What happened
The stock market got off to a memorable start on the first trading day of 2022, but iTeos Therapeutics (ITOS 1.40%) had a particularly memorable day. Shares of the clinical-stage biotech rose by 1.9% to beat the frothy S&P 500 on the day, thanks to its inclusion in another high-profile equity index.
So what
After market hours on Friday S&P Dow Jones Indices, the company that operates the closely tracked set of S&P indexes, announced that iTeos would become a component of its S&P SmallCap 600 index. The company is replacing Magellan Health, which if all goes according to plan will soon be absorbed by insurer Centene in an acquisition announced nearly one year ago and valued at $2.2 billion.
iTeos' graduation to the S&P Small Cap 600 Index will occur before the start of trading this Wednesday, Jan. 5.
Image source: Getty Images.
The company's latest news continues the positive momentum it's enjoyed since last June, when it struck a co-development deal with global pharmaceutical giant GlaxoSmithKline (GSK 0.87%) centered around its EOS-448 pipeline cancer treatment.
This is a potentially very lucrative arrangement, as it includes a $625 million upfront payment to iTeos, and potentially up to an additional $1.45 billion in developmental and commercial milestone payments.
Now what
Inclusion in the S&P SmallCap 600 index will certainly raise iTeos' profile, and help support the stock price due to the numerous index funds that will undoubtedly snap it up.
But this "index effect" isn't the most powerful engine driving a stock's price up and down. That said, iTeos still looks like an attractive stock based on the promise of EOS-448, which now has great forward momentum with the GlaxoSmithKline deal.
