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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 September 30, 2021

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 November 2, 2021, the registrant had 35,273,893 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

 

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:

 

We will not be able to commercialize our current product candidates and any future product candidates if our preclinical studies do not produce successful results or our clinical trials do not demonstrate the safety and efficacy of our current or future product candidates.

 

 

As an organization, we have never conducted pivotal clinical trials, and we may be unable to do so for any product candidates we may develop.

 

Positive results from early preclinical studies of our product candidates are not necessarily predictive of the results of later preclinical studies and any future clinical trials of our product candidates. If we cannot replicate the positive results from our earlier preclinical studies of our product candidates in our later preclinical studies and future clinical trials, we may be unable to successfully develop, obtain regulatory for and commercialize our product candidates.

 

We may not be able to file INDs or IND amendments to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA or a comparable foreign regulatory may not permit us to proceed.

 

We face significant competition from other biopharmaceutical and biotechnology companies, academic institutions, government agencies, and other research organizations, which may result in others discovering, developing or commercializing products more quickly or marketing them more successfully than us. If their product candidates are shown to be safer or more effective than ours, our commercial opportunity may be reduced or eliminated.

 

We rely on third parties to conduct our clinical trials and perform some of our research and preclinical studies. If these third parties do not satisfactorily carry out their contractual duties or fail to meet expected deadlines, our development programs may be delayed or subject to increased costs, each of which may have an adverse effect on our business and prospects.

 

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability. We have never generated any revenue from product sales and may never be profitable.

 

If the current public health pandemic related to coronavirus (COVID-19) continues to worsen, our operations, business and financial results may be adversely impacted.

 

If we are unable to obtain and maintain sufficient intellectual property protection for our current product candidates or any future product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be adversely affected.

 

Even if our development efforts are successful, we may not obtain regulatory approval for any of our current product candidates or any future product candidates in the United States or other jurisdictions, which would prevent us from commercializing our current product candidates and any future product candidates. Even if we obtain regulatory approval for our current product candidates and any future product candidates, any such approval may be subject to limitations, including with respect to the approved indications or patient populations, which could impair our ability to successfully commercialize our current product candidates or any future product candidates.

 

We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

 

We may be unable to adequately protect our information systems from cyberattacks, which could result in the disclosure of confidential or proprietary information, including personal data, damage our reputation, and subject us to significant financial and legal exposure.

i


 

 

We are an emerging growth company and a smaller reporting company, and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors.

 

The trading price of our common stock may be volatile. We may be at an increased risk of securities class action litigation.

The summary risk factors described above should be read together with the text of the full risk factors below, in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on 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 in full 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.

 

ii


 

 

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 Income (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

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

83

Item 3.

Defaults Upon Senior Securities

83

Item 4.

Mine Safety Disclosures

83

Item 5.

Other Information

83

Item 6.

Exhibits

84

Signatures

85

 

 

 

iii


 

 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

iTeos Therapeutics, Inc. and subsidiaries

Condensed consolidated balance sheets

(unaudited)

 

(in thousands, except share amounts)

 

September 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

899,767

 

 

$

336,326

 

Grants receivable

 

 

4,891

 

 

 

133

 

Research and development tax credits receivable

 

 

539

 

 

 

192

 

Prepaid expenses and other current assets

 

 

8,940

 

 

 

2,893

 

Total current assets

 

 

914,137

 

 

 

339,544

 

Property and equipment, net

 

 

2,121

 

 

 

1,352

 

Research and development tax credits receivable

 

 

2,852

 

 

 

3,286

 

Restricted cash

 

 

137

 

 

 

128

 

Right of use assets

 

 

2,859

 

 

-

 

Other assets

 

 

273

 

 

 

248

 

Total assets

 

$

922,379

 

 

$

344,558

 

Liabilities, redeemable convertible preferred stock and stockholders’

   equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,707

 

 

$

3,026

 

Accrued expenses and other current liabilities

 

 

12,189

 

 

 

7,486

 

Income tax payable

 

 

2,771

 

 

 

 

Deferred income

 

 

522,075

 

 

 

4,486

 

Lease liabilities

 

 

486

 

 

 

 

Total current liabilities

 

 

542,228

 

 

 

14,998

 

Grants repayable, net of current portion

 

 

5,548

 

 

 

5,883

 

Other noncurrent liabilities

 

 

181

 

 

 

480

 

Lease liabilities, net of current portion

 

 

2,383

 

 

 

 

Total liabilities

 

 

550,340

 

 

 

21,361

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized;

   zero shares issued or outstanding at September 30, 2021 and

   December 31, 2020

 

 

 

 

 

 

Common stock, $0.001 par value, 150,000,000 shares authorized;

   35,257,464 and 35,044,758 shares issued and outstanding at

   September 30, 2021 and December 31, 2020, respectively

 

 

35

 

 

 

35

 

Additional paid-in capital

 

 

407,499

 

 

 

396,443

 

Accumulated other comprehensive income

 

 

8,754

 

 

 

617

 

Accumulated deficit

 

 

(44,249

)

 

 

(73,898

)

Total stockholders’ equity

 

 

372,039

 

 

 

323,197

 

Total liabilities and stockholders’ equity

 

$

922,379

 

 

$

344,558

 

 

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 income (loss)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except share and per share amounts)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License Revenue

 

$

104,271

 

 

$

 

 

$

104,271

 

 

$

 

Total Revenue

 

 

104,271

 

 

 

 

 

 

104,271

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

16,102

 

 

 

8,726

 

 

 

41,983

 

 

 

20,688

 

General and administrative expenses

 

 

8,761

 

 

 

4,799

 

 

 

30,907

 

 

 

9,611

 

Total operating expenses

 

 

24,863

 

 

 

13,525

 

 

 

72,890

 

 

 

30,299

 

Income (loss) from operations

 

 

79,408

 

 

 

(13,525

)

 

 

31,381

 

 

 

(30,299

)

Other income and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

 

 

1,320

 

 

 

2,299

 

 

 

8,936

 

 

 

4,969

 

Fair value adjustment for preferred stock

  tranche rights liability

 

 

 

 

 

 

 

 

 

 

 

1,265

 

Research and development tax credits

 

 

169

 

 

 

273

 

 

 

288

 

 

 

643

 

Other income (expense), net

 

 

(8,484

)

 

 

265

 

 

 

(8,185

)

 

 

235

 

Income (loss) before income taxes

 

 

72,413

 

 

 

(10,688

)

 

 

32,420

 

 

 

(23,187

)

Income tax (expense) benefit

 

 

(2,771

)

 

 

8

 

 

 

(2,771

)

 

 

58

 

Net income (loss)

 

 

69,642

 

 

 

(10,680

)

 

 

29,649

 

 

 

(23,129

)

Cumulative dividends on Series A preferred stock

 

 

 

 

 

(36

)

 

 

 

 

 

(249

)

Accretion of redeemable convertible preferred

   stock to redemption value

 

 

 

 

 

(931

)

 

 

 

 

 

(5,120

)

Net income (loss) attributable to common stockholders

 

$

69,642

 

 

$

(11,647

)

 

$

29,649

 

 

$

(28,498

)

Basic net income (loss) per common share

 

$

1.98

 

 

$

(0.48

)

 

$

0.84

 

 

$

(3.40

)

Diluted net income (loss) per common share

 

$

1.86

 

 

$

(0.48

)

 

$

0.79

 

 

$

(3.40

)

Weighted-average common shares outstanding - basic

 

 

35,196,995

 

 

 

24,349,222

 

 

 

35,134,692

 

 

 

8,376,860

 

Weighted-average common shares outstanding - diluted

 

 

37,482,089

 

 

 

24,349,222

 

 

 

37,539,184

 

 

 

8,376,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

69,642

 

 

$

(10,680

)

 

$

29,649

 

 

$

(23,129

)

Foreign currency translation adjustments

 

 

8,516

 

 

 

393

 

 

 

8,137

 

 

 

321

 

Comprehensive income (loss)

 

$

78,158

 

 

$

(10,287

)

 

$

37,786

 

 

$

(22,808

)

 

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)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

Series A

 

 

Series B

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

stockholders’

 

In thousands except share amounts

 

preferred stock

 

 

preferred stock

 

 

Common stock

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

equity

 

 

 

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

)

'Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

350

 

 

 

 

 

 

 

 

 

350

 

Exercise of stock options into common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

131,867

 

 

 

 

 

 

205

 

 

 

 

 

 

 

 

 

205

 

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

)

Accretion of Series B and B-2 preferred stock

   to redemption value

 

 

 

 

 

 

 

 

 

 

 

931

 

 

 

 

 

 

 

 

 

(931

)

 

 

 

 

 

 

 

 

(931

)

Conversion of redeemable convertible preferred stock to common stock upon closing of initial public offering

 

 

(6,167,726

)

 

 

(5,353

)

 

 

(65,396,258

)

 

 

(176,550

)

 

 

22,460,076

 

 

 

22

 

 

 

181,881

 

 

 

 

 

 

 

 

 

181,903

 

Issuance of common stock from initial public offering, net of issuance costs of $19.0 million

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,091,675

 

 

 

12

 

 

 

210,687

 

 

 

 

 

 

 

 

 

210,699

 

Exercise of stock options into common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

104,592

 

 

 

 

 

 

450

 

 

 

 

 

 

 

 

 

450

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,714

 

 

 

 

 

 

 

 

 

1,714

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

393

 

 

 

 

 

 

393

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,680

)

 

 

(10,680

)

Balance at September 30, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

35,044,758

 

 

$

35

 

 

$

394,488

 

 

$

97

 

 

$

(58,994

)

 

$

335,626

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Series A

 

 

Series B

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

Total

 

In thousands except share amounts

 

preferred stock

 

 

preferred stock

 

 

Common stock

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

income

 

 

deficit

 

 

equity

 

Balance at December 31, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

35,044,758

 

 

$

35

 

 

$

396,443

 

 

$

617

 

 

$

(73,898

)