Iteos Therapeutics Inc

NASDAQ:ITOS

Earnings Call Transcript 2021-Q2

[Operator]

Good morning and welcome to the iTeos Therapeutics’ Second Quarter 2021 Financial Results Conference Call. My name is Emily and I will be your moderator today. At this time, all participants are in a listen-only mode. However, following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request.

Now I'd like to turn over to Ryan Baker, Head of Investor Relations at iTeos, please proceed.

[Ryan Baker, Head-Investor Relations]

Thank you for joining us today. Joining me from iTeos with prepared remarks are Michel Detheux, President and CEO; and Matthew Gall, Chief Financial Officer. Joe Lager, Chief Medical Officer will be available for Q&A.

Before we begin, I would like to remind you all that the team will be making forward-looking statements in the prepared remarks and during the Q&A Session.

Any statements made during this call that are not statements of historical or current facts are intended to be forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

We want to emphasize that such forward-looking statements reflect our current expectations and assumptions regarding timing, progress and success of our current ongoing clinical trials, therapeutic potential thereof, expected milestones our financial condition, including cash runaway, our business operation, development efforts and relationships with third parties and collaborators, and are neither predictions nor guarantees of future events or performance.

Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with our business, including those under the heading entitled Risk Factors in our quarterly report on Form 10-Q for the quarter ended June 30, 2021, which was filed yesterday with the SEC as well as in subsequent reports, including our current reports on Form 8-K. The Company disclaims any obligation to update or revise any forward-looking statements except as required by law. Michel?

[Michel Detheux, President and Chief Executive Officer]

Thank you, Ryan. Hi everyone. Good morning, good afternoon, everyone. I would like to begin today's story by effecting on the substantial progress we have made at iTeos and the recent announcement of our strategic partnership with the GlaxoSmithKline for our potent, high affinity anti-TIGIT antibody, EOS-448. This partnership brings enormous value to iTeos not only giving this program best-in-class resources for clinical development now, and as we look forward for growth from stabilization, but also validating our scientific approach and vigor. It also provides a catalyst for our current team to continue to grow our pipeline of highly differentiated immuno-oncology therapeutics.

Our team is deeply committed to developing therapies that focus on mechanisms of immunosuppression. Our approach in both targeting the pathway to reduce immunosuppression and restore the immune response against cancer, meeting the high unmet need the treatment for cancer patients.

In the last four years, we've put three distinct and highly differentiated programs into clinical trials and these values of creation we have shown that we can leverage our expertise in tumor immunology and continue to build a robust pipeline going forward.

It's ideal to note that on EOS-448 inupadenant antagonist on our plan to further roll our pipeline, let me just take a moment to summarize our partnership with Glaxosmithkline. We selected GSK as our partner for EOS-448 as they have a strategi focus on TIGIT CD226 access and they share our belief that combination of PD1, TIGIT, CD96 and CD112 checkpoint inhibitor can transform standard of care for the limitation we will have effective treatment option. The deal essentially closed and as a result we received $625 million upfront payment, we will be eligible to receive up to additional $1.45 billion in milestones payment should the EOS-448 program achieve certain development and commercial milestones.

GSK and iTeos will share responsibility and cost with the sixty-forty ratio respectively for the global development of EOS-448 and we will jointly commercialize and equally split profit in the U.S.

Outside of the U.S., GSK will receive an exclusive license for commercialization and iTeos will receive tiered royalty payments. These attributes both in the partner and competitor, will allow to expand and accelerate the development of EOS-448 and meaningfully participate in the development process, commercialization and in the value creation. Including manufacture to be working with partner with a capabilities and portfolio of GSK and we leverage the collaboration with significant value for all our stakeholders.

EOS-448 has the potential to achieve significant immune stimulatory effects through three mechanisms. One, blocking the binding of TIGIT to slide down, resulting in immune-mediated killing of tumor cells by T cells and NK cells; two, engaging the FC gamma receptor to further promote anti-tumor immune responses, in dendritic cells and macrophages, through the release of pro-inflammatory cytokines and chemokine and the activation of antigen presenting cells and three, activating NK cells and macrophage, TIGIT positive cells that are known to dampen the immune response like immunosuppressive Tregs and exhausted T cells.

With highly encouraging initial first-in-human data for EOS-448 and are pleased [Audio Dip] in advanced solid tumor during our Phase 1. Data presented at AACR in April showed that out of 20 patients treated with single-agent EOS-448 also the patient with stable disease or better and there also confirmed partial response in the patient with pembrolizumab-resistant melanoma.

Peripheral biomarker data confirmed depletion of TIGIT positive Treg cells and reduction in exhausted TIGIT positive CD8 T cells, whereas the other effector T cells are not change, demonstrating the multifaceted mechanism built on potent engagement of both TIGIT and the FC gamma receptor by EOS-448.

Based on the robust biomarker data, given early signs of efficacy as a monotherapy and data showing EOS-448 was well-tolerated with no dose limiting toxicities. The clinical development plan with GSK is geared towards advancing rapidly reduce suppression and these patients directed prior in indication and combination where we see the most potential to benefit patients.

With an approved PD-1 and a portfolio of potentially continuing to win programs gives us the ability to move to rapidly towards approval and to work with GSK on the dostarlimab. We plan to start combination studies of EOS-448 with GSK to simply approve antitumor drug. And plant to initiate trial in non-small cell lung cancer and additional indication in 2022.

We are currently initiating a trial of EOS-448 in combination with pembrolizumab and with our novel A2A receptor antagonist inupadenant in patients with solid tumor. We are also moving forward to evaluate EOS-448 for monotherapy. And in combination with IMID molecule in patients with multiple myeloma.

Turning to inupadenant, adenosine suppress the immune response against tumor and inhibit response to current therapy. The adenosine receptor A2A receptor, responsible for regulating adenosine immunosuppressive effect on immune cells within the tumor. Based on our understanding of the unique condition within the tumor on microenvironment and thoughtfully designed inupadenant address that could selectively and potently inhibit A2A receptor in high concentration of adenosine in the tumor microenvironment. Inupadenant is a second generation A2A receptor antagonist with differentiated pharmacologic properties. Unlike higher generation of adenosine receptor antagonist inupadenant was designed to inhibit A2A receptor even in high concentration of adenosine. Inupadenant is highly selectively for A2A receptor and there is no blood penetration properties which are expected to reduce off-target safety effects and improve the therapeutic index.

At ASCO in June, we reported updated results on our monotherapy dose escalation Phase 1/2a study. In 43 patients with advanced solid tumors treated with single agent inupadenant we saw durable responses of stable disease rather than six months in five patients with advanced solid tumor, including the previously reported confirmed partial response in patient with checkpoint inhibitor resistant melanoma, and heavily pretreated castrate-resistant prostate cancer. Both of these responses has lasted longer than 12 months. We also used in positive patient with heavily pretreated non-small cell lung cancer with stable disease lasting for more than 10 months. We are pleased with the best durability of the anti-tumor responses we have observed to date and the durability of inupadenant.

Clearly in the analysis tumor biopsy indicated that the expression of each receptor increases tumor is associated with clinical outcome in patients with solid tumor treated with single agent inupadenant. We will continue to integrate the biomarker driven approach into our A2A receptor clinical program to choose optimal therapeutic combinations and identify the patients most likely to benefit from the treatment.

We are currently evaluating inupadenant in combination with pembrolizumab and with chemotherapy and we are planning expansion in selected tumor, including PD-1 registered melanoma and other indications and we will continue to evaluate potential biomarkers. More information about our company development plan will be shared in the near future. We will also be initiating evaluation of a triplet combination of inupadenant, EOS-448 and PD-1.

Turning to our discovery. We have a robust discovery ongoing and we continue to progress clinical program focused on additional targets that pathway of immunosuppression. As we build our pipeline, we expect submit an additional product candidate for IND enabling studies before the end of 2021. The team is very excited about these candidates, which targets internally discovered mechanism of inner secretion in the adenosine pathway, which we believe will be a first-in-class agent.

We believe that we have assembled significant expertise in target identification, modality selection, and to the [indiscernible] that we can leverage to build upon our demonstrated [indiscernible] of success to build a differentiated I-O pipeline. With our headquarters in Cambridge, Massachusetts, and our R&D center in Belgium, iTeos’s global presence allowing us to attract talent worldwide and remain at the forefront of innovation in the field of immuno-oncology.

I will now hand the call over to Matthew Gall, our Chief Financial Officer.

[Matthew Gall, Chief Financial Officer]

Thanks, Michel. I’d like to provide a brief update on our financial results for the second quarter of 2021. The company’s cash and cash equivalent position was $302.9 million as of June 30, 2021 as compared to $136.9 million as of June 30, 2020. Following receipt of the upfront payment from GSK pursuant to our collaboration and license agreements earlier in August 2021, we believe that our existing cash and cash equivalence would enable us to fund our operating expenses and capital expenditure requirements into 2026.

Research and development expenses were $14.2 million for the quarter ended June 30, 2021 as compared to $6.1 million for the second quarter of 2020. This increase was primarily due to an increase in activities related to clinical trials for EOS-448 and inupadenant and increased headcount.

General and administrative expenses were $15.1 million for the quarter ended June 30, 2021 as compared to $2.4 million for the second quarter of 2020. This increase was primarily due to increased head count, professional fees and other costs associated with becoming a public company along with advisory fees incurred by the company for the collaboration and licence agreement with GSK.

The net loss attributable to common shareholders was $26.5 million or a net loss of $0.75 per basic and diluted share for the quarter ended June 30, 2021, as compared to $10.3 million or net loss of $29.49 per basic and diluted share for the second quarter of 2020.

I'll now turn the call back over to Michel for closing remarks.

[Michel Detheux, President and Chief Executive Officer]

Thank you, Matt. As we move into this inupadenant framing our proof-of-concept trials in several immunocology combinations, we have also begin to prepare for pivotal trials, which we plan to initiate in the next 12 to 18 months. We will be focused on execution of our clinical programs and then continuing to investigate the mechanism of action of our drug to inform our development programs. We expect to generate data for multiple indication in different combination with both of our clinical stage asset, including the initiation of several clinical trials with our partners at GSK over the coming months.

Thank you very much for your attention on today’s call and your ongoing interest. I'd like to now turn the call back over to the Operator to ask questions.

[Operator]

Thank you very much. [Operator Instructions] Our first question today comes from Chris Raymond from Piper Sandler. Chris, please proceed.

[Chris Raymond, Piper Sandler]

Thanks, and congrats on the progress this quarter. Just a couple maybe first a strategic question, I guess it's pretty remarkable. You guys have funded – you're funded now about five years or so, and I'd say that kind of runway is kind of at the high end of what we've seen for an earlier stage company like you guys. Just as you think about maybe, I guess in a temporal maybe investment choices. Can you talk about the assumptions that went into this cash runway guidance? I guess, long and short of it is – is there any sort of business development embedded in this? Is there any other activities? Thanks.

[Michel Detheux, President and Chief Executive Officer]

Chris, Michel speaking. Yes, indeed, which is something which connected here and that will allow the [indiscernible] control, with that we designed with GSK in compliance us moving increasingly as possible, this include initiating several trials with this. Then, third, with GSK paying 60% of global expenses, this program is still only can choose about one-third of the cash balance. We believe that the data for looking [indiscernible] into the Phase 3 studies, and we integrate that in our cash runway. The company is putting three distinct program in the higher for the past four year that we said and with critical value creation that will keep us enable for us to generate [indiscernible], then we are in discussion with indicative several programs. That really we developed in-house, and we believe we'll be able to address different making involved into moderating immune response against the tumor side. Again we also integrated a few academic partnerships, that will expand our experts in tumor immunology and drug discovery. And we are also integrating I would say opportunities in external innovation. I want to stress that will be highly opportunistic and cash flow efficient there. We know what we are looking for and we'll take the time to find the best opportunity to expand our pipeline within this cash runway.

[Chris Raymond, Piper Sandler]

Okay. And then just a follow-up maybe more detailed. Do you have an update on the A2A biomarker for inupadenants? Any progress there and any sort of guidance as to when we'll see additional data?

[Michel Detheux, President and Chief Executive Officer]

Yes. I'm going to turn the question to Joe to give the most demonstration on that. Joe, please.

[Joe Lager, Chief Medical Officer]

Thank you, Shai and thanks Chris. So we have reported some initial data on our biomarker at ASCO this year, showing that the expression of the A2A receptor itself and associated with the clinical outcome for the patient treated with monotherapy. We are continuing to investigate those biomarkers and using that data to understand what types of cells were expressing A2AR within the tumor and – developing, I think a more profound understanding of the mechanism of action of the drug, which is informing our indication selection, and which we will be incorporating in our clinical development plan as we move forward. We anticipate we're putting that data out sometime next year as we kind of put all the pieces of the story together.

[Chris Raymond, Piper Sandler]

Okay. Thank you.

[Operator]

Our next question comes from Daina Graybosch from SVB Leerink. Please go ahead.

[Daina Graybosch, SVB Leerink]

Hi, good morning. Thank you for the question. I'd like to get into now that we're a little bit past the GSK deal, your guys perspective on the broader TIGIT CD226 access, and the core numbers now that the collaboration has together and you mentioned the CD96, and of course, there's also PVRIG and potential path PD-1 as well. And I wonder of all those three questions. Why, because look at your confidence to double or triple down on the CD226 access? Which of the various combinations are you guys most enthusiastic about? And then with CD96, I find it perhaps the most complex and controversial of some literature suggesting you should inhibit it in other literature, suggesting neutered for anti-tumor immunity. And I believe people from the GSK approach is inhibition and what to do confidence that the right approach?

[Michel Detheux, President and Chief Executive Officer]

Thanks, Diana. I want to mention that the primary goal of the calculation is to move forward with the combination of the study PD-1 one from GSK and our TIGIT antibody EOS-448. In some specific indication we could look for – to that combination that will include a different option CD96 or CD155 could be appear in some specific indication where you are high level of one of these two partners on top of TIGIT. We are also evaluating the combination of PD-1 plus our TIGIT antibody and our A2A antagonist inupadenant. We believe there's a strong rationale data with a good clinical data. So, I mean to specific question of CD96, GSK will come data set showing that in CD96 will [indiscernible] and as the combination of CD96 TIGIT plus PD-1 in some sector could create an insurance synergy that will allow to differentiated on the doubld combination of PD-1 plus TIGIT.

[Daina Graybosch, SVB Leerink]

Got it. So no near-term plans for the PBR PVRIG, and in combination with your TIGIT that was licensed surface that you think?

[Michel Detheux, President and Chief Executive Officer]

Joe, do you want to comment on that question?

[Joe Lager, Chief Medical Officer]

So that is another combination that we're interested in Daina. The PVRIG, PD-1 trial receptor antibody at GSK has not yet entered into clinical trials. So it will be a later step, but it is another combination that we're interested in.

[Daina Graybosch, SVB Leerink]

Thank you very much.

[Operator]

Our next question comes from Swayampakula Ramakanth from H.C. Wainwright. Your line is now open.

[Swayampakula Ramakanth, H.C. Wainwright]

Thank you. This is RK from H.C. Wainwright. Good morning, Michel. And I apologize to this question have been asked. I've been jumping between calls. On the inupadenant in your press release, you said that you're going to be looking at several indications and also will be using different biomarkers to select patients. Could you highlight a couple of indications that we would be going after, and also what sort of biomarkers are you looking to work with?

[Michel Detheux, President and Chief Executive Officer]

Good morning, RK. Well, inupadenant, by the data we introduce at ASCO two months about the relationship [indiscernible] chemistry and the anti-tumor effect in patients. And we actually is extending this biomarker validation in order to select a specific patient in different indication. Joe, can you just note on we need to for this biomarker strategy please.

[Joe Lager, Chief Medical Officer]

Yes. Hello RK. So as Michel said, A2AR since correlated with clinical outcome that we presented at ASCO. We are exploring – using this data to really explore the mechanism of action of the drug. We say that this we're getting from our translational data from our clinical trials, new insight into how the drug is working to restore anti-tumor immunity. And we are evaluating based on that data and number of indications. You're planning to proceed as we previously discussed that the cohort anti-PD-1 melanoma. And we are evaluating other solid tumors based on the data that's coming in. So we anticipate giving an update on the clinical development plan later this year.

[Swayampakula Ramakanth, H.C. Wainwright]

Yes. Thank you both. And then with the good [indiscernible] thanks to GSK collaboration. Michel, if you had if you had the chance to bring in molecules, or if you're looking for additional molecules [indiscernible] into the pipeline. What sort of molecules have you been looking at? We'll be looking to add more to the A2AR franchise or to other tumor microenvironment molecules?

[Michel Detheux, President and Chief Executive Officer]

Yes. It can be done with the five plus year of cash run rate [indiscernible] our investment into the TIGIT clinical deployment plan. Our A2AR, inupadenant program also and expanding the pipeline. As I said before, with our explicit inupadenant regime we ensured that we've been able to sedate the right targets, the best possible modality and that we have expecting general allergy to sedate or to identify patient population. We have a clinical program, which is a new target into – identification of our new development program. And we are agreeing to new clinical candidate before the end of the year for this program. And we’ll give more information about the specific needs of the program and why we are excited with discover this for clinical program.

We are also considering other I would say actually, in order to comment the anti-tumor response through – so far we acquired with pembrolizumab on mechanisms which targeting T-cells, but also additional new cell and, additional data is mentioned in the near future. we are targeting T-cells NK cells, dendritic cells, and macrophage, and we believe other mechanisms that could be used either standalone or in combination with spend the healthcare or our pipeline to continue to boost the immune response against cancer cells in different tumor types. Then if we look for external information, it will be, with mechanism targeting additional type of immune cells, which are not covered by our current program at the clinical stage or in the clinical pipeline.

[Swayampakula Ramakanth, H.C. Wainwright]

Thank you. Thank you very much and good luck with everything. Thanks.

[Michel Detheux, President and Chief Executive Officer]

You're welcome.

[Operator]

Our next question today comes from Anupam Rama from JP Morgan. Please proceed

[Anupam Rama, JP Morgan]

Hi guys. Thanks for taking the question and congrats on all the progress. Maybe just a quick one on 448 for me strategically, what's the rationale and value of studying in combination with pembro? If the dostarlimab – combination. I think Joe, you said was supposed to start later this year or maybe early next year. Thanks so much.

[Michel Detheux, President and Chief Executive Officer]

Hi Anupam. We agreed that our work on the combination with dostarlimab have to inform our next steps and what works getting started is a lot to generate data as quickly as opposed to go on the set – combination and evaluate few in endometrial cancer, high In local [indiscernible] in parallel we are also working for – evolution of the combination of dostarlimab, which would be [indiscernible] in non-small cell lung cancer to be initiated by GSK and with additional indication that would be added to the clinical development plan. Joel, do you want to add something?

[Joe Lager, Chief Medical Officer]

No, I'll just emphasize what you said, Michelle, about the, the intent of moving forward with the study is really to conclude to accelerate the program and generate data in this time as we're getting started the dostarlimab combination.

[Anupam Rama, JP Morgan]

Thanks for taking my question.

[Operator]

[Operator Instructions] we currently have no further questions. I will now hand back to Michelle for any closing comments.

[Michel Detheux, President and Chief Executive Officer]

Well, I would like to thank everyone for taking time to review our progress. As we said, we are focused on the execution, both at the clinical stage and clinical pipeline and we'll continue to move forward with our clinical strategy to deliver strong data for our clinical assets and to build our pipeline. Bye.

[Operator]

Thank you everyone for joining us today. This now concludes today's conference call and you may now disconnect your lines. Please have a lovely rest of your day.