itos-10q_20200630.htm

 

 

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, 2020

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.)

139 Main Street

Cambridge, MA

 

02142

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (339) 217 0161

 

 

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 27, 2020, the registrant had 35,044,758 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

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 Redeemable Convertible Preferred Stock and Stockholders’ Equity/Deficit

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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

84

Item 3.

Defaults Upon Senior Securities

84

Item 4.

Mine Safety Disclosures

84

Item 5.

Other Information

84

Item 6.

Exhibits

85

Signatures

86

 

 

 

i


 

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,

2020

 

 

December 31,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

136,870

 

 

$

19,868

 

Grants receivable

 

 

212

 

 

 

5,196

 

R&D tax credits receivable

 

 

133

 

 

 

133

 

Prepaid expenses and other current assets

 

 

3,180

 

 

 

879

 

Total current assets

 

 

140,395

 

 

 

26,076

 

Property and equipment, net

 

 

1,251

 

 

 

1,336

 

R&D tax credits receivable

 

 

3,172

 

 

 

2,917

 

Restricted cash

 

 

123

 

 

 

122

 

Other assets

 

 

270

 

 

 

293

 

Total assets

 

$

145,211

 

 

$

30,744

 

Liabilities, redeemable convertible preferred stock and stockholders’

   deficit

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,656

 

 

$

1,174

 

Accrued expenses and other current liabilities

 

 

3,360

 

 

 

4,262

 

Preferred stock tranche rights liability

 

 

 

 

 

5,400

 

Deferred income

 

 

1,500

 

 

 

2,360

 

Total current liabilities

 

 

7,516

 

 

 

13,196

 

Grants repayable

 

 

4,161

 

 

 

1,397

 

Other noncurrent liabilities

 

 

484

 

 

 

482

 

Total liabilities

 

 

12,161

 

 

 

15,075

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Redeemable convertible preferred stock:

 

 

 

 

 

 

 

 

Series B-2 preferred stock, $0.001 par value: 44,453,477 and 0 shares

   authorized, issued and outstanding at June 30, 2020 and December 31, 2019,

   respectively; liquidation value of $127,090

 

 

127,090

 

 

 

 

Series B preferred stock, $0.001 par value: 31,989,428 and

   20,942,781 shares authorized at June 30, 2020 and December 31, 2019,

   respectively; 20,942,781 shares issued and outstanding at June 30, 2020

   and December 31, 2019; liquidation value of $55,300

 

 

48,529

 

 

 

46,404

 

Series A-1 and A-2 preferred stock, $0.001 par value: 6,167,726

   shares authorized, issued and outstanding; liquidation value of $7,114

 

 

5,353

 

 

 

5,353

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 90,000,000 and  50,000,000

   shares authorized at June 30, 2020 and December 31, 2019,

   respectively; 388,415 and 256,548 shares issued and outstanding at

   June 30, 2020 and December 31, 2019, respectively

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

687

 

 

 

 

Accumulated other comprehensive loss

 

 

(296

)

 

 

(224

)

Accumulated deficit

 

 

(48,314

)

 

 

(35,865

)

Total stockholders’ deficit

 

 

(47,922

)

 

 

(36,088

)

Total liabilities, redeemable convertible preferred stock and

   stockholders’ deficit

 

$

145,211

 

 

$

30,744

 

 

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

1


 

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)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

$

6,137

 

 

$

3,902

 

 

$

11,962

 

 

$

8,253

 

General and administrative expenses

 

 

2,394

 

 

 

2,093

 

 

 

4,812

 

 

 

3,862

 

Total operating expenses

 

 

8,531

 

 

 

5,995

 

 

 

16,774

 

 

 

12,115

 

Loss from operations

 

 

(8,531

)

 

 

(5,995

)

 

 

(16,774

)

 

 

(12,115

)

Other income and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

 

 

1,081

 

 

 

678

 

 

 

2,670

 

 

 

1,442

 

Fair value adjustment for preferred stock tranche rights

   liability and anti-dilution warrants liability

 

 

 

 

 

(488

)

 

 

1,265

 

 

 

296

 

R&D tax credits

 

 

186

 

 

 

155

 

 

 

370

 

 

 

353

 

Other income (expense), net

 

 

12

 

 

 

(47

)

 

 

(30

)

 

 

(75

)

Loss before income taxes

 

 

(7,252

)

 

 

(5,697

)

 

 

(12,499

)

 

 

(10,099

)

Income tax benefit (expense)

 

 

50

 

 

 

(58

)

 

 

50

 

 

 

(58

)

Net loss

 

 

(7,202

)

 

 

(5,755

)

 

 

(12,449

)

 

 

(10,157

)

Cumulative dividends on Series A preferred stock

 

 

(106

)

 

 

(106

)

 

 

(213

)

 

 

(213

)

Accretion of redeemable convertible preferred stock to

   redemption value

 

 

(2,994

)

 

 

(915

)

 

 

(4,189

)

 

 

(1,612

)

Net loss attributable to common stockholders

 

$

(10,302

)

 

$

(6,776

)

 

$

(16,851

)

 

$

(11,982

)

Basic and diluted net loss per common share

 

$

(29.49

)

 

$

(36.49

)

 

$

(55.63

)

 

$

(64.52

)

Weighted-average common shares outstanding—basic and

   diluted

 

 

349,290

 

 

 

185,716

 

 

 

302,919

 

 

 

185,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,202

)

 

$

(5,755

)

 

$

(12,449

)

 

$

(10,157

)

Foreign currency translation adjustments

 

 

245

 

 

 

529

 

 

 

(72

)

 

 

262

 

Comprehensive loss

 

$

(6,957

)

 

$

(5,226

)

 

$

(12,521

)

 

$

(9,895

)

 

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

 

 

 

2


 

iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated statements of redeemable convertible preferred stock and stockholders’ equity/deficit

(in thousands except share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Retained

 

 

Total

 

 

 

Series A

 

 

Series B

 

 

 

 

 

Profit

 

 

Additional

 

 

other

 

 

earnings/

 

 

stockholders’

 

 

 

preferred stock

 

 

preferred stock

 

 

Common stock

 

 

certificates

 

 

paid-in

 

 

comprehensive

 

 

(accumulated

 

 

equity/

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit)

 

 

(deficit)

 

Balance at December 31, 2018

 

 

6,167,726

 

 

$

5,353

 

 

 

10,900,376

 

 

$

20,378

 

 

 

185,716

 

 

$

87

 

 

 

7,022

 

 

$

11

 

 

$

 

 

$

(11

)

 

$

(10,765

)

 

$

(10,678

)

Accretion of Series B Preferred Stock to

   redemption value

 

 

 

 

 

 

 

 

 

 

 

697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(205

)

 

 

 

 

 

(492

)

 

 

(697

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

205

 

 

 

 

 

 

 

 

 

205

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(267

)

 

 

 

 

 

(267

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,402

)

 

 

(4,402

)

Balance at March 31,  2019

 

 

6,167,726

 

 

 

5,353

 

 

 

10,900,376

 

 

 

21,075

 

 

 

185,716

 

 

 

87

 

 

 

7,022

 

 

 

11

 

 

 

-

 

 

 

(278

)

 

 

(15,659

)

 

 

(15,839

)

Issuance of Series B Preferred Stock

 

 

 

 

 

-

 

 

 

10,042,405

 

 

 

22,372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of Series B Preferred Stock to

   redemption value

 

 

 

 

 

 

 

 

 

 

 

915

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(203

)

 

 

 

 

 

(712

)

 

 

(915

)

Exercise of stock options into profit certificates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

63,810

 

 

 

102

 

 

 

 

 

 

 

 

 

 

 

 

102

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

203

 

 

 

 

 

 

 

 

 

203

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

529

 

 

 

 

 

 

529

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,755

)

 

 

(5,755

)

Balance at June 30, 2019

 

 

6,167,726

 

 

$

5,353

 

 

 

20,942,781

 

 

$

44,362

 

 

 

185,716

 

 

$

87

 

 

 

70,832

 

 

$

113

 

 

$

 

 

$

251

 

 

$

(22,126

)

 

$

(21,675

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Retained

 

 

Total

 

 

 

Series A

 

 

Series B

 

 

 

 

 

Profit

 

 

Additional

 

 

other

 

 

earnings/

 

 

stockholders’

 

 

 

preferred stock

 

 

preferred stock

 

 

Common stock

 

 

certificates

 

 

paid-in

 

 

comprehensive

 

 

(accumulated

 

 

equity/

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit)

 

 

(deficit)

 

Balance at December 31, 2019

 

 

6,167,726

 

 

$

5,353

 

 

 

20,942,781

 

 

$

46,404

 

 

 

256,548

 

 

$

1

 

 

 

 

 

$

 

 

$

 

 

$

(224

)

 

$

(35,865

)

 

$

(36,088

)

Issuance of Series B-2 Preferred Stock, net of

   issuance costs of $332

 

 

 

 

 

 

 

 

44,453,477

 

 

 

125,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Settlement of preferred stock tranche right

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,135

 

 

 

 

 

 

 

 

 

4,135

 

Accretion of Series B and B-2 Preferred Stock

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

1,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,195

)

 

 

 

 

 

 

 

 

(1,195

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

 

 

 

 

 

 

186

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(317

)

 

 

 

 

 

(317

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,247

)

 

 

(5,247

)

Balance at March 31, 2020

 

 

6,167,726

 

 

 

5,353

 

 

 

65,396,258

 

 

 

172,625

 

 

 

256,548

 

 

 

1

 

 

 

 

 

 

 

 

 

3,126

 

 

 

(541

)

 

 

(41,112

)

 

 

(38,526

)

Accretion of Series B and B-2 Preferred Stock

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

2,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,994

)

 

 

 

 

 

 

 

 

(2,994

)

Exercise of stock options into common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

131,867

 

 

 

 

 

 

 

 

 

 

 

 

205

 

 

 

 

 

 

 

 

 

205

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

350

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

245

 

 

 

 

 

 

245

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,202

)

 

 

(7,202

)

Balance at June 30, 2020

 

 

6,167,726

 

 

$

5,353

 

 

 

65,396,258

 

 

$

175,619

 

 

 

388,415

 

 

$

1

 

 

 

 

 

$

 

 

$

687

 

 

$

(296

)

 

$

(48,314

)

 

$

(47,922

)

 

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

 

3


 

iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated statements of cash flows

(unaudited)

 

 

 

Six months ended June 30,

 

(in thousands)

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(12,449

)

 

$

(10,157

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

250

 

 

 

307

 

Stock-based compensation

 

 

536

 

 

 

408

 

Fair value adjustment for preferred stock tranche rights and anti-dilution

   warrants liabilities

 

 

(1,265

)

 

 

(296

)

Deferred rent

 

 

(14

)

 

 

(5

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Grants receivable

 

 

4,962

 

 

 

(1,586

)

R&D tax credits receivable

 

 

(238

)

 

 

(282

)

Prepaid expenses and other current assets

 

 

(580

)

 

 

(376

)

Accounts payable

 

 

1,055

 

 

 

508

 

Accrued expenses and other liabilities

 

 

(886

)

 

 

(234

)

Deferred income

 

 

(852

)

 

 

1,055

 

Net cash used in operating activities

 

 

(9,481

)

 

 

(10,658

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(119

)

 

 

(673

)

Purchase of other assets

 

 

(19

)

 

 

(121

)

Net cash used in investing activities

 

 

(138

)

 

 

(794

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of Series B-2 Preferred Stock

 

 

125,358

 

 

 

 

Payment of issuance costs on Series B-2 Preferred Stock

 

 

(332

)

 

 

 

Proceeds from issuance of Series B Preferred Stock

 

 

 

 

 

22,372

 

Proceeds from issuance of common stock and profit certificates upon exercise of options

 

 

205

 

 

 

102

 

Payment of IPO costs

 

 

(1,311

)

 

 

 

 

Proceeds from grants repayable

 

 

2,713