IOVA stock price soared but risk/reward is unfavourable for now

Iovance Biotherapeutics (NASDAQ: IOVA) stock price defied gravity on Friday as investors cheered the latest FDA update about its drug. The shares jumped by more than 15% even as the Nasdaq 100 and S&P 500 indices retreated. This jump pushed its market cap to over $1.1 billion.

Why did Iovance Biotherapeutics shares jump?

Iovance Biotherapeutics stock price has not done well this year. It has crashed by more than 50% in the past 12 months. Other companies in the cell therapy industry like Orgenesis, Omeros Group, and Instill Bio have all slipped. A likely reason for this sell-off is the fear about the efficacy and safety of these products.

This explains why Iovance Biotherapeutics stock jumped on Friday. In a statement, the FDA found no major issue with its melanoma drug lifileucel. The FDA is still studying the drug and it intends to deliver its decision on February 24th next year. In the statement, the company attributed the approval delay to the limited resources that the FDA has.

For starters, Iovance Biotherapeutics is a company that is developing drugs to treat solid tumors. Its drug deploys billions of individualized patient-specific polyclonal TIL cells to recognize and target a multitude of non-overlapping neoantigens in these patients. 

Iovance, whose stock peaked at over $50 a few years ago, has been working to gain approval by the FDA. Most of the trials data so far have been positive, with a success rate of over 85%. 

I believe that the Iovance stock price has crashed in the past few months because of the complex nature of the company’s products. For one, no other company has achieved approvals of targeting a solid tumor cancer in the past. As such, the need for more time by the FDA is understandable. 

IOVA stock price forecast

Investing in early-stage companies like Iovance Biotherapeutics is a high-risk and high-reward situation. In most cases, approval of such a product leads to the shares to jump and vice versa. The challenge for investors is that there are now a few more months to go before the FDA gives its verdict.

On the daily chart, we see that the IOVA stock price has been in a strong bearish trend in the past few months. This week, the shares crashed and moved below the key support level at $5.23, the lowest level in April. It was also the lower side of the descending triangle pattern. 

The MACD has moved below the neutral point while the price is below the 50-day moving average. Therefore, the outlook for the stock is bearish, with the next key level to watch being at $4. I suspect that the shares will regain its volatility ahead of the FDA approval date in February.