ITOS iTeos Therapeutics Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-39401

 

 

iTeos Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware		84-3365066
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
321 Arsenal St Watertown, MA		02472
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (339) 217 0162

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.001 par value per share		ITOS		Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☒
Non-accelerated filer		☐		Smaller reporting company		☐
				Emerging growth company		☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 1, 2024 the registrant had 36,521,845 shares of common stock, $0.001 par value per share, outstanding.

 

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Summary of the material risks associated with our business

Our business is subject to numerous risks and uncertainties that you should be aware of before making an investment decision, including those highlighted in the section entitled “Risk Factors”. These risks include, but are not limited to, the following:

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The above summary risk factors should be read together with the full risk factors under in the heading “Risk factors” and the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes, as well as in other documents that we file with the Securities and Exchange Commission ("SEC"). The risks summarized above or described below are not the only risks that we face. Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations and future growth prospects.

 

 

Special note regarding forward-looking statements

 

This Quarterly Report on Form 10-Q, including the section entitled "Risk factors" and "Management’s discussion and analysis" of financial condition and results of operations” contains express or implied forward-looking statements. These statements relate to future events or future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

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In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” "will," "would," "if," or the negatives of these terms or other comparable terminology, although not all forward-looking statements contain such identifying terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect our results and financial condition. Factors that may cause actual results to differ from current expectations include, among other things, those listed under the section titled “Risk factors” in this Quarterly Report on Form 10-Q and in any subsequent filings with the SEC. If one of these risks or uncertainties occur, or if underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Statements regarding our cash runway do not indicate when we may access the capital markets.

While we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to do so except to the extent required by applicable law. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q.

 

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Table of Contents

 

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and comprehensive loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
	Signatures	70

 

 

 

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated balance sheets

(unaudited)

 

(in thousands, except share amounts)		June 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents		$	251,098			$	251,177
Short-term investments (amortized cost of $320,709)			320,158				280,739
Grants receivable			393			—
Research and development tax credits receivable			727				135
Refundable income taxes			6,228				6,365
Unbilled milestone receivable			35,000			—
Prepaid expenses and other currents assets			13,001				12,236
Total current assets			626,605				550,652
Property and equipment, net			5,334				4,696
Long-term investments (amortized cost of $108,164)			107,846				100,539
Research and development tax credits receivable, net of current portion			5,465				4,508
Restricted cash			303				274
Right of use assets			5,500				6,036
Other assets			788				883
Total assets		$	751,841			$	667,588
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	11,055			$	11,293
Accrued expenses and other current liabilities			15,431				7,058
Accrued personnel expenses			5,299				8,562
Payable for investments			—				9,787
Deferred income			1,604				2,063
Lease liabilities			1,277				1,251
Total current liabilities			34,666				40,014
Grants repayable, net of current portion			6,028				6,609
Lease liabilities, net of current portion			4,239				4,807
Unrecognized tax benefits			43,040				40,930
Total liabilities			87,973				92,360
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value: 150,000,000 shares authorized at    June 30, 2024 and December 31, 2023; 36,519,945    and 35,838,080 shares issued and outstanding, respectively			37				36
Additional paid-in capital			601,102				463,799
Accumulated other comprehensive loss			(16,560	)			(13,240	)
Retained earnings			79,289				124,633
Total stockholders’ equity			663,868				575,228
Total liabilities and stockholders’ equity		$	751,841			$	667,588

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated statements of operations and comprehensive loss

(unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except share and per share amounts)		2024				2023				2024				2023
Revenue:
License and collaboration revenue		$	35,000			$	—			$	35,000			$	12,595
Total revenue			35,000				—				35,000				12,595
Operating expenses:
Research and development expenses			36,709				29,186				71,238				54,885
General and administrative expenses			12,457				13,435				25,160				25,385
Total operating expenses			49,166				42,621				96,398				80,270
Loss from operations			(14,166	)			(42,621	)			(61,398	)			(67,675	)
Other income and expenses:
Grant income			522				799				1,472				1,534
Research and development tax credits			893				386				1,696				729
Interest income			7,817				8,042				15,203				15,893
Other income, net			67				326				2,158				2,099
Loss before income taxes			(4,867	)			(33,068	)			(40,869	)			(47,420	)
Income tax expense			(2,261	)			(1,232	)			(4,475	)			(2,431	)
Net loss		$	(7,128	)		$	(34,300	)		$	(45,344	)		$	(49,851	)
Basic net loss per common share		$	(0.18	)		$	(0.96	)		$	(1.20	)		$	(1.39	)
Diluted net loss per common share		$	(0.18	)		$	(0.96	)		$	(1.20	)		$	(1.39	)
Weighted-average common shares outstanding - basic			39,699,053				35,768,952				37,771,084				35,742,641
Weighted-average common shares outstanding - diluted			39,699,053				35,768,952				37,771,084				35,742,641
Net loss		$	(7,128	)		$	(34,300	)		$	(45,344	)		$	(49,851	)
Foreign currency translation adjustments			(151	)			104				(2,416	)			(1,902	)
Unrealized loss on available-for-sale securities			(72	)			(1,722	)			(906	)			(1,620	)
Comprehensive loss		$	(7,351	)		$	(35,918	)		$	(48,666	)		$	(53,373	)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated statements of stockholders’ equity

(unaudited)

 

														Accumulated
										Additional				other								Total
In thousands except share amounts		Common stock								paid-in				comprehensive				Retained				stockholders’
		Shares				Amount				capital				loss				earnings				equity
Balance at December 31, 2022			35,611,219			$	36			$	435,665			$	(9,644	)		$	237,275			$	663,332
Stock-based compensation			—				—				5,807				—				—				5,807
Common stock issued upon exercises of options			149,408				—				578				—				—				578
Currency translation adjustment			—				—				—				(2,006	)			—				(2,006	)
Unrealized gain on available-for-sale securities			—				—				—				102				—				102
Net loss			—				—				—				—				(15,551	)			(15,551	)
Balance at March 31, 2023			35,760,627			$	36			$	442,050			$	(11,548	)		$	221,724			$	652,262
Stock-based compensation			—				—				6,964				—				—				6,964
Common stock issued upon exercises of options			21,292				—				218				—				—				218
Currency translation adjustment			—				—				—				104				—				104
Unrealized loss on available-for-sale securities			—				—				—				(1,722	)			—				(1,722	)
Net income			—				—				—				—				(34,300	)			(34,300	)
Balance at June 30, 2023			35,781,919			$	36			$	449,232			$	(13,166	)		$	187,424			$	623,526

 

														Accumulated
										Additional				other								Total
In thousands except share amounts		Common stock								paid-in				comprehensive				Retained				stockholders’
		Shares				Amount				capital				loss				earnings				equity
Balance at December 31, 2023			35,838,080				36			$	463,799			$	(13,240	)		$	124,633			$	575,228
Stock-based compensation			—				—				7,263				—				—				7,263
Common stock issued upon exercises of options and release of restricted stock units			5,676				—				22				—				—				22
Currency translation adjustment			—				—				—				(2,265	)			—				(2,265	)
Unrealized loss on available-for-sale securities			—				—				—				(832	)			—				(832	)
Net loss			—				—				—				—				(38,216	)			(38,216	)
Balance at March 31, 2024			35,843,756				36			$	471,084			$	(16,337	)		$	86,417			$	541,200
Stock-based compensation			—				—				8,062				—				—				8,062
Common stock issued upon exercises of options, ESPP purchases, and release of restricted stock units			433,332				—				2,383				—				—				2,383
Issuance of common stock and pre-funded warrant, net of offering costs			1,142,857				1				119,573				—				—				119,574
Exchange of common stock for pre-funded warrant			(900,000	)			—				—				—				—				—
Currency translation adjustment			—				—				—				(151	)			—				(151	)
Unrealized loss on available-for-sale securities			—				—				—				(72	)			—				(72	)
Net loss			—				—				—				—				(7,128	)			(7,128	)
Balance at June 30, 2024			36,519,945				37			$	601,102			$	(16,560	)		$	79,289			$	663,868

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated statements of cash flows

(unaudited)

 

		Six Months Ended June 30,
(in thousands)		2024				2023
Cash flows from operating activities
Net loss		$	(45,344	)		$	(49,851	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			614				447
Stock-based compensation			15,325				12,771
Non-cash: Net accretion of available-for-sale debt securities			(5,527	)			(5,386	)
Change in operating lease right-of-use assets			(5	)			—
Changes in operating assets and liabilities:
Grants receivable			(397	)			584
Research and development tax credits receivable			(1,705	)			(729	)
Refundable income taxes			140				(1,839	)
Unbilled milestone receivable			(35,000	)
Prepaid expenses and other current assets			(1,051	)			702
Accounts payable			(218	)			(2,512	)
Accrued expenses and other liabilities			5,130				989
Income tax payable			—			—
Deferred income			(399	)			1,318
Deferred revenue			—				(12,595	)
Unrecognized tax benefits			2,110			—
Net cash used in operating activities			(66,327	)			(56,101	)
Cash flows from investing activities
Purchases of investments			(245,073	)			(139,037	)
Proceeds from maturities of investments			193,182				128,265
Purchase of property and equipment			(1,387	)			(819	)
Net cash used in investing activities			(53,278	)			(11,591	)
Cash flows from financing activities
Proceeds from issuance of common stock upon exercise of options and ESPP purchases			2,404				796
Proceeds from issuance of common stock and pre-funded warrant			119,994
Net cash provided by financing activities			122,398				796
Effects of exchange rate changes on cash, cash equivalents and restricted cash			(2,843	)			(1,659	)
Net decrease in cash, cash equivalents and restricted cash			(50	)			(68,555	)
Cash, cash equivalents and restricted cash at beginning of period			251,451				285,038
Cash, cash equivalents and restricted cash at end of period		$	251,401			$	216,483
Non-cash investing and financing activities
Capital expenditure included in accounts payable		$	2			$	20
Operating lease liabilities arising from obtaining right-of-use assets			235				1,059
Unrealized loss on available-for-sale securities			(906	)			(1,620	)
Offering costs included within accounts payable			277				—
Supplemental disclosure of cash flows
Cash paid for taxes		$	2,384			$	4,321

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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iTeos Therapeutics, Inc.

Notes to condensed consolidated financial statements

(unaudited)