Cancer drugmaker iTeos to shut down

Dive Brief:

• Cancer drugmaker iTeos Therapeutics said Wednesday it plans to wind down operations and seek to sell the company’s assets and intellectual property rights.
• ITeos has for years struggled to develop a cancer treatment that sufficiently impressed investors and its pharmaceutical partners. Two weeks ago, it said it was shelving its most advanced drug prospect, a TIGIT-targeting treatment developed with GSK.
• The immuno-oncology developer is the latest biotechnology company considering merger prospects or liquidatation of its assets this year. Others such as Cargo Therapeutics and Third Harmonic Bio have made their own plans to dissolve.

Dive Insight:

Investors are increasingly scrutinizing “zombie” biotechs, pressuring their executive teams to shut down and return capital to shareholders after their primary development efforts fail.

Typically, struggling companies have turned to mergers or pivoted to new programs to justify holding onto their cash reserves. Activist investors and analysts have argued they should give that money back to their investors instead. A new investment fund launched in April with the intention of liquidating billions of dollars in cash “trapped” on the balance sheets of nearly 300 public biotechs whose share prices have fallen significantly.

“Cash that was raised through an efficient capital process to fund specific projects … is now being allocated by a few insiders and spent on programs that investors are not willing to support,” Cantor Fitzgerald analyst Eric Schmidt wrote in a February note explaining how the goals of executive teams and investors can diverge in the wake of clinical setbacks. He specifically highlighted biotechs Cargo, BioAge Labs and Keros Therapeutics.

ITeos fits a similar mold. It developed an immunotherapy with Pfizer in the mid-2010s, but the pharma giant handed back rights to development in 2018 after the drug’s promise faded. A few years later, iTeos brokered a deal with GSK to develop a so-called TIGIT drug for use in combination with cancer immunotherapies.

Testing of that candidate was stopped in mid-May after study results showed the drug regimen failed to significantly delay tumor progression in non-small cell lung cancer. Data showed a “trend below the meaningful threshold” for drug responses in study participants with other cancers, iTeos said.

At the time, iTeos CEO Michel Detheux said: “We believe the best path forward is to promptly evaluate a full range of strategic alternatives to unlock the value of our assets.”

According to a regulatory filing Wednesday, iTeos plans to spend as much as $24.7 million in severance and other layoff costs, as well as another $11.1 million to wind down clinical development activities and terminate leases and other contracts. It expects to complete that by the third quarter of 2025.

As of March 31, iTeos held $156.5 million in cash and cash equivalents.

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