its business going.

Through the first three months of the year, the company used up nearly $104 million from just its day-to-day operating activities. There simply isn't much of a buffer for Iovance to cover all of its needs from its current financial position. Its cash and short-term investments, as of the end of the period, totaled just under $360 million.

If it's going through more than $100 million quarterly, it seems inevitable that frequent stock offerings will be necessary to keep the business going. Unless the company shows strong sales, the market won't be impressed, and it'd be difficult to keep the stock from falling further.

Iovance isn't a suitable option for risk-averse investors

Without a high risk tolerance, you may be better off avoiding Iovance stock. It's a risky healthcare company to invest in and while it may have a billion-dollar therapy in its portfolio, it's still in the early stages of its growth, which can make for a volatile ride for investors. There can be some considerable upside for the business in the long run; however, this is a stock I'd take a wait-and-see approach with.

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David Jagielski 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.