ITOS - iTeos Therapeutics: Able To Pull In Big Pharma Deals Needs Follow-Through

Summary

• iTeos Therapeutics, Inc. has a major deal with GSK, but a rival drug failed, bringing iTeos Therapeutics down.
• This happened once before with another program.
• iTeos Therapeutics has a lot of cash.

iTeos Therapeutics, Inc. ( ITOS ) is a developer of immunotherapies for cancer. Despite having a decent market cap for an emerging biopharma, the company has an even larger cash pile; thus, with low debt on its balance sheet , iTeos has a negative enterprise value. The cash pile is a result of the large GSK plc ( GSK ) collaboration for iTeos’ TIGIT compound EOS-448, which resulted in a $625mn upfront payment in 2021. The less than stellar valuation is a result of a price drop in May 2022 after Roche’s phase 3 TIGIT flop, which has dragged the 3-4 other TIGIT players down. iTeos has been hit the hardest because, like Roche’s tiragolumab, iTeos’ EOS-448, now christened GSK4428859, is also targeting non-small cell lung cancer ((NSCLC)).

A TIGIT is a T cell immunoreceptor with Ig and ITIM domains which was the in-thing in 2021. In 2021, a few researchers wrote :

T cell immunoreceptor with Ig and ITIM domains (TIGIT) is an inhibitory receptor expressed on several types of lymphocytes. Efficacy of antibody blockade of TIGIT in cancer immunotherapy is currently widely being investigated in both pre-clinical and clinical studies.

However, in May 2022, after Roche announced a phase 3 flop for its own TIGIT compound tiragolumab, the enthusiasm has fallen. A 534 patient phase 3 study failed to meet the co-primary end point of progression-free survival ((PFS)) for tiragolumab plus atezolizumab (Tecentriq) vs atezolizumab alone for patients with PD-L1–high locally advanced or metastatic NSCLC. Within 48 hours, iTeos and GSK announced :

iTeos is working together with GSK to evaluate how best to proceed with additional clinical development of EOS-448 in light of the recent release regarding the Roche SKYSCRAPER-01 study

According to biospace , in May 2021, other TIGIT programs in the pipeline were:

BeiGene and Novartis are also working to develop an anti-TIGIT therapy, ociperlimab. Others in the class include Merck's vibostolimab, Arcus Biosciences' domvanalimab, Compugen's COM902, Bristol Myers Squibb's BMS-986207 and Agenus Biosciences' AGEN307.

iTeos completed a phase 1/2a trial of EOS-448 last year, here’s the registry entry - NCT04335253 . This was an open label dose escalation study checking PK/PD, safety and tolerability. There were some 40 participants with multiple advanced tumors, not specifically NSCLC alone. Preliminary data was published here . Here’s the efficacy data:

The partial response was in a PD-1 resistant patient with EOS-448 as monotherapy. Key data:

PK and PD assessment indicate a linear and dose-proportional PK with complete target engagement that correlates with strong depletion of Treg and TIGIT + T cell populations, known to be exhausted. Total T cells have been minorly impacted resulting in a shift towards a more functional antitumor immune response

The data here is not overwhelming, it is just indicative of some drug effect, which has led to further trials. Its most important effect must have been GSK’s involvement, because this data came out in April 2021 and GSK began its collaboration in June 2021.

Besides the GSK-partnered and sponsored EOS-448 program which combines with GSK’s PD-1 dostarlimab, iTeos has a pipeline of 2 other drugs, Inupadenant & EOS-984. Inupadenant is an A2A receptor antagonist in various phase 2 trials, while EOS-984 is in early phase 1 trials.

I was looking for any data readouts they have done for their pipeline in the past, but I could not find anything. It appears that the company hasn’t had any major data readouts so far for their pipeline.

Financials

ITOS has a market cap of $596mn and a cash balance of $752mn. R&D expenses were $23.9 million for the quarter ended September 30, 2022, while G&A expenses were $10.8 million. At that rate, the company has a cash runway of over 20 quarters. Or, they have adequate cash to figure out if their TIGIT and A2A pipeline will work for them, and make strategic asset purchases if they so choose.

The GSK deal involved a huge $625mn in upfront payment, the highest in the TIGIT space - which has other big name collaborations. Expenses were 40% for iTeos and 60% for GSK for studies in the Global Development Plan. Another $550mn milestone fees were contingent upon clinical development and regulatory events, and another $900mn for sales milestones. In the U.S., it was co-commercialization and 50-50 profit share, while ex-U.S., ITOS would get double-digit royalties up to 20%, no expenses.

Bottom Line

iTeos Therapeutics, Inc. began well with a great collaboration, something they had done once before with Pfizer Inc. (PFE) with an asset in the IDO1 space, a space that faltered after Incyte’s big failure. Here, too, the history has been aptly repeated, with Roche’s TIGIT failure having an effect on iTeos. So they started well, and are not at 52-week lows because of no immediate data readouts and worry surrounding efficacy. However, if they do well this time, they will have a tremendous spike. I have little data to predict anything, so I will simply observe iTeos Therapeutics, Inc. with interest.

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