Executive Summary / Key Takeaways

• IO Biotech is a clinical-stage biotech company focused on developing novel, off-the-shelf therapeutic cancer vaccines based on its proprietary T-win platform, designed to target both tumor and immune-suppressive cells.
• The company's lead candidate, Cylembio (IO102-IO103), is in a potentially registrational Phase 3 trial for advanced melanoma, with the critical progression-free survival (PFS) primary endpoint readout expected in the third quarter of 2025.
• Early clinical data for Cylembio in combination with PD-1 inhibitors have shown promising response rates and PFS in melanoma and encouraging activity in Phase 2 trials for NSCLC and SCCHN, suggesting the potential of the T-win platform's unique mechanism of action.
• Financially, IOBT is pre-revenue and cash-constrained, reporting a net loss of $22.4 million in Q1 2025 and holding $37.1 million in cash as of March 31, 2025, raising substantial doubt about its ability to continue as a going concern without significant additional funding, which is heavily dependent on positive clinical data.
• The company operates in a highly competitive oncology market dominated by large pharmaceutical companies with established immunotherapies, requiring IOBT's technology to demonstrate clear, quantifiable advantages to gain market traction and secure necessary funding. Despite lacking proprietary, quantifiable technology differentiators.

The T-win Platform: A Novel Approach in the Immunotherapy Landscape

IO Biotech, Inc. ($IOBT) is a clinical-stage biopharmaceutical company positioning itself at the forefront of cancer immunotherapy with its unique T-win platform. Founded in Denmark in 2014 and becoming a U.S.-listed public entity through a reorganization and IPO in late 2021, the company has dedicated its efforts to developing off-the-shelf therapeutic cancer vaccines. This approach stands in contrast to many existing immunotherapies, aiming to offer a readily available treatment option. IOBT's strategic focus centers on harnessing the power of the immune system by targeting specific elements within the tumor microenvironment (TME).

The core of IOBT's strategy is its proprietary T-win technology. This platform is designed with a dual mechanism of action: stimulating T cells to attack cancer cells and simultaneously targeting immune-suppressive cells within the TME. By activating T cells against specific antigens expressed by both tumor cells and TME components, the platform aims to convert the immunosuppressive TME into a pro-inflammatory, anti-tumor environment. This modulation is intended to unleash and potentiate the tumor-killing activity of T cells, potentially amplifying the effects of other immunotherapies, such as checkpoint inhibitors.

IOBT's pipeline is built upon this foundational technology. The lead candidate, IO102-IO103 (known as Cylembio in the U.S.), is a dual-antigen vaccine targeting cells expressing indoleamine 2,3-dioxygenase (IDO) and programmed death-ligand 1 (PD-L1). These targets are often associated with immunosuppression in the TME. Early clinical evidence from an investigator-initiated Phase 1/2 trial in metastatic melanoma patients treated with IO102-IO103 in combination with nivolumab demonstrated a confirmed objective response rate (ORR) of 73% and a complete response rate (CRR) of 50%, with a median progression-free survival (PFS) of 25.5 months as of a January 2023 data cut. These results were noted as an increase compared to what had been reported with anti-PD-1 monotherapy alone, suggesting a tangible benefit.

Beyond Cylembio, IOBT is advancing other candidates leveraging the T-win platform. IO112 targets Arginase 1, an enzyme highly expressed in difficult-to-treat tumors and associated with myeloid-derived suppressor cells (MDSCs). Preclinical data for IO112 has shown anti-tumor activity and modulation of immunosuppressive tumor-associated macrophages (TAMs). IO170 targets transforming growth factor beta 1 (TGFβ1), another key immunosuppressive factor. Recent preclinical data for a murine surrogate of IO170 presented at AACR 2025 demonstrated significant tumor growth inhibition in breast and prostate cancer models, along with favorable changes in the TME, including increased cytotoxic T-cell interaction. The company anticipates filing an IND for IO112 in 2025 and continuing IND-enabling studies for IO170 in 2025. The strategic intent behind these candidates is to address a broader range of solid tumors by targeting different immunosuppressive pathways.

Clinical Momentum and the Pivotal Phase 3 Readout

The investment narrative for IOBT is heavily centered on the progress and outcome of its clinical trials, particularly the potentially registrational Phase 3 IOB-013/KN-D18 trial. This trial is evaluating Cylembio in combination with Merck 's Keytruda (pembrolizumab) against pembrolizumab alone in previously untreated patients with advanced melanoma. Enrollment for this trial was completed ahead of schedule in November 2023, with a total of 407 patients. The primary endpoint is PFS, and the analysis is event-driven, planned when 226 progression or death events occur.

The expected readout of the PFS primary endpoint in the third quarter of 2025 represents the most significant near-term catalyst for IOBT. Positive data from this trial could validate the T-win platform's potential in a large, randomized setting and pave the way for a Biologics License Application (BLA) submission to the FDA, which the company plans for 2025 if the data are positive. A potential U.S. launch is targeted for 2026, contingent on regulatory approval. While a planned interim analysis of ORR in IOB-013 did not meet the criteria for declaring superiority, the independent data monitoring committee (IDMC) recommended the trial continue to the PFS analysis, noting no new safety signals. This indicates the trial remains on track for the primary endpoint analysis.

Beyond the pivotal melanoma trial, IOBT is exploring Cylembio in other solid tumor indications through Phase 2 basket trials in collaboration with Merck , which supplies pembrolizumab free of charge. The IOB-022/KN-D38 trial in first-line metastatic NSCLC and SCCHN has completed enrollment. Results from the SCCHN cohort met the primary endpoint of ORR at 44.4% in efficacy evaluable patients, showing an encouraging 6.6-month median PFS. Preliminary results from the NSCLC cohort also showed promising activity with a 48% confirmed ORR and an encouraging 8.1-month median PFS in efficacy evaluable patients. The IOB-032/PN-E40 trial is investigating Cylembio in the perioperative setting for melanoma and SCCHN, with enrollment also completed and data expected in the second half of 2025. These basket trials aim to demonstrate the potential applicability of Cylembio across multiple tumor types.

Financial Health and the Funding Imperative

As a clinical-stage biotechnology company, IOBT is pre-revenue and heavily reliant on external funding to support its research and development activities. The company has incurred significant operating losses since inception, including a net loss of $22.4 million for the three months ended March 31, 2025, compared to $19.5 million for the same period in 2024. For the full year 2024, the net loss was $95.5 million. Research and development expenses were the primary driver of operating costs, increasing by $2.1 million in Q1 2025 compared to Q1 2024, mainly due to increased clinical trial activity for Cylembio and personnel costs. General and administrative expenses also saw a modest increase.

The company's liquidity position is a critical factor for investors. As of March 31, 2025, IOBT held $37.1 million in cash and cash equivalents. Cash used in operating activities was $23.1 million in Q1 2025.

IOBT has financed its operations through various means, including its IPO ($103.3 million net proceeds), a private placement in August 2023 ($71.9 million net proceeds), and a loan facility with the European Investment Bank (EIB). The EIB facility provides up to $57.5 million, with committed tranches totaling $37.5 million. The first tranche of $10.0 million was drawn on May 6, 2025, and the company believes conditions for the second tranche ($12.5 million) have been met. However, conditions for the third committed tranche ($15.0 million) were not satisfied as of March 31, 2025, as they require milestones like raising additional capital and submitting a marketing authorization application.

Based on its current operating plan, IOBT expects its existing cash and cash equivalents, combined with the first two EIB tranches, to fund operations for at least 12 months from the May 14, 2025 filing date. However, the company explicitly states that this raises substantial doubt about its ability to continue as a going concern for one year from the filing date, as funding beyond this period and for future activities (including potential commercialization) will require significant additional capital. The ability to secure this funding is heavily dependent on positive data from the IOB-013 Phase 3 trial expected in Q3 2025.

Competing in a Crowded Oncology Arena

IOBT operates within the highly competitive oncology market, particularly in the immunotherapy space. This landscape is dominated by large, well-established pharmaceutical companies with significant financial resources, extensive R&D capabilities, and existing commercial infrastructures. Key competitors include Merck , Bristol-Myers Squibb (BMY), and AstraZeneca (AZN), all of whom have approved and commercially successful checkpoint inhibitors like Keytruda, Opdivo, and Imfinzi, respectively. These companies generate billions in annual revenue and possess substantial cash flow, allowing them to invest heavily in R&D and commercialization. For instance, Merck 's 2024 TTM Gross Profit Margin is 76%, compared to IOBT's 0% as a pre-revenue company. Similarly, Merck (MRK)'s TTM P/S ratio is 3.93, while IOBT's is 0.00, highlighting the vast difference in their current financial standing and market valuation based on sales.

IOBT's competitive positioning relies primarily on the potential differentiation offered by its T-win platform and lead candidate, Cylembio. While competitors focus on blocking immune checkpoints, IOBT's approach aims to actively stimulate T cells against specific immunosuppressive targets (IDO/PD-L1) within the TME. The early clinical data showing promising response rates and PFS in combination with PD-1 inhibitors suggests this mechanism could be complementary or synergistic with existing therapies. However, this also means IOBT's lead strategy involves combination therapy, making it reliant on the availability and commercial terms of partners' drugs like pembrolizumab.

Competing against companies with significantly greater financial resources, manufacturing scale, and established sales and marketing capabilities presents a substantial challenge for IOBT. These larger players can absorb higher R&D costs, conduct larger and more numerous trials, and exert considerable influence in the market through pricing and distribution. IOBT's strategic response is to focus on demonstrating a clear, clinically meaningful benefit with its novel technology, particularly in the IOB-013 Phase 3 trial. Success here is crucial not only for regulatory approval but also for attracting potential partners or securing the significant funding required to build its own commercial capabilities, should it choose to pursue that path. The company's ability to recruit and retain qualified personnel and manage its growth effectively are also critical operational factors in this competitive environment.

Risks and the Path Forward

The investment in IOBT carries significant risks, inherent in the clinical-stage biotechnology sector. The most pressing risk is the substantial doubt about the company's ability to continue as a going concern, directly tied to its limited cash runway and dependence on future financing. The outcome of the IOB-013 Phase 3 trial is paramount, as positive data is essential to attract the capital needed to fund operations beyond Q2 2026 and support potential BLA submission and commercialization. Failure to achieve statistical significance on the primary endpoint or unexpected safety issues would severely jeopardize the company's prospects and ability to raise funds.

Clinical trial execution itself remains a risk, including potential delays in future trials, difficulties in patient enrollment or retention, and the possibility that results from ongoing or future trials may not replicate earlier promising data. The reliance on third parties for manufacturing and clinical trial conduct introduces additional dependencies and potential points of failure, such as compliance issues or supply disruptions. Regulatory risk is also significant; even with positive data, there is no guarantee of timely approval, and any approval may come with restrictions on labeling or require costly post-marketing studies.

Furthermore, IOBT has identified a material weakness in its internal control over financial reporting related to accounting for CRO accruals and prepayments, which was not remediated as of March 31, 2025. While remediation efforts are underway, failure to effectively address this could impact the reliability of financial reporting and potentially affect investor confidence and stock price. Geopolitical events, such as conflicts impacting clinical trial sites in regions like Israel, also pose operational risks.

Conclusion

IO Biotech represents a high-risk, high-reward investment opportunity centered on the potential of its novel T-win platform and lead cancer vaccine candidate, Cylembio. The company's strategy to target both tumor and immune-suppressive cells offers a differentiated approach in the competitive immunotherapy landscape, with early clinical data providing a glimpse of potential efficacy. However, IOBT faces significant financial hurdles, operating with a limited cash runway and requiring substantial future funding that is contingent on clinical success. Financial data indicates consistently zero revenue.

The upcoming Phase 3 PFS readout for Cylembio in advanced melanoma in the third quarter of 2025 is the critical near-term catalyst that will largely determine the company's trajectory. Positive results could validate the technology, unlock financing opportunities, and pave the way for potential market entry in 2026. Conversely, a negative outcome would severely challenge the investment thesis and raise significant questions about the platform's broader applicability. Investors should weigh the potential upside of a novel, effective cancer vaccine against the substantial clinical, financial, and competitive risks inherent in this stage of development.