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Famous Biotech Billionaire Purchases $26.5 Million Worth of IOVA – Insider Weekends

  • September 17, 2023

Key Insights

  • Famous biotechnology investor Wayne P. Rothbaum purchased $26.5 million worth of a clinical-stage biotechnology company, Iovance Biotherapeutics Inc. (IOVA).
  • Mr. Rothbaum is well known for his investments in companies such as Acerta Pharma, which developed the blood cancer drug Calquence, which was later sold to Astra Zeneca for over $7 billion.
  • Iovance Biotherapeutics primarily develops drugs that combat cancer via investigational tumor-infiltrating lymphocytes (TIL) therapy, and is currently seeking approval for their drug lifileucel – which uses TIL therapy to fight melanoma.
  • The approval process for lifileucel has been ongoing since 2020, and was recently pushed back to February 2024 due to the FDA citing resource constraints, but Iovance has announced that this process will be expedited and will likely complete before the date given.
  • The stock dropped by over 15% following the pushback announcement, but has recently rebounded, and will likely continue to do so following Mr. Rothbaum’s purchase.

We rarely dive into a biotech company for an Insider Weekends article, and it’s even rarer that we write about a clinical-stage biotechnology company. However, on certain occasions, we find some sort of special situation that makes the company worth exploring, as was the case with the cluster of insider purchases at Merrimack Pharmaceuticals (MACK), about which we wrote the following in January:

We decided to continue our recent tradition of looking beyond the top five insider purchases and sales this week after seeing some interesting purchases at a tiny company that saw its stock jump up more than 200% in a single day a few weeks ago. Three different insiders of the company purchased $3 million worth of shares after this big run up in the stock.

Merrimack Pharmaceuticals (MACK) is a biopharmaceutical company located in Cambridge, Massachusetts that does not have any ongoing research and development nor does it have any employees. The reason for the big jump in the stock price and the considerable insider buying given the small size of the company is the pancreatic cancer treating drug Onivyde, which was sold to Ipsen on April 3, 2017.

As part of this sale, Merrimack Pharmaceuticals was entitled to receive up to $450 million in the form of contingent milestone payments from Ipsen, broken up into:

  • $225.0 million upon approval by the U.S. Food and Drug Administration, or FDA, of Onivyde for the first-line treatment of metastatic adenocarcinoma of the pancreas, subject to certain conditions;
  • $150.0 million upon approval by the FDA of Onivyde for the treatment of small-cell lung cancer after failure of first-line chemotherapy; and
  • $75.0 million upon approval by the FDA of Onivyde for an additional indication unrelated to those described above.

Despite the fact that Merrimack Pharmaceuticals no longer had any operations, the Directors kept buying shares in order to profit from the contingent milestone payments that continued to be paid out. In that week’s article, we laid out the full calculations for Merrimack’s true value would be per share, given all the payments, and it worked out to roughly $13 a share, a slight premium to the $12.24 the company is trading at now.

There was one other instance in which we found a biotech company intriguing, and that had more to do with the insider who was purchasing the shares. In a October 2022 Insider Weekends article on the biotech NGM Biopharmaceuticals (NGM), we wrote the following:

…what stood out to us the most was Director David V. Goeddel purchasing shares in biotech company NGM Biopharmaceuticals (NGM). Dr. Goeddel’s purchase was the sixth-largest insider purchase last week, but we still chose to include it due to the interesting circumstances surrounding the transaction..

Founded by Dr. Jin-Long Chen, NGM Biopharmaceuticals is a biotech company that targets cardio-metabolic and liver diseases, age-related retinal degeneration, and the development of cancerous tumors. The stock recently dropped a little over 68% after the company announced that their drug to combat geographic atrophy (which causes blindness in elderly patients) had recently failed its Phase II trial. The drug was one of four drug candidates that were in Phase II, and all other drug candidates from NGM remain in the Phase I. The insider purchase last week was by Dr. David V. Goeddel, the very first non-university scientist hired by the world’s first biotech company, Genentech.

Dr. Goeddel was the third employee at Genentech and worked in the molecular biology field, and later went on to co-found Tularik, a drug discovery company that centered around cell signaling and gene expression control. In 2004, Tularik was acquired by Amgen for $1.3 billion, and Dr. Goeddel became the first Senior Scientific Vice President at Amgen and worked there until 2006. From 2007 onwards, Dr. Goeddel has served as a Managing Partner of the venture capital partnership The Column Group. Dr. Goeddel was also NGM’s CEO from 2008 to 2010, was chairman of the board from 2008, and became a lead independent director in 2018.

Given Dr. Goeddel’s history with NGM and his importance in the biotech sector, we found his purchase significant. In the last two years, Dr. Goeddel has been the only insider to buy shares (mostly through The Column Group), with a large cluster of purchases from May to June of 2022. The only other insider transactions are sales and options exercises coming from Dr. Jin-Long Chen and Dr. Hsiao D. Lieu (former VP at Genentech and current Chief Medical Officer and Senior VP at NGM).

The biotechnology company that we’ll be discussing in this post falls under the same category that NGM Biopharmaceuticals did. A note of caution when dealing with biotech companies – despite Mr. Goeddel’s experience, NGM’s stock did not do well after his insider purchases.

When we first saw the $26.5 million purchase of the clinical-stage biotech Iovance Biotherapeutics Inc. (IOVA), we were ready to pass by the company before we started doing research on Wayne P. Rothbaum (the director who made the purchase). We came across this absolutely fascinating article on Forbes that made for a very interesting read on who Mr. Rothbaum was and his significance in the biotech sphere.

Mr. Rothbaum is hailed as one of the most proficient biotech investors, yet is relatively unknown to the general public. Despite being a billionaire and running his investment firm Quogue Capital for years, there is little information about him online. This could have to do with the fact that he manages his own assets via Quogue Capital. However, what Mr. Rothbaum is most known for is his support for various new biotech companies that have gone on to be extremely successful, such as the startup Acerta Pharma which developed the blood cancer drug Calquence. Acerta Pharma then sold Calquence to AstraZeneca for $7 billion and the drug generated over $2 billion in revenues last year.

Mr. Rothbaum is also known for taking large risks and an aggressive approach to biotech companies, buying a large amount of shares of new biotech companies. This recent purchase of Iovance Biotherapeutics was not his only purchase of the company – he has been buying shares since 2018, and he last purchased over $65 million worth of shares in December 2022. What’s really interesting is that despite all these purchases, Mr. Rothbaum has never sold his shares, even as the price ran up to over $50 a share.

Mr. Rothbaum made numerous purchases of Iovance Bioherapeutics, but never sold, even after the stock soared to over $50 share.
Mr. Rothbaum made numerous purchases of Iovance Biotherapeutics, but never sold, even after the stock soared to over $50 a share.

Iovance Biotherapeutics is a company that focuses on fighting cancer via investigational TIL therapy. The body has naturally occurring tumor-infiltrating lymphocytes (TIL) cells that fight cancer, but lose their capabilities once cancer fully attacks the body. Iovance develops a form of therapy that takes these naturally occurring TIL cells in the patient’s body and cultivates them outside the body to be readministered to the patient as a one-time treatment. Iovance has multiple drugs in its pipeline, as pictured below, but the most important of which is the drug lifileucel – which uses TIL therapy to treat melanoma, a type of skin cancer.

Drugs in Iovance's Pipeline, first screenshot

Drugs in Iovance's Pipeline, second screenshot
Drugs in Iovance’s Pipeline

As seen, lifileucel is the drug that is furthest in Iovance’s pipeline, yet is also the drug that seems to have run into many problems. The drug was set to receive approval this year, but the FDA has delayed the approval once again citing resource constraints. Iovance has been attempting to get approval for lifileucel since 2020 but a decision date was pushed back to February 2024. However, Iovance met with the FDA and assures investors that the resource constraints are being addressed. The review process is being expedited – and is likely to be completed before the February 2024 date. The company received orphan drug status for lifileucel back in 2015, but it hasn’t done much to speed up the approval process.

Following this new development of the decision date getting pushed out to February 2024, Iovance’s stock dropped by over 15%, but rebounded by 13.46% last Friday. We suspect following Mr. Rothbaum’s purchase (which actually came after the rebound), the stock may recover even more once the market reopens on Monday. No other drugs in Iovance’s pipeline are as far as lifileucel, but Iovance has many drugs that are working in combination with lifileucel – so the FDA approval of lifileucel is important.

As for financial results, as is typical of clinical-stage biotechnology companies, Iovance is not making any profit. Looking at the balance sheet, the company still has $236 million in net cash. If the lifileucel drug is approved by February 2024 as is expected, we might see a turnaround over the next few years in financial results, and the stock will also likely soar. Considering Mr. Rothbaum’s long history with biotech companies, this is one of the more interesting biotech opportunities we have come across.

Editor’s Note: Tamanna Suria contributed to this article.

Welcome to edition 699 of Insider Weekends. Insider buying increased last week with insiders purchasing $69.98 million of stock compared to $34.62 million in the week prior. Selling also increased to $2.02 billion compared to $1.05 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by the total insider purchases that week. The adjusted ratio for last week dropped to 28.89. In other words, insiders sold almost 29 times as much stock as they purchased. This week, the Sell/Buy ratio was favorable, compared to the prior week when the ratio stood at 30.37.

Notable Insider Buys:

1. Iovance Biotherapeutics, Inc. (IOVA): $5.27

Director Wayne P. Rothbaum acquired 5,000,000 shares of this clinical-stage biotechnology company, paying $5.30 per share for a total amount of $26.5 million. These shares were purchased indirectly by Quogue Capital LLC.

You can view the list of recent insider transactions for Iovance Biotherapeutics, Inc. here.

P/E: N/A Forward P/E: -3.71 Industry P/E: 30.17
P/S: 5486.49 Price/Book: 2.05 EV/EBITDA: -2.72
Market Cap: $1.31B Avg. Daily Volume: 5,734,559 52 Week Range: $4.41 – $10.86

2. Asana, Inc. (ASAN): $18.25

President, CEO, & Chair Dustin A. Moskovitz acquired 554,847 shares of this work management platform, paying $20.08 per share for a total amount of $11.14 million. Mr. Moskovitz increased his stake by 1.31% to 42,917,649 shares with this purchase.

You can view the list of recent insider transactions for Asana, Inc. here.

P/E: -11.85 Forward P/E: -67.59 Industry P/E: 25.18
P/S: 6.61 Price/Book: 11.99 EV/EBITDA: -11.83
Market Cap: $4.01B Avg. Daily Volume: 2,391,554 52 Week Range: $11.32 – $27.14

3. ChargePoint Holdings, Inc. (CHPT): $5.62

Director Bruce R. Chizen acquired 500,000 shares of this electric vehicle (EV) charging networks provider, paying $5.79 per share for a total amount of $2.89 million. These shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for ChargePoint Holdings, Inc. here.

P/E: N/A Forward P/E: -28.1 Industry P/E: 19.40
P/S: 3.62 Price/Book: 7.35 EV/EBITDA: -6.24
Market Cap: $2.02B Avg. Daily Volume: 10,335,196 52 Week Range: $4.96 – $18.25

4. Porch Group, Inc. (PRCH): $0.8323

CEO, Chairman and Founder Matt Ehrlichman acquired 1,007,282 shares of this software platform, paying $0.83 per share for a total amount of $833,139. Mr. Ehrlichman increased his stake by 8.26% to 13,203,582 shares with this purchase.

You can view the list of recent insider transactions for Porch Group, Inc. here.

P/E: N/A Forward P/E: -0.82 Industry P/E: 25.18
P/S: 0.25 Price/Book: -2.22 EV/EBITDA: -1.35
Market Cap: $81.92M Avg. Daily Volume: 1,467,509 52 Week Range: $0.71 – $3.99

5. Burke & Herbert Financial Services Corp. (BHRB): $50.18

Shares of this regional bank were acquired by 4 insiders:

  • Director Barnwell Julian Forrest Jr. acquired 5,000 shares, paying $49.68 per share for a total amount of $248,412. These shares were purchased indirectly through a trust.
  • Director Shawn Patrick McLaughlin acquired 2,500 shares, paying $49.45 per share for a total amount of $123,626. Mr. McLaughlin increased his stake by 5.49% to 48,000 shares with this purchase.
  • Chair, President, & CEO David P. Boyle acquired 2,000 shares, paying $48.54 per share for a total amount of $97,090. Mr. Boyle increased his stake by 15.99% to 14,510 shares with this purchase.
  • Director Jose David Riojas acquired 1,000 shares, paying $48.66 per share for a total amount of $48,660. Mr. Riojas increased his stake by 33.33% to 4,000 shares with this purchase.

You can view the list of recent insider transactions for Burke & Herbert Financial Services Corp. here.

P/E: 9.8 Forward P/E: N/A Industry P/E: 9.52
P/S: 3.01 Price/Book: 1.29 EV/EBITDA: 33.15
Market Cap: $372.77M Avg. Daily Volume: 56,301 52 Week Range: $47.72 – $85

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Airbnb, Inc. (ABNB): $142.75

Shares of Airbnb were sold by 4 insiders:

  • Director Joseph Gebbia sold 166,667 shares for $145.28, generating $24.21 million from the sale. These shares were sold indiretly through a trust.
  • CEO and Chairman Brian Chesky sold 150,000 shares for $150.06, generating $22.51 million from the sale.
  • Chief Strategy Officer Nathan Blecharczyk sold 60,000 shares for $145.22, generating $8.71 million from the sale.
  • Director Jeffrey D. Jordan sold 2,000 shares for $150.00, generating $300,000 from the sale. These shares were sold indiretly through a trust.

You can view the list of recent insider transactions for Airbnb, Inc. here.

P/E: 42.23 Forward P/E: 36.23 Industry P/E: 15.63
P/S: 10.02 Price/Book: 17.81 EV/EBITDA: 42.02
Market Cap: $91.09B Avg. Daily Volume: 6,633,883 52 Week Range: $81.91 – $154.95

2. AppLovin Corporation (APP): $42.82

Director Eduardo Vivas sold 854,375 shares of this software-based platform for mobile app developers for $41.49, generating $35.45 million from the sale. 2,700 of these shares were sold indirectly through a trust.

You can view the list of recent insider transactions for AppLovin Corporation here.

P/E: 856.4 Forward P/E: 32.2 Industry P/E: 25.18
P/S: 5.17 Price/Book: 9.83 EV/EBITDA: 21.65
Market Cap: $14.89B Avg. Daily Volume: 2,582,635 52 Week Range: $9.14 – $43.76

3. Cactus, Inc. (WHD): $51.21

Shares of this wellheads and pressure control equipment manufacturer were sold by 3 insiders:

  • Chairman and CEO Scott Bender sold 250,000 shares for $55.74, generating $13.94 million from the sale.
  • Chief Operating Officer Steven Bender sold 19,362 shares for $55.06, generating $1,066,033 from the sale.

You can view the list of recent insider transactions for Cactus, Inc. here.

P/E: 25.1 Forward P/E: 14.03 Industry P/E: 8.85
P/S: 3.65 Price/Book: 4.35 EV/EBITDA: 12.66
Market Cap: $3.31B Avg. Daily Volume: 469,279 52 Week Range: $31.365 – $58.3

4. Salesforce, Inc. (CRM): $214.61

Shares of this business services company were sold by 4 insiders:

  • Chair and CEO Marc Benioff sold 75,000 shares for $222.18, generating $16.66 million from the sale.
  • President and CFO Amy E. Weaver sold 16,277 shares for $225.73, generating $3.67 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Pres/Chief Engineering Officer Srinivas Tallapragada sold 10,000 shares for $225.73, generating $2.26 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Co-Founder and CTO Parker Harris sold 3,500 shares for $224.33, generating $785,157 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

You can view the list of recent insider transactions for Salesforce, Inc. here.

P/E: 134.13 Forward P/E: 24.36 Industry P/E: 25.18
P/S: 6.31 Price/Book: 3.6 EV/EBITDA: 27.83
Market Cap: $208.82B Avg. Daily Volume: 5,360,296 52 Week Range: $126.34 – $238.22

5. Datadog, Inc. (DDOG): $94.55

Shares of this monitoring and analytics platform for developers were sold by 4 insiders:

  • Director Dev Ittycheria sold 123,750 shares for $100.00, generating $12.38 million from the sale. 55,000 of these shares were sold indirectly by a trust.
  • Chief Executive Officer Olivier Pomel sold 85,637 shares for $98.15, generating $8.41 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Financial Officer David M. Obstler sold 10,000 shares for $98.16, generating $981,583 from the sale. These shares were sold as a result of exercising options immediately prior to the sale.
  • Chief Revenue Officer Sean Michael Walters sold 2,420 shares for $99.19, generating $240,052 from the sale.

You can view the list of recent insider transactions for Datadog, Inc. here.

P/E: -353.59 Forward P/E: 58.01 Industry P/E: 25.18
P/S: 16.2 Price/Book: 18.6 EV/EBITDA: -327.88
Market Cap: $30.73B Avg. Daily Volume: 4,391,562 52 Week Range: $61.34 – $118.02

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium and Plus members.

Disclaimer:  I hold a long position in Atlassian (TEAM). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.