iTeos Therapeutics: How a Biotech Contrarian Play Could Yield Asymmetric Gains

The biotech sector thrives on volatility, where setbacks can either cripple companies or become catalysts for contrarian opportunities. iTeos Therapeutics (NASDAQ: ITOS) exemplifies this paradox: despite a 2023 clinical trial setback that sent its stock plummeting 60%, the company’s shares have rebounded sharply in 2025. This recovery isn’t a fluke—it’s a masterclass in navigating market skepticism through robust liquidity, strategic pivots, and the quiet power of cash reserves. For investors willing to look beyond the noise, iTeos presents a compelling contrarian bet.

The Setback and the Short Squeeze: When Bearish Sentiment Backfires

In March 2023, iTeos halted its ITM-213 trial due to safety concerns, triggering a 60% stock collapse. The sell-off was exacerbated by short sellers, who likely piled on to a name already under pressure from delayed data reads and a crowded immuno-oncology space. Fast-forward to April 2025, and ITOS shares had surged 17.3% to $8.12 (from $6.96 pre-announcements) on the back of strategic updates, including a partnership with Pfizer and a robust cash balance. This rebound isn’t just a recovery—it’s a short squeeze in action. reveals how bearish bets were squeezed as the company proved its staying power.

The Cash Paradox: Liquidity as a Catalyst, Not a Crutch

iTeos’s $624.3 million in cash and investments (as of March 2025) is the linchpin of its resilience. This figure, nearly triple its 2022 reserves, stems from a June 2024 public offering and the $200 million upfront from its Pfizer partnership for EOS-448, a next-gen anti-TIGIT antibody. Critics may dismiss cash hoards as defensive, but in biotech, liquidity is offensive: it funds late-stage trials, attracts partnerships, and buys time for data-driven catalysts. With this war chest, iTeos can advance its GALAXIES Lung-301 Phase 3 trial (comparing its belrestotug/dostarlimab combo to pembrolizumab) without dilution—a rarity in a sector where burn rates often outpace optimism. underscores this financial fortitude.

Speculation and Strategic Shifts: Betting on the Pipeline’s Longevity

The market’s rally isn’t blind faith—it’s rooted in iTeos’s ability to pivot. While the inupadenant program was scrapped, resources were reallocated to EOS-984 (an ENT1 inhibitor in Phase 1) and EOS-215 (anti-TREM2 antibody), both targeting immuno-oncology’s unmet needs. The GALAXIES Lung-201 interim data (expected Q2 2025) and HNSCC trial results could validate belrestotug’s role in combination therapies, while Pfizer’s backing for EOS-448 adds credibility. Short sellers, once dominant, now face a company with a 3-year cash runway and a pipeline that’s narrower but more focused—a classic contrarian setup where fear turns to FOMO.

Why Contrarians Should Take Note: Asymmetric Returns Ahead

iTeos’s story mirrors the broader biotech playbook: setbacks test liquidity, but those with cash > 3x operational burn and late-stage assets often rebound faster than consensus expects. The PFS signal threshold for belrestotug’s combo (a key Q2 readout) could redefine the stock’s narrative. Even a partial win here—say, a 20% PFS improvement—could catapult ITOS toward triple-digit levels. Meanwhile, the Pfizer partnership’s $1.4 billion total potential (including milestones) creates a “binary event” catalyst for 2026–2027, far beyond current valuation models.

Final Call: Buy the Dip, Trust the Balance Sheet

iTeos isn’t a slam dunk—clinical trials are inherently risky, and competition in immuno-oncology is fierce. But for contrarian investors, the math is compelling: a $624M cash pile, a 2027 burn date, and a pipeline with multiple Phase 1/2 readouts this year create a safety net and upside catalysts. With shares at $8.12 and a 52-week high of $21.80 (achieved in 2023’s pre-setback euphoria), the downside is cushioned while the upside remains open.

Act now, before consensus catches up. The next catalyst—the GALAXIES Lung-201 interim data—could ignite a rally akin to April’s. In biotech, liquidity isn’t just a lifeboat—it’s a rocket fuel. iTeos’s story is proof that setbacks can be the spark, not the end.