IO Biotech, a clinical-stage biopharmaceutical company, is at the forefront of developing novel, off-the-shelf, immune-modulating therapeutic cancer vaccines based on its proprietary T-win platform. The company's mission is to harness the power of the immune system to combat cancer, offering a promising solution in the fight against this devastating disease.

Business Overview and History

IO Biotech was founded in December 2014 as IO Biotech ApS in Denmark, with the goal of advancing innovative cancer therapies. The company's core focus is on developing T-cell-engaging cancer vaccines that target immunosuppressive mechanisms within the tumor microenvironment (TME).

In November 2021, IO Biotech ApS completed a corporate reorganization, becoming a wholly-owned subsidiary of the newly formed IO Biotech, Inc., which was incorporated in the United States. As part of this reorganization, each issued and outstanding Class A ordinary share of IO Biotech ApS was exchanged on a one-for-one basis into shares of common stock of IO Biotech, Inc.

Following the reorganization, IO Biotech, Inc. completed its initial public offering (IPO) in November 2021, selling an aggregate of 8.22 million shares of common stock at a price of $14.00 per share, including 1.07 million shares sold pursuant to the underwriters' exercise of their option to purchase additional shares. The company received net proceeds of $103.3 million from the IPO after deducting underwriting discounts, commissions, and other offering expenses.

Prior to the IPO, IO Biotech had financed its operations primarily through the issuance of convertible preference shares, convertible notes, and ordinary shares. Since inception, the company has incurred significant operating losses, with net losses of $86.1 million and $71.5 million for the years ended December 31, 2023 and 2022, respectively.

IO102-IO103, the company's lead investigational therapeutic cancer vaccine, is designed to target the immunosuppressive mechanisms mediated by indoleamine 2,3-dioxygenase (IDO) and programmed death ligand 1 (PD-L1). In a Phase 1/2 clinical trial conducted at Herlev University Hospital in Copenhagen, IO102-IO103 in combination with the anti-PD-1 monoclonal antibody nivolumab demonstrated promising results, with a confirmed overall response rate of 73% and a complete response rate of 50% in 30 patients with metastatic melanoma.

Based on these positive findings, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation (BTD) to IO102-IO103 in combination with pembrolizumab for the treatment of patients with unresectable or metastatic melanoma in December 2020. This designation has allowed IO Biotech to engage in more frequent and intensive guidance from the FDA as it advances the development of IO102-IO103.

Leveraging the BTD, IO Biotech initiated a pivotal Phase 3 clinical trial (IOB-013/KN-D18) in 2022, evaluating IO102-IO103 in combination with pembrolizumab as a first-line treatment for patients with advanced melanoma. The trial has completed enrollment ahead of schedule, with a total of 407 patients enrolled across more than 100 centers globally, including in the United States, Europe, Australia, Turkey, South Africa, and Israel.

In addition to the pivotal melanoma trial, IO Biotech is investigating IO102-IO103 in multiple solid tumor indications through its Phase 2 basket trial (IOB-022/KN-D38). This trial is evaluating the combination of IO102-IO103 and pembrolizumab in first-line treatment of patients with metastatic non-small cell lung cancer (NSCLC) and recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN). Enrollment in this trial has also been completed ahead of schedule.

Furthermore, IO Biotech is exploring the potential of IO102-IO103 in a neoadjuvant/adjuvant setting through the IOB-032/PN-E40 Phase 2 basket trial. This trial is assessing the safety, biomarker data, and anti-tumor activity of IO102-IO103 in combination with pembrolizumab given before (neoadjuvant) and after (adjuvant) surgery in patients with resectable melanoma or SCCHN.

Beyond IO102-IO103, IO Biotech's pipeline includes additional product candidates, such as IO112, which targets the immunosuppressive enzyme Arginase 1, and IO170, which is designed to modulate the transforming growth factor-beta (TGF-β) pathway in the TME. The company plans to submit an Investigational New Drug (IND) application for IO112 to the FDA in 2025.

Financials and Liquidity

As of September 30, 2024, IO Biotech reported cash and cash equivalents of $80.2 million. The company's net loss for the nine months ended September 30, 2024, was $64.2 million, with a net loss per common share of $0.97. For the most recent fiscal year (2023), IO Biotech reported a net loss of $86.1 million. The company has not yet generated any revenue, as it is still in the clinical development stage.

In the most recent quarter (Q3 2024), IO Biotech reported a net loss of $24.02 million, which was an increase compared to the same period in the prior year. This increase was primarily due to higher research and development expenses related to the company's ongoing clinical trials, particularly the continued execution of the pivotal Phase 3 trial of IO102-IO103.

IO Biotech's financial position has been bolstered by several key events, including its initial public offering (IPO) in November 2021, which raised $103.3 million in net proceeds, and a private placement completed in August 2023, which generated $71.9 million in net proceeds.

In December 2024, IO Biotech announced that it had entered into a loan facility of up to €57.5 million from the European Investment Bank (EIB), the long-term lending institution of the European Union. This financing is expected to extend the company's cash runway into the second quarter of 2026 and support the advancement of its immune-modulating therapeutic cancer vaccines, including the potential BLA submission for IO102-IO103.

The company's liquidity position remains strong, with a debt-to-equity ratio of 0.027, a current ratio of 5.37, and a quick ratio of 5.37 as of September 30, 2024. IO Biotech expects its current cash and cash equivalents to be sufficient to fund its operations into the fourth quarter of 2025.

Operational Highlights and Milestones

IO Biotech has made significant progress in advancing its lead product candidate, IO102-IO103, through clinical development. Key operational highlights and milestones include:

1. Pivotal Phase 3 Trial (IOB-013/KN-D18) in Advanced Melanoma: The company completed enrollment of 407 patients in this trial, which is evaluating IO102-IO103 in combination with pembrolizumab as a first-line treatment for patients with advanced melanoma. The primary endpoint of progression-free survival (PFS) is projected to be reached in the first half of 2025.

2. Phase 2 Basket Trial (IOB-022/KN-D38) in NSCLC and SCCHN: IO Biotech has completed enrollment in this trial, which is investigating IO102-IO103 in combination with pembrolizumab in the first-line treatment of patients with metastatic NSCLC and recurrent or metastatic SCCHN. Positive data from the SCCHN cohort was presented at the European Society for Medical Oncology (ESMO) Congress 2024, and data from the NSCLC cohort has been accepted for presentation at an upcoming scientific conference.

3. Phase 2 Neoadjuvant/Adjuvant Trial (IOB-032/PN-E40) in Resectable Melanoma and SCCHN: Enrollment in this trial, which is evaluating IO102-IO103 in combination with pembrolizumab as neoadjuvant and adjuvant treatment for patients with resectable melanoma or SCCHN, has been completed ahead of schedule.

4. Regulatory Milestones: In addition to the Breakthrough Therapy Designation granted by the FDA for IO102-IO103 in metastatic melanoma, IO Biotech has also received regulatory clearance from the FDA to initiate the IOB-032/PN-E40 trial evaluating the vaccine candidate in a neoadjuvant/adjuvant setting.

5. Financing and Partnerships: The company's cash position has been bolstered by its successful IPO, private placement, and a €57.5 million loan facility from the European Investment Bank. IO Biotech has also established a clinical collaboration with Merck, which is providing pembrolizumab for use in several of the company's ongoing trials.

Risks and Challenges

Despite IO Biotech's promising progress, the company faces several risks and challenges common to the biopharmaceutical industry, including:

1. Clinical Development Risks: The success of IO Biotech's product candidates is dependent on the outcome of ongoing and future clinical trials. Unfavorable results or delays in these trials could adversely impact the company's development timeline and regulatory approval prospects.

2. Regulatory Approval Uncertainties: Even if IO Biotech's product candidates demonstrate positive results in clinical trials, there is no guarantee that they will receive regulatory approvals from the FDA, European Commission, or other governing bodies, which could delay or prevent their commercialization.

3. Competitive Landscape: The oncology market is highly competitive, with numerous pharmaceutical and biotechnology companies developing novel therapies. IO Biotech's products may face competition from both existing and emerging therapies, which could impact their commercial potential.

4. Manufacturing and Supply Chain Challenges: As IO Biotech advances its product candidates, it will need to establish reliable manufacturing and supply chain capabilities, which could be subject to disruptions or delays.

5. Financing and Capital Requirements: The company will require significant additional capital to fund its ongoing research, development, and potential commercialization efforts. Failure to secure sufficient funding could hamper IO Biotech's ability to execute on its strategic objectives.

Geographic Markets and Future Outlook

IO Biotech's product candidates are currently being evaluated in clinical trials primarily in the United States and Europe. The company's strategy is focused on advancing its pipeline of novel, immune-modulating cancer vaccines, with the goal of improving outcomes for patients with a variety of solid tumor types.

The successful development and commercialization of its product candidates, particularly IO102-IO103, will be critical to IO Biotech's future success and its ability to generate revenue and achieve profitability. With the ongoing pivotal Phase 3 trial in advanced melanoma and multiple Phase 2 trials in various indications, IO Biotech is well-positioned to potentially bring its innovative therapies to market in the coming years.

Conclusion

IO Biotech is at the forefront of the emerging field of immune-modulating therapeutic cancer vaccines, leveraging its proprietary T-win platform to develop novel treatments that target the immunosuppressive mechanisms within the tumor microenvironment. The company's lead candidate, IO102-IO103, has demonstrated promising results in early-stage clinical trials, leading to a Breakthrough Therapy Designation from the FDA and the initiation of a pivotal Phase 3 trial in advanced melanoma.

With a robust clinical pipeline, strategic partnerships, and a strengthened financial position, IO Biotech is well-positioned to continue advancing its innovative approach to cancer treatment. As the company navigates the challenges inherent to the biopharmaceutical industry, its commitment to developing transformative therapies that harness the power of the immune system remains steadfast. Investors and patients alike will be closely watching IO Biotech's progress as it strives to bring its novel cancer vaccines to the market and improve outcomes for those affected by this devastating disease.