Iovance CEO quits after firm discloses delays for its lead drug

Iovance Biotherapeutics Inc. plunged 39% on Wednesday before recovering some of those losses Thursday as its chief executive resigned just hours after the biotech company announced the delay of its lead experimental medicine.

The stock had its biggest drop since June 2013, and trading in Iovance was halted briefly Wednesday after disclosing the abrupt departure of Maria Fardis, who has led the company since 2016. Iovance said in a Securities and Exchange Commission filing that Fardis was leaving to pursue other opportunities and that its general counsel, Frederick G. Vogt, would serve in her role while a replacement was found. Vogt is a Temple University Law graduate who previously practiced at Morgan, Lewis and holds a doctorate in chemistry from Penn State.

The company, which is based in California, didn’t respond to requests seeking further comment on the CEO’s departure.

Late Tuesday, Iovance said a regulatory filing for its most-watched asset lifileucel, an experimental medicine for a deadly skin cancer, would be delayed until next year from 2021. Its shares started plummeting on news of the delay, then dropped further on the CEO’s resignation.

Iovance, which has a three-story office and lab in Philadelphia’s Navy Yard, has been a frequent pick on analysts’ M&A target lists, and before Wednesday 13 of the 14 analysts covering the company rated it the equivalent of a buy, with only one analyst recommending investors just hold on to the stock. Stifel and JMP analysts both dropped their ratings to the equivalent of a hold on Wednesday.

“We don’t expect clarity on the situation anytime soon,” Stifel’s Benjamin Burnett wrote in a note to clients. “The abrupt departure of the CEO during what was already a sensitive situation adds too much hair to recommend shares.”

Hopes had been high for Iovance’s drug — which belongs to a new class of immunotherapy medicines known as tumor infiltrating lymphocytes, or TILS, a special immune cell that attacks cancer cells.

The drug seemed very effective in early tests of melanoma patients. But almost all patients also had severe or life-threatening side effects, and one patient died of a complication possibly related to the therapy.

Fardis, an organic chemist and former Gilead Sciences executive, became Iovance’s CEO in June 2016, and gets credit for turning the firm around. In 2014, when Iovance was called Lion Biotechnologies, its then-CEO resigned amid a stock promotion scandal.

Under Fardis, Iovance made progress toward a scientific breakthrough, while also impressing Wall Street analysts at least until this week.

Burnett says the chance of success for Iovance’s drug is now a coin flip. The stock, which topped $27 on Tuesday before the CEO’s sudden exit, closed Thursday at $18.75.

A competing drug developer, Instil Bio Inc., fell 15% on Wednesday, the biggest drop ever for the company, which went public in March.