Michel Detheux | iTeos

Right across from the Charleroi airport, the Walloon biotech company iTeos is working towards a better world. CEO Michel Detheux and his forty employees are full of idealism as they fight the cancer monster. iTeos Therapeutics is active in immunotherapy and in a few years, hopes to be launching two medications to help relieve cancer patients from their misery. This year the model business raised 75 million dollars, intended in part to fund the costly testing and research phase. This promising biotech company is now opening an office in Boston as well.

Who are the driving force and shareholders behind iTeos?

Michel Detheux: Benoît Van den Eynde and I started the company in 2011 on a fifty-fifty basis, with only minimal funds, however. Our first round of financing in 2012 raised 3 million euros. The university at Louvain-la-Neuve and various business angels (such as the famous Walloon financier Jean Stéphenne), among others, decided to share in our journey. Other backers included Fund+ (Désiré Collen, ex-Thrombogenics), Pierre Drion (ex-CEO Petercam) and the Ludwig Institute for Cancer Research.This renowned cancer research institute – along with technology from the UCL de Duve Institute – was iTeos’ scientific foundation. Additionally, the Walloon government provided us with 6 million euros in support. In 2014 a strategic alliance followed with the pharmacological giant Pfizer and SRIW, the Walloon investment firm. Pfizer has currently pulled out again. Our big break, financially speaking, was this past year, when we managed to raise 64 million euros of additional capital. I believe this to be unprecedented, one of the most important for our sector, a preclinical stage biotech within Europe. Eighteen shareholders brought in that capital together. Our main investor is now the American venture capital fund MPM, controlling one third of our company. You could say MPM is a real leading force. The rest follow in their wake.

64 million euros is a lot of money. Why is so much private capital needed?

Michel Detheux: We actually need even more. The Région wallonne has been a major partner with several grants and refundable loans for another 30 million. So, we now have funds amounting to approximately 100 million euros altogether. It’s all due to our business model. Immunotechnological research is extremely expensive and additionally, the research process is very slow. Our competition has even larger budgets, from 300 million to 1,500 million euros.

So, how do you intend to differentiate yourselves from the big boys?

Michel Detheux: iTeos has one single ambition: to be world-class. Within five to seven years, we want to bring two best-in-class medications to market.

Private equity investors always want a return on their investment. Will they have the necessary long-term patience?

Michel Detheux: Five to seven years is indeed a long time, though our investors know this is a sector that requires plenty of patience. We think we have found a solution to their desires though, namely an IPO, a.k.a. the stock market. Bringing a new medication to market will cost us about a billion at least. That means raising a few hundred million (300 to 350 million) in funds. In this country, with the exception of the GIMV, that isn’t so simple. So, we need to go public. That’s why we’re adding the Boston office. Another possibility would be for iTeos to get a major partner on board. Those are our two long-term funding options. The initial investors are aware of that. At some point they may decide to continue sharing the journey, or opt for a return on their initial investment instead.

Private Equity is the smart money

It’s striking how many financial partners are involved. Doesn’t that complicate things? Will the rules of corporate governance apply if things get critical?

Michel Detheux: Corporate governance rules are an ideal guideline if it ever comes down to it. We’ve communicated this principle clearly to all our backers from the start. We strive to incorporate corporate governance for all aspects of our company: HR, legal, business development and, as you see, financial matters as well. That’s a good thing too. If we ever hit the stock market, this part of the job will have been done already, together with our backers. They’ve all declared their approval of this approach.

Please, summarise private equity’s advantages and disadvantages for us.

Michel Detheux: I’ll begin with the benefits. In our sector, private equity is the only option. Without private equity we’d never be able to realise our entrepreneurial vision. That’s why I always call private equity the smart money. Private investors really do more than just hand over the money. They have their own networks. Besides, and don’t underestimate this, they often have extensive market knowledge, much more than you’d guess at first. Finally, you can count on private equity players to be there for you, even under difficult circumstances.

Disadvantages?

Michel Detheux: I can’t think of any. It’s only logical that a company will need to prove itself and fulfil the promises it’s made to its backers. The fact that iTeos attracted investors from across the globe is proof that this team meets its promises and has managed to gain international recognition in record time. American, Swiss and Chinese investment funds showed an interest, along with the original stakeholders.

In conclusion: iTeos is now opening an additional office in Boston. Why?

Michel Detheux: I’m going over there myself with my family to get things moving and work on visibility. A presence in the US is simply a requirement in this sector. After all, Boston is the Mecca of the American pharma sector. To prepare to be listed on Nasdaq – as is our intention – you need to be on location. Most bankers, the greatest investors and most prestigious legal firms can all be found on the East Coast of the US. There are approximately 1,500 biotech companies in Boston alone, compared to 2,000 for all of Europe. That says it all.

Private Equity/BVA
Author: Karel Cambien