A decade ago, scientists discovered that certain cancers can inhibit immune cells that typically attack and eradicate a tumor. Subsequently, research on how to activate the immune system and enable it to counteract the cancer has ramped up. Biopharma companies like iTeos Therapeutics (NASDAQ:ITOS) are working to discover breakthrough immunotherapy treatments. Recent positive updates have made the shares surge over 38% in the past few days, making it an intriguing option for investors willing to explore a speculative biopharma opportunity.
iTeos’ Pipeline Is Aimed at Reinvigorating Immune Responses against Cancer
iTeos Therapeutics is a clinical-stage biopharmaceutical company that develops distinctive immuno-oncology therapeutics. The company’s focus on tumor immunology and immunosuppressive pathways fuels the creation of new product candidates aimed at reinvigorating immune responses against cancer. The company’s current pipeline includes several novel, clinical-stage programs that target validated immuno-oncology pathways to enhance patient outcomes.
Its leading candidate, Belrestotug (EOS-448), developed in collaboration with GSK (NYSE:GSK), targets TIGIT, a crucial inhibitory receptor that stifles innate immune responses against cancer. The treatment has been designed to fortify the anti-tumor response through an intricate immune modulatory mechanism. It is making steady progress across various Phase 2/3 clinical trials.
The company is also advancing in the Phase 2 trials of Inupadenant, an adenosine A2A receptor antagonist designed to nullify cancer immunosuppression. EOS-984, another therapeutic candidate (Phase 1), is a potential first-in-class small molecule that targets the equilibrative nucleoside transporter 1 (ENT1), intending to reverse the immunosuppressive activity of adenosine and restore immune cell proliferation.
Analysis of iTeos Financials
The company recently reported financial results for Q1. Net loss was -$38.2 million, or – $1.07 per basic and diluted share for the quarter, compared to a net loss of -$15.6 million, or – $0.44, the same quarter in the prior year.
As of March 31, 2024, the Company had cash, cash equivalents, and investments totaling $595.0 million, compared to $706.6 million in the previous year. This includes $13.0 million from receivables of matured investments. The figure has recently risen to $715.0 million due to a direct offering that contributed around $120 million. The Company predicts this cash will sustain operations until 2027, with plans for several Phase 3 trials.
As mentioned, the company recently raised $120 million in a securities purchase agreement to sell 1,142,857 shares of common stock at $17.50 per share, a premium of around 44% to its closing price on May 9, 2024. Additionally, the company sold pre-funded warrants for the purchase of up to 5,714,285 shares of common stock, priced at $17.499 per warrant, in a registered direct offering.
What Is the Price Target for ITOS Stock?
Analysts following the company are bullish on the stock. iTeos Therapeutics is rated a Strong Buy based on the recommendations and 12-month price targets issued by five Wall Street analysts over the past three months. Their price targets range from $46.00 at the high end to $18.00 at the low end, making the average price target for ITOS stock $31.75. This represents an 84.92% upside from current levels.
The stock is highly volatile, though lately, it has been trending up, climbing over 58% year-to-date. It trades at the higher end of its 52-week price range of $8.20-$18.75 and continues to demonstrate strong positive price momentum, trading above its 20-day (12.17) and 50-day (11.69) moving averages.
ITOS Could See Several Candidates Pass Through Phase 3 Trials
It’s tough to know which clinical-stage therapies will make it to market (most don’t), which makes investing in companies like iTeos a highly speculative endeavor. Yet, with a recently filled treasure chest and a significant pharma partnership with GSK, the company is well-positioned to see several pipeline candidates pass through Phase 3 trials. Investor sentiment is bullish, propelling the stock, and any positive clinical news will likely serve to catalyze it higher. Savvy investors looking for a compelling biopharma opportunity might want to explore ITOS further.
