Executive Summary / Key Takeaways

• Strategic Pivot to Acquisition: iTeos Therapeutics (ITOS) is undergoing a definitive acquisition by Concentra Biosciences, LLC, for $10.05 per share in cash plus a Contingent Value Right (CVR), marking a complete shift from its prior clinical-stage biopharmaceutical operations.
• Termination of Lead Program: The decision to wind down operations followed the failure of its lead anti-TIGIT program, belrestotug (EOS-448), in combination trials with GSK, leading to the termination of their collaboration agreement.
• CVR as the Speculative Upside: The core investment thesis now hinges on the CVR, which offers stockholders 80% of net proceeds from the disposition of remaining pipeline assets (EOS-984, EOS-215, preclinical obesity, PTPN1/2 inhibitor programs) within six months post-merger.
• Strong Cash Position, but Going Concern Doubt: Despite a robust cash and investments balance of $590 million as of June 30, 2025, the company faces "substantial doubt" about its ability to continue as a going concern due to the wind-down, underscoring the urgency and necessity of the merger.
• High-Risk, High-Reward CVR: The CVR represents a speculative opportunity, dependent on Concentra's ability to successfully monetize these early-stage assets in a competitive immuno-oncology landscape, with no guarantee of payment.

From Pioneering Immuno-Oncology to Strategic Realignment

iTeos Therapeutics, initially established in Belgium in 2011 and later incorporated in Delaware in 2019, embarked on a mission to revolutionize cancer treatment through immuno-oncology. The company's foundational strategy centered on a deep understanding of the tumor microenvironment to design novel therapeutics that restore the immune response against cancer. Its pipeline historically targeted key resistance mechanisms, including the TIGIT-CD226 pathway, the adenosine pathway, and the reprogramming of immunosuppressive macrophages. This innovative approach aimed to carve out a niche in a market dominated by large pharmaceutical players.

The company's early journey was marked by strategic collaborations, notably with Adimab, LLC, to bolster its antibody discovery efforts. A significant milestone arrived in June 2021 with a transformative collaboration and license agreement with GlaxoSmithKline (GSK) for belrestotug (EOS-448), its lead anti-TIGIT antibody. This partnership, which included a $625 million upfront payment and potential for $1.45 billion in milestones, was hailed by management as validating its scientific approach and providing "best-in-class resources for clinical development." It also granted iTeos co-commercialization rights in the U.S. and tiered royalties ex-U.S., offering strategic flexibility and a substantial extension of its cash runway into 2026.

The Promise of Differentiated Technology

iTeos's competitive edge was historically rooted in its differentiated technological approach to immuno-oncology. Belrestotug (EOS-448), the company's lead asset, was designed as a potent, high-affinity anti-TIGIT antibody with a functional Fc domain. This multifaceted mechanism aimed to block TIGIT binding, engage the Fc gamma receptor to promote anti-tumor responses, and deplete immunosuppressive T-regs and exhausted T-cells. Management believed this approach offered a unique advantage over other anti-TIGIT assets in development.

Similarly, inupadenant, a small molecule A2A receptor antagonist, was engineered with specific pharmacologic properties to overcome limitations of earlier-generation drugs. It was designed to selectively and potently inhibit the A2A receptor even in high adenosine concentrations found within tumors, exhibit high selectivity for A2A, and minimize blood-brain barrier penetration to reduce off-target safety effects. The company also explored a potential biomarker, the expression of the A2A receptor in tumors, which it believed could predict clinical benefit and provide a competitive advantage due to the difficulty in developing such an assay. Further pipeline assets, EOS-984 (an ENT1 inhibitor) and EOS-215 (an anti-TREM2 antibody), represented additional attempts to target novel mechanisms within the adenosine pathway and macrophage function, respectively, showcasing iTeos's commitment to internal discovery and innovation.

Clinical Setbacks and the Shift to Wind-Down

The narrative took a dramatic turn in May 2025. Topline interim results from the GALAXIES Lung-201 study, evaluating belrestotug with GSK's dostarlimab in non-small cell lung cancer, failed to meet established criteria for clinically meaningful improvements in progression-free survival. Concurrently, an interim analysis of the GALAXIES HN-202 trial in head and neck squamous cell carcinoma showed a trend below the meaningful threshold for objective response rate. These disappointing outcomes led GSK to terminate the collaboration agreement on May 13, 2025.

In the wake of these clinical failures and the loss of its primary partnership, iTeos announced its intention to wind down clinical and operational activities on May 28, 2025. This decision was part of a comprehensive review of strategic alternatives aimed at maximizing shareholder value, effectively ending the company's active drug development phase. The wind-down is expected to be substantially complete in the third quarter of 2025.

The Concentra Acquisition: A Cash-Plus-CVR Proposition

On July 18, 2025, iTeos entered into a definitive merger agreement with Concentra Biosciences, LLC. Under the terms, Concentra will acquire iTeos for $10.05 per share in cash, plus one Contingent Value Right (CVR) per share. The CVR represents a contractual right to receive contingent payments, comprising 100% of iTeos's closing net cash exceeding $475 million, and crucially, 80% of any net proceeds from the disposition of certain "CVR Products" within six months following the merger's closing.

The CVR Products include EOS-984 (ENT1 inhibitor), EOS-215 (anti-TREM2 antibody), a preclinical obesity program targeting ENT1, a program developing a small molecule inhibiting PTPN1/2, and any other product or candidate covered by iTeos's patents as of the merger closing date. Concentra has committed to using commercially reasonable efforts to market and dispose of these CVR Products during the six-month disposition period. This structure transforms the investment thesis from a bet on iTeos's internal pipeline development to a speculative play on the successful monetization of its residual assets by Concentra.

Financial Performance Reflects Transition

The company's financial performance for the three and six months ended June 30, 2025, starkly reflects this strategic pivot. License and collaboration revenue, which was $35 million in the comparable periods of 2024 (due to a milestone from GSK), dropped to zero in Q2 2025. This absence of revenue, combined with significant one-time costs, led to a substantial increase in net loss. For the six months ended June 30, 2025, the net loss widened to $113.34 million, compared to $45.34 million in the prior year period.

Operating expenses surged, primarily driven by the termination of the GSK collaboration and the wind-down. Research and development expenses increased by $15.1 million to $86.3 million for the six months ended June 30, 2025, largely due to a $32.0 million settlement payment owed to GSK and increased payroll costs. Restructuring costs of $16.3 million were recorded in Q2 2025, primarily for severance related to employee terminations in Belgium and the U.S. General and administrative expenses, however, saw a decrease of $4.0 million to $21.2 million, mainly due to lower stock-based compensation and reduced facility costs.

Despite these losses, iTeos maintained a strong liquidity position as of June 30, 2025, with cash and cash equivalents of $207.8 million and available-for-sale securities of $382.2 million, totaling approximately $590 million. Net cash used in operating activities increased by $9.9 million to $76.2 million for the six months ended June 30, 2025, primarily due to the increased net loss and severance costs, partially offset by accrued clinical trial costs. Notably, net cash provided by investing activities swung positively by $81.3 million, as the company paused redeploying matured investments in the latter half of the period. The company also benefited from a relief of a substantial majority of its $7.0 million repayable grant liability from the Walloon Region in July 2025.

However, the 10-Q filing explicitly states "substantial doubt about the Company's ability to continue as a going concern for at least 12 months from the issuance date," underscoring that without the merger or an alternative strategic transaction, the company faces potential dissolution and liquidation.

Competitive Landscape: From Innovation to Asset Monetization

iTeos historically positioned itself as an innovator in immuno-oncology, seeking to differentiate its assets against the broad portfolios of large pharmaceutical companies like Bristol-Myers Squibb (BMY), Merck (MRK), AstraZeneca (AZN), and Roche (RHHBY). Its strategy focused on specific, novel mechanisms and biomarker-driven patient selection, aiming for superior efficacy in niche patient populations. For instance, inupadenant's high selectivity for A2A and resistance to high adenosine concentrations were touted as advantages over less selective competitors.

However, with the termination of its lead program and the decision to wind down, iTeos's competitive positioning has fundamentally shifted. The company is no longer an active developer competing on clinical outcomes but a repository of assets whose value must be realized through disposition. The competitive challenge now lies with Concentra Biosciences, which must navigate a crowded market to find buyers or licensees for assets like EOS-984 and EOS-215 within a tight six-month window. This requires demonstrating the value of these preclinical and early-stage clinical programs to potential partners who themselves operate in a highly competitive and capital-intensive drug development environment. The success of the CVR, therefore, depends on Concentra's ability to effectively market these assets against established and emerging programs from well-capitalized rivals.

Outlook and Risks: The CVR's Uncertain Path

The immediate outlook for iTeos is dominated by the pending acquisition by Concentra. The merger is expected to close in Q3 2025, contingent on conditions including a majority tender of shares and iTeos having at least $475 million in closing net cash. If the merger fails, iTeos's board may pursue dissolution and liquidation, though the company might also seek an alternative strategic transaction.

The primary upside for investors now lies solely in the CVR. Its value is highly speculative, dependent on two factors: the final "closing net cash" exceeding $475 million (with 100% of the excess paid out), and Concentra's success in monetizing the CVR Products within the six-month disposition period (with 80% of net proceeds passed to CVR holders). Concentra's commitment to "commercially reasonable efforts" to dispose of these assets is key, but there is no guarantee that any CVR consideration will be received.

Significant risks accompany this CVR-centric investment. The merger itself could fail, potentially leading to a decline in iTeos's stock price and the imposition of an $8.4 million termination fee or expense reimbursement to Concentra. Litigation related to the transaction is also a possibility. Furthermore, the U.S. federal income tax treatment of CVRs is unclear, posing potential adverse tax consequences for holders. The merger agreement also limits iTeos's ability to pursue alternative transactions, potentially deterring other bidders. Ultimately, the value of the CVR Products is uncertain, and their disposition within a limited timeframe in a competitive market presents a substantial challenge.

Conclusion

iTeos Therapeutics stands at a critical juncture, transitioning from an aspiring immuno-oncology innovator to a company being acquired. The investment narrative has fundamentally shifted from a long-term bet on its pipeline to a near-term proposition centered on the Concentra acquisition. While the $10.05 cash component provides a floor, the true speculative upside, and the remaining link to iTeos's former innovative spirit, lies in the Contingent Value Right.

The CVR represents a unique, albeit high-risk, opportunity for investors to potentially benefit from the residual value of iTeos's early-stage assets, including EOS-984 and EOS-215. Its realization is entirely dependent on Concentra's ability to successfully market and dispose of these assets within a tight six-month window in a competitive biopharmaceutical landscape. The "going concern" warning underscores the necessity of this transaction, making the CVR a speculative bet on the successful monetization of a once-promising, but now divested, technological portfolio. Investors must weigh the certainty of the cash payment against the highly contingent and uncertain nature of any future CVR payouts, recognizing that the company's future is now firmly in the hands of its acquirer and the market for its remaining intellectual property.