UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission File Number: 001-41008 IO Biotech, Inc. (Exact Name of Registrant as Specified in its Charter) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 87-09 ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) Commission File Number: 001-41008 IO Biotech, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 87-0909276 (State or other jurisdiction of incorporation or organization) Ole Maaløes Vej 3 DK-2200 Copenhagen N Denmark NA (Address of principal executive offices) (Zip ...

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) IO Biotech is a clinical-stage biopharmaceutical company developing novel immune-modulating cancer vaccines, with lead candidate IO102-IO103 in Phase 3 for advanced melanoma - IO Biotech is a clinical-stage biopharmaceutical company developing novel, immune-modulating cancer vaccines based on its **T-win technology platform**[17](index=17&type=chunk) - The lead product candidate, IO102-IO103, targets immunosuppressive mechanisms mediated by **IDO and PD-L1**, demonstrating meaningful tumor regression and durable antitumor response in a Phase 1/2 trial for metastatic melanoma[17](index=17&type=chunk) - IO102-IO103, in combination with pembrolizumab, was granted **Breakthrough Therapy Designation (BTD)** by the FDA for unresectable/metastatic melanoma[17](index=17&type=chunk)[23](index=23&type=chunk) - A potentially registrational **Phase 3 trial (IOB-013/KN-D18)** for IO102-IO103 in combination with pembrolizumab for first-line advanced melanoma began in May 2022, with **75% patient enrollment expected by mid-2023** and completion by year-end 2023[18](index=18&type=chunk) [Overview](index=7&type=section&id=Overview) The T-win platform activates T cells against immunosuppressive mechanisms, with a dual action of direct killing and tumor microenvironment modulation, featuring IO102-IO103 and IO112 in its pipeline - The **T-win platform** activates pre-existing T cells to target immunosuppressive mechanisms, with a dual mechanism of action: **direct killing of immunosuppressive cells** (tumor and TME cells expressing IDO/PD-L1) and **modulation of the TME into a pro-inflammatory environment**[19](index=19&type=chunk)[44](index=44&type=chunk) - The lead candidate, **IO102-IO103**, combines IO102 (targeting IDO+) and IO103 (targeting PD-L1+) for a synergistic therapeutic effect[22](index=22&type=chunk) - **IO112**, a novel product candidate, targets **Arginase 1**, an immunoregulatory enzyme overexpressed in difficult-to-treat tumors, and is currently in a **Phase 1 trial** with an IND filing planned for 2023[28](index=28&type=chunk)[32](index=32&type=chunk) [Our Strategy](index=10&type=section&id=Our%20Strategy) IO Biotech's strategy focuses on advancing IO102-IO103 towards approval in advanced melanoma, expanding its clinical development into other solid tumors, and leveraging the T-win platform for new vaccine candidates - Advance IO102-IO103 towards approval in combination with anti-PD-1 therapy for first-line advanced melanoma, aiming for **accelerated approval based on interim ORR analysis** and MAA filing with EMA based on PFS[32](index=32&type=chunk) - Broaden IO102-IO103 clinical development into other solid tumor settings (NSCLC, SCCHN, UBC) through **Phase 2 basket trials** (IOB-022 for metastatic, IOB-032 for neo-adjuvant/adjuvant)[32](index=32&type=chunk) - Leverage the **T-win platform** to design and advance a portfolio of novel immune-modulating cancer vaccine candidates, including **IO112** (targeting Arginase 1) and other preclinical compounds like TGFB[32](index=32&type=chunk)[33](index=33&type=chunk) - Strengthen position through continuous innovation, **intellectual property expansion (17 patent families)**, and selective strategic collaborations (e.g., with Merck for Keytruda supply)[36](index=36&type=chunk) [Our Approach to Therapeutic Cancer Vaccines](index=11&type=section&id=Our%20Approach%20to%20Therapeutic%20Cancer%20Vaccines) The T-win platform is a novel cancer vaccine approach activating T cells against immunosuppressive mechanisms, aiming for dual action, durable responses, and broad applicability - The **T-win platform** activates naturally occurring T cells to target immunosuppressive mechanisms, employing a dual mechanism: **direct killing of immunosuppressive cells** (IDO+, PD-L1+ tumor and TME cells) and **modulation of the TME into a pro-inflammatory, anti-tumor environment**[44](index=44&type=chunk)[48](index=48&type=chunk) - Key advantages of the T-win platform include **durability of response** (targeting genetically stable immunosuppressive cells), dual/multi-epitope design for broader patient reach, favorable tolerability (subcutaneously injected peptides), versatility in combination therapies, well-understood manufacturing, and ease of administration[52](index=52&type=chunk) - The platform is built on the discovery of naturally occurring, pro-inflammatory T cells against immunosuppressive proteins like **IDO and PD-L1** in cancer patients[45](index=45&type=chunk) [Current Trials](index=16&type=section&id=Current%20Trials) IO Biotech is conducting a Phase 3 registrational trial for IO102-IO103 in advanced melanoma and a Phase 2 basket trial for other solid tumors, showing encouraging initial data - The **IOB-013/KN-D18 Phase 3 trial** for IO102-IO103 + pembrolizumab in first-line advanced melanoma aims for **300 patients**, with an interim ORR analysis one year after 75% randomization and PFS as the primary endpoint[53](index=53&type=chunk) - The **IOB-022 Phase 2 basket trial** is investigating IO102-IO103 + pembrolizumab in first-line metastatic NSCLC (PD-L1 ≥50%), SCCHN (CPS ≥20), and UBC (CPS ≥10)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Initial data from **10 NSCLC patients** in IOB-022 showed **4 partial responses and 4 stable diseases** among 9 evaluable patients, with a safety profile consistent with prior experience[58](index=58&type=chunk) [Our Product Candidates](index=18&type=section&id=Our%20Product%20Candidates) IO Biotech's pipeline features lead candidate IO102-IO103 in Phase 3 for melanoma and Phase 2 for other solid tumors, with IO112 targeting Arginase 1 and preclinical compounds exploring other immunosuppressive molecules - IO102-IO103, combining IDO-derived peptide IO102 and PD-L1-derived peptide IO103, is designed for synergistic anti-tumor effects by directly killing immunosuppressive cells and reducing TME immunosuppression[61](index=61&type=chunk)[62](index=62&type=chunk) MM1636 Phase 1/2 Trial Results (Metastatic Melanoma, as of Jan 5, 2023) | Metric | Value | | :--- | :--- | | Median Follow-up | 49.8 months | | Evaluable Patients | 30 | | Confirmed ORR | 73.3% (95% CI: 54.1% to 87.7%) | | Complete Response Rate (CRR) | 50.0% (95% CI: 31.3% to 68.7%) | | Partial Response Rate | 23.3% (95% CI: 9.9% to 42.3%) | | Median PFS | 25.5 months | | Median OS | Not reached | | Treatment-related AE discontinuation rate | 17% | | Grade 3-5 AEs | 17% (5 patients) | - IO112, targeting Arginase 1, is in a **first-in-human Phase 1 trial** for arginase-positive solid tumors, with preclinical data showing enhanced anti-tumor effect in combination with anti-PD-1 antibody[169](index=169&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) - Preclinical development includes evaluating additional targets like **TGF-ß (IO170)** to modulate the TME for therapeutic benefit across various cancers[176](index=176&type=chunk) [Collaborations](index=45&type=section&id=Collaborations) IO Biotech maintains strategic collaborations with Herlev University Hospital for intellectual property and research, and with MSD International GmbH (Merck) for clinical trials, retaining global commercial rights to its compounds - Agreements with Herlev University Hospital grant IO Biotech options to acquire intellectual property rights related to T-cell activating inventions and non-exclusive licenses for clinical data[178](index=178&type=chunk)[181](index=181&type=chunk) - IO Biotech has multiple Clinical Trial Collaboration and Supply Agreements with MSD (Merck) to evaluate IO102-IO103 in combination with **KEYTRUDA® (pembrolizumab)** for advanced melanoma (Phase 3), metastatic NSCLC, SCCHN, UBC (Phase 2), and neo-adjuvant/adjuvant melanoma and SCCHN (Phase 2)[188](index=188&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) - Under MSD collaborations, IO Biotech sponsors the trials, MSD provides KEYTRUDA® free of charge, data rights are shared, and IO Biotech maintains **global commercial rights** to its compounds[188](index=188&type=chunk)[191](index=191&type=chunk) - A Clinical Trial Research Agreement with Cliniques Universitaires Saint-Luc supports an investigator-initiated study of peptide-based immunotherapy in SCCHN, with Saint-Luc owning data but granting IO Biotech an exclusive license and patent rights[201](index=201&type=chunk)[202](index=202&type=chunk) [Competition](index=48&type=section&id=Competition) The biopharmaceutical industry, particularly immuno-oncology, is highly competitive, with IO Biotech facing established players possessing greater resources and market positions - The biopharmaceutical industry is intensely competitive, with major pharmaceutical and biotechnology companies, academic institutions, and government agencies conducting research and development in cancer immunotherapies[204](index=204&type=chunk) - Key competitors in immuno-oncology include Amgen, AstraZeneca, BMS, Merck, Novartis, Pfizer, and Roche[206](index=206&type=chunk)[497](index=497&type=chunk) - In melanoma, dominant market players are **BMS (nivolumab, nivolumab & ipilimumab)** and **Merck (pembrolizumab)**[207](index=207&type=chunk)[497](index=497&type=chunk) - Many competitors have significantly greater financial, technical, and human resources, potentially leading to faster product development, regulatory approval, and market commercialization[209](index=209&type=chunk)[498](index=498&type=chunk) [Manufacturing and Supply](index=49&type=section&id=Manufacturing%20and%20Supply) IO Biotech relies entirely on third-party CDMOs for manufacturing its peptide-based product candidates, leveraging well-understood synthetic chemistry for high-quality, low-cost, and easily administered products - IO Biotech's compounds are linear peptides manufactured through a **well-understood solid-state peptide synthesis process**, designed for long shelf-life and easy subcutaneous administration[214](index=214&type=chunk) - The company does not own or operate manufacturing facilities and relies on **third-party CDMOs** for all preclinical, clinical, and future commercial supply, ensuring compliance with regulatory requirements[215](index=215&type=chunk)[217](index=217&type=chunk) - This outsourcing strategy allows the company to maintain an efficient infrastructure and focus internal expertise and resources on product candidate development and third-party management[216](index=216&type=chunk) [Commercialization](index=49&type=section&id=Commercialization) IO Biotech holds worldwide commercial rights to its immuno-oncology programs and plans to build a focused sales and marketing organization, potentially pursuing third-party distribution arrangements - IO Biotech holds **worldwide development and commercial rights** to its pipeline and intends to commercialize approved product candidates in key geographies[219](index=219&type=chunk) - The company currently lacks internal marketing, sales, or distribution capabilities[219](index=219&type=chunk) - Plans include building a focused sales and marketing organization to target oncologists and potentially entering into distribution and marketing arrangements with third parties[220](index=220&type=chunk)[221](index=221&type=chunk) [Intellectual Property](index=50&type=section&id=Intellectual%20Property) IO Biotech protects its T-win platform and product candidates through 17 patent families covering various targets, trade secrets, and confidentiality agreements, with patents generally having a 20-year term - IO Biotech's intellectual property strategy involves seeking, maintaining, and defending patent rights, relying on trade secrets and know-how, and leveraging data exclusivity and market exclusivity[223](index=223&type=chunk) - The patent portfolio comprises **17 separate patent families**, covering IO102 (IDO), IO103 (PD-L1), IO112 (Arginase 1), and other targets like TDO, PD-L2, CCL22, Arginase 2, and TGFbeta[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - Patents generally have a **20-year term** from their application filing date, with some U.S. patents having term adjustments[225](index=225&type=chunk) - The company holds the **'T-win' trademark** in the EU, US, China, Japan, and UK, registered for pharmaceuticals and scientific/medical research services[228](index=228&type=chunk) [Government Regulation](index=52&type=section&id=Government%20Regulation) The development and commercialization of IO Biotech's biological products are extensively regulated by authorities like the FDA and EMA, involving rigorous trials, complex approval processes, and ongoing post-approval obligations - Biological products are extensively regulated by the FDA in the U.S. and comparable authorities globally, covering research, development, testing, manufacturing, approval, marketing, and post-approval monitoring[229](index=229&type=chunk)[230](index=230&type=chunk) - The U.S. approval process involves nonclinical testing (GLP), IND submission, clinical trials (Phases 1-3 under GCP), BLA submission, FDA review, manufacturing facility inspections (cGMP), and potential advisory committee review[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Expedited programs like Fast Track, **Breakthrough Therapy Designation (BTD)**, Priority Review, and Accelerated Approval are available for serious conditions with unmet needs, but do not guarantee faster or ultimate approval[258](index=258&type=chunk)[264](index=264&type=chunk) - Post-approval, products are subject to ongoing requirements including recordkeeping, adverse event reporting, compliance with promotion/advertising rules, and potential post-market studies or Risk Evaluation and Mitigation Strategies (REMS)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - In the EU, a **centralized procedure for MA** is mandatory for biotechnology-derived products, involving EMA evaluation (210 days, excluding clock stops) and European Commission approval; Orphan drug designation grants **10 years of market exclusivity**[313](index=313&type=chunk)[316](index=316&type=chunk)[324](index=324&type=chunk) - The company's operations are subject to various healthcare laws (Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act) and regulations concerning pricing and reimbursement, which vary significantly by country and can impact market access and profitability[275](index=275&type=chunk)[280](index=280&type=chunk)[289](index=289&type=chunk)[333](index=333&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) IO Biotech faces numerous significant risks, including a limited operating history with consistent net losses, the need for substantial additional funding, unpredictable clinical trial outcomes, and intense competition - IO Biotech has a limited operating history, has incurred net losses since inception (**$71.5 million in 2022, $67.9 million in 2021**), and anticipates continued significant losses, with no guarantee of profitability or revenue generation from product sales[346](index=346&type=chunk)[646](index=646&type=chunk) - The company will need substantial additional funding beyond its current **$142.6 million cash and cash equivalents** (sufficient through Q3 2024) to complete development and commercialization of product candidates, with potential for dilution or relinquishing rights if capital is raised through equity, debt, or collaborations[348](index=348&type=chunk)[349](index=349&type=chunk)[352](index=352&type=chunk)[648](index=648&type=chunk) - All product candidates are in early clinical or preclinical development, and success is uncertain due to the **high risk of clinical trial failure**, the novel nature of T-win technology, and potential delays in site activation or patient enrollment[354](index=354&type=chunk)[355](index=355&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) - The company relies on third parties for clinical trials and manufacturing, exposing it to risks of delays, increased costs, quality issues, and regulatory non-compliance[447](index=447&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) - The biopharmaceutical industry is highly competitive, with larger companies possessing greater resources, and the company's intellectual property protection (patents, trade secrets) faces challenges from infringement, invalidation, and evolving patent laws[495](index=495&type=chunk)[498](index=498&type=chunk)[529](index=529&type=chunk)[530](index=530&type=chunk)[535](index=535&type=chunk)[537](index=537&type=chunk) - Operating as a public company incurs increased costs and management time for compliance (Sarbanes-Oxley Act, SEC, Nasdaq), and the stock price is subject to high volatility[598](index=598&type=chunk)[577](index=577&type=chunk) [Item 1B. Unresolved Staff Comments](index=124&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments were reported[628](index=628&type=chunk) [Item 2. Properties](index=124&type=section&id=Item%202.%20Properties) IO Biotech leases office and lab facilities in Copenhagen, New York, and Maryland, with leases expiring between 2027 and 2027, and believes its current facilities are adequate - IO Biotech leases approximately **622 square meters** of office space and lab space in Copenhagen, Denmark, with leases expiring on December 31, 2027[629](index=629&type=chunk) - In the United States, the company leases office space in New York (lease expires February 28, 2027) and lab space in Maryland (lease expires March 31, 2027)[630](index=630&type=chunk) - A UK office facility lease in Monmouthshire is terminable at the company's convenience[630](index=630&type=chunk) - The company believes its current facilities are adequate and that suitable additional or substitute space will be available commercially as needed[631](index=631&type=chunk) [Item 3. Legal Proceedings](index=124&type=section&id=Item%203.%20Legal%20Proceedings) IO Biotech is not currently a party to any material legal proceedings, believing incidental litigation will not materially adversely affect its business, though litigation can still incur costs and divert resources - IO Biotech is not currently a party to any material legal proceedings[632](index=632&type=chunk) - The company believes that the final outcome of ordinary course litigation and claims will not have a material adverse effect on its business[632](index=632&type=chunk) - Litigation, regardless of outcome, can adversely impact the company due to defense and settlement costs and diversion of management resources[632](index=632&type=chunk) [Item 4. Mine Safety Disclosures](index=124&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to IO Biotech, Inc - Mine Safety Disclosures are not applicable to the Registrant[633](index=633&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=125&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) IO Biotech's common stock is listed on Nasdaq under "IOBT," with no dividends paid or anticipated, and the company completed its IPO in November 2021, raising $103.3 million in net proceeds - IO Biotech's common stock is listed on the Nasdaq Global Select Market under the symbol **"IOBT"**[635](index=635&type=chunk) - The company has never declared or paid dividends on its common stock and anticipates retaining future earnings for business development[635](index=635&type=chunk)[812](index=812&type=chunk) Common Stock and Equity Compensation Data (as of March 9, 2023 / Dec 31, 2022) | Metric | Value | | :--- | :--- | | Common Stock Outstanding (March 9, 2023) | 28,815,267 shares | | Holders of Record (March 9, 2023) | 12 | | Securities to be Issued Upon Exercise of Outstanding Options and Warrants (Dec 31, 2022) | 3,920,000 (approx) | | Weighted Average Exercise Price of Outstanding Options and Warrants (Dec 31, 2022) | $10.77 | | Remaining Available for Issuance Under Equity Compensation Plans (Dec 31, 2022) | 1,389,000 (approx) | - The company completed its IPO on November 9, 2021, issuing **8,222,500 shares** of common stock and raising approximately **$103.3 million in net proceeds**[638](index=638&type=chunk)[639](index=639&type=chunk) - There has been no material change in the planned use of IPO proceeds, and no equity securities were purchased by the issuer or affiliated parties[640](index=640&type=chunk)[641](index=641&type=chunk) [Item 6. (Reserved)](index=126&type=section&id=Item%206.%20(Reserved)) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=127&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) IO Biotech, a clinical-stage biopharmaceutical company, has incurred significant operating losses, with net losses of $71.5 million in 2022 and $67.9 million in 2021, and anticipates needing additional funding beyond Q3 2024 - IO Biotech is a clinical-stage biopharmaceutical company focused on developing novel, immune-modulating cancer vaccines, with its lead candidate IO102-IO103 in a potentially registrational Phase 3 trial for advanced melanoma[644](index=644&type=chunk)[645](index=645&type=chunk) Key Financial Highlights (Years Ended December 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (Amount) | Change (Percent) | | :--- | :--- | :--- | :--- | :--- | | Research and development expenses | $46,986 | $30,152 | $16,834 | 55.8% | | General and administrative expenses | $24,438 | $11,082 | $13,356 | 120.5% | | Total operating expenses | $71,424 | $41,234 | $30,190 | 73.2% | | Loss from operations | $(71,424) | $(41,234) | $(30,190) | 73.2% | | Other income (expense), net | $1,239 | $(26,577) | $27,816 | (104.7)% | | Net loss before income tax expense | $(70,185) | $(67,811) | $(2,374) | 3.5% | | Net loss | $(71,458) | $(67,879) | $(3,579) | 5.3% | | Cash and cash equivalents (as of Dec 31) | $142,590 | $211,531 | $(68,941) | (32.6)% | | Accumulated deficit (as of Dec 31) | $177,739 | $106,281 | $71,458 | 67.2% | - The increase in R&D expenses in 2022 was primarily driven by increased preclinical studies and clinical trial activities for IO102-IO103, including the Phase 3 trial, and higher personnel costs[668](index=668&type=chunk) - General and administrative expenses increased significantly in 2022 due to higher personnel costs (headcount and recruiting), insurance premiums, consulting, and travel costs[669](index=669&type=chunk)[670](index=670&type=chunk) - The company's existing cash and cash equivalents (**$142.6 million** as of December 31, 2022) are expected to fund operations through the **third quarter of 2024**, but additional funding will be necessary thereafter[648](index=648&type=chunk)[673](index=673&type=chunk)[680](index=680&type=chunk) [Overview](index=129&type=section&id=Overview) IO Biotech is a clinical-stage biopharmaceutical company developing immune-modulating cancer vaccines, with its lead candidate IO102-IO103 in a Phase 3 trial for advanced melanoma, incurring significant net losses and requiring future capital raises - IO Biotech is a clinical-stage biopharmaceutical company developing novel, immune-modulating cancer vaccines based on its T-win technology platform[644](index=644&type=chunk) - The lead product candidate, IO102-IO103, has Breakthrough Therapy Designation for unresectable/metastatic melanoma and is in a potentially registrational Phase 3 trial[644](index=644&type=chunk)[645](index=645&type=chunk) Net Loss and Cash Position (Years Ended December 31) | Metric | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Net Loss | $(71.5) | $(67.9) | | Accumulated Deficit | $(177.7) | $(106.2) | | Cash and Cash Equivalents | $142.6 | $211.5 | - Current cash and cash equivalents (**$142.6 million** as of Dec 31, 2022) are estimated to fund operations through **Q3 2024**, with additional funding required thereafter[648](index=648&type=chunk) [Components of Operating Results](index=130&type=section&id=Components%20of%20Operating%20Results) Operating expenses primarily comprise research and development (R&D) and general and administrative (G&A) costs, with R&D expenses reduced by grant income and tax credits, and other income/expense reflecting foreign exchange and interest - Research and development expenses include personnel, consultants, CROs, CMOs, lab expenses, and patent-related costs, all expensed as incurred[652](index=652&type=chunk) - R&D expenses are reduced by grant income (e.g., **$0.03 million in 2022, $0.1 million in 2021**) and Danish tax credits (**$0.8 million in both 2022 and 2021**)[654](index=654&type=chunk)[655](index=655&type=chunk)[754](index=754&type=chunk)[755](index=755&type=chunk) - General and administrative expenses primarily cover personnel, professional services (legal, audit, accounting), and facility-related fees[663](index=663&type=chunk) - Other income (expense), net, is composed of foreign exchange gains/losses, interest income/expense, and, in 2021, fair value adjustments on convertible notes[665](index=665&type=chunk) [Results of Operations](index=133&type=section&id=Results%20of%20Operations) In 2022, total operating expenses increased by 73.2% to $71.4 million, driven by significant increases in R&D and G&A expenses, while other income (expense), net, shifted to a net income due to the absence of preferred stock tranche adjustments Operating Expenses and Other Income (Years Ended December 31) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change (Amount) | Change (Percent) | | :--- | :--- | :--- | :--- | :--- | | Research and Development Expenses | $46,986 | $30,152 | $16,834 | 55.8% | | General and Administrative Expenses | $24,438 | $11,082 | $13,356 | 120.5% | | Other Income (Expense), Net | $1,239 | $(26,577) | $27,816 | (104.7)% | - The **$16.8 million increase in R&D expenses** was primarily due to a **$5.3 million increase** in preclinical studies and clinical trial-related activities for IO102-IO103 (including Phase 3), a **$7.7 million increase** in personnel costs, and a **$2.9 million increase** in chemistry, manufacturing, and control activities[668](index=668&type=chunk) - The **$13.4 million increase in G&A expenses** was mainly driven by a **$4.3 million increase** in personnel costs (headcount and recruiting) and a **$7.9 million increase** in consultants and other costs (including **$2.9 million insurance, $2.3 million consulting, $0.8 million travel**)[669](index=669&type=chunk)[670](index=670&type=chunk) - The shift in Other income (expense), net, from a net expense to a net income was primarily due to the decrease in fair value adjustments on the company's preferred stock tranche obligations, which were settled in 2021[671](index=671&type=chunk) [Liquidity and Capital Resources](index=134&type=section&id=Liquidity%20and%20Capital%20Resources) IO Biotech's operations are financed by past equity issuances, including a 2021 IPO, with $142.6 million in cash as of December 31, 2022, projected to fund operations through Q3 2024, necessitating additional future financing - Operations have been financed by **$288.7 million in net proceeds** from convertible preference shares, convertible notes, ordinary shares, and a 2021 IPO (**$103.3 million net proceeds**)[646](index=646&type=chunk)[672](index=672&type=chunk) Cash Flow Summary (Years Ended December 31) | Cash Flow Activity | 2022 (in thousands) | 2021 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(59,729) | $(40,646) | | Net cash used in investing activities | $(690) | $(153) | | Net cash provided by financing activities | $0 | $252,951 | - Cash used in operating activities increased from **$40.6 million in 2021 to $59.7 million in 2022**, primarily due to higher net losses and changes in working capital[675](index=675&type=chunk)[676](index=676&type=chunk) - The company's **$142.6 million in cash and cash equivalents** (as of Dec 31, 2022) is expected to fund operations through **Q3 2024**, but additional financing will be required for future clinical and preclinical activities[673](index=673&type=chunk)[680](index=680&type=chunk) [Contractual Obligations and Commitments](index=136&type=section&id=Contractual%20Obligations%20and%20Commitments) IO Biotech has lease obligations for its office and lab spaces extending to 2027 and enters into various third-party service contracts, which are generally terminable with short notice, with non-cancelable obligations not considered material - IO Biotech has lease agreements for office space in Copenhagen, Denmark (expires Dec 2027), Rockville, Maryland (expires April 2027), and New York, NY (expires Jan 2027)[683](index=683&type=chunk) - The company enters into contracts with third-party service providers for clinical trials, preclinical research, manufacturing, and other services, which typically include termination clauses of **30 to 90 days**[684](index=684&type=chunk) - Non-cancelable obligations under these service agreements are not considered material, but financial obligations for active clinical trial patients may extend beyond contractual termination notice periods[684](index=684&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=136&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) IO Biotech's financial statements require significant estimates for R&D accruals, equity-based compensation, and income taxes, with a full valuation allowance against deferred tax assets due to historical losses - Key areas requiring significant estimates and assumptions include contract research organization (CRO) accruals, fair value of stock-based compensation awards, and valuation of deferred tax assets[686](index=686&type=chunk)[689](index=689&type=chunk) - The company's going concern evaluation projects existing cash and cash equivalents (**$142.6 million** as of Dec 31, 2022) to fund operations through **Q3 2024**[688](index=688&type=chunk) - Research and development costs, particularly those from third-party service providers, are estimated based on work progress, contract milestones, patient enrollment, and study duration[689](index=689&type=chunk)[691](index=691&type=chunk) - Equity-based compensation is measured at fair value using a **Black-Scholes option pricing model**, incorporating assumptions for volatility, expected term, risk-free interest rate, and dividend yield[694](index=694&type=chunk) - Deferred tax assets are recognized for temporary differences and loss carryforwards, but a **full valuation allowance** is recorded against net deferred tax assets in Denmark and the U.S. due to the unlikelihood of realization given historical operating losses[697](index=697&type=chunk)[699](index=699&type=chunk)[826](index=826&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=138&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, IO Biotech is not required to provide quantitative and qualitative disclosures about market risk - IO Biotech is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[705](index=705&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=139&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents IO Biotech's audited consolidated financial statements for 2022 and 2021, prepared under U.S. GAAP, highlighting continued net losses and increased operating expenses - The consolidated financial statements for the years ended December 31, 2022 and 2021 were audited by EY Godkendt Revisionspartnerselskab and present fairly the financial position and results of operations in conformity with U.S. GAAP[709](index=709&type=chunk) Consolidated Balance Sheet Highlights (as of December 31, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $142,590 | $211,531 | | Total current assets | $148,219 | $221,738 | | Total assets | $151,805 | $222,288 | | Total liabilities | $12,951 | $10,364 | | Total stockholders' equity | $138,854 | $211,924 | | Accumulated deficit | $(177,739) | $(106,281) | Consolidated Statements of Operations and Comprehensive Loss Highlights (Years Ended December 31, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Research and development | $46,986 | $30,152 | | General and administrative | $24,438 | $11,082 | | Total operating expenses | $71,424 | $41,234 | | Net loss | $(71,458) | $(67,879) | | Net loss per common share, basic and diluted | $(2.48) | $(17.30) | Consolidated Statements of Cash Flows Highlights (Years Ended December 31, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(59,729) | $(40,646) | | Net cash used in investing activities | $(690) | $(153) | | Net cash provided by financing activities | $0 | $252,951 | [Notes to the Consolidated Financial Statements](index=147&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail IO Biotech's corporate reorganization, IPO, significant accounting policies, fair value measurements, collaboration agreements, and tax provisions, highlighting ongoing losses and future funding needs - IO Biotech completed a corporate reorganization in November 2021, making IO Biotech ApS a wholly-owned subsidiary, and subsequently completed an IPO, raising **$103.3 million in net proceeds**[728](index=728&type=chunk)[729](index=729&type=chunk) - The company's financial statements are prepared in conformity with U.S. GAAP, with the Euro as the functional currency for its Danish and UK subsidiaries, and the U.S. dollar as the reporting currency[739](index=739&type=chunk)[744](index=744&type=chunk) - As of December 31, 2022, cash and cash equivalents were **$142.6 million**, with an accumulated deficit of **$177.7 million**, and current cash is expected to fund operations through **Q3 2024**[736](index=736&type=chunk) - Key accounting estimates include contract research organization accruals, fair value of stock-based compensation (using Black-Scholes model), and valuation of deferred tax assets, for which a **full valuation allowance** is recorded[743](index=743&type=chunk)[762](index=762&type=chunk)[764](index=764&type=chunk)[769](index=769&type=chunk)[826](index=826&type=chunk) - The company has significant collaborations with MSD International GmbH for clinical trials of IO102-IO103 in combination with KEYTRUDA®, and with Herlev University Hospital for scientific support and intellectual property[787](index=787&type=chunk)[789](index=789&type=chunk)[790](index=790&type=chunk)[791](index=791&type=chunk)[792](index=792&type=chunk) - As of December 31, 2022, the company had net operating loss (NOL) carryforwards of approximately **$140.5 million in Denmark**, which can be carried forward indefinitely[827](index=827&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=161&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) IO Biotech reported no changes in or disagreements with its accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure were reported[835](index=835&type=chunk) [Item 9A. Controls and Procedures](index=161&type=section&id=Item%209A.%20Controls%20and%20Procedures) IO Biotech's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, having remediated a previously identified material weakness - Management concluded that IO Biotech's disclosure controls and procedures were effective as of December 31, 2022[838](index=838&type=chunk) - A previously disclosed material weakness in internal control over financial reporting (related to financial statement close process and lack of finance capacity/expertise) was remediated during 2022[840](index=840&type=chunk)[841](index=841&type=chunk) - Remediation efforts included hiring a Chief Financial Officer and Chief Accounting Officer, four additional accounting/financial reporting personnel, and enhancing financial close processes with additional independent reviews and improved precision[841](index=841&type=chunk)[842](index=842&type=chunk) - Management assessed and concluded that the company's internal control over financial reporting was effective as of December 31, 2022[846](index=846&type=chunk) - As an emerging growth company, IO Biotech is exempt from the requirement to include an attestation report of its independent registered public accounting firm on internal control over financial reporting[847](index=847&type=chunk) [Item 9B. Other Information](index=162&type=section&id=Item%209B.%20Other%20Information) This item reports that there is no other information required to be disclosed - No other information is required to be disclosed under this item[848](index=848&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=162&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item reports that there are no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections were reported[849](index=849&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=163&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding Directors, Executive Officers and Corporate Governance is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[852](index=852&type=chunk) [Item 11. Executive Compensation](index=163&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding Executive Compensation is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[853](index=853&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=163&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[854](index=854&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=163&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding Certain Relationships and Related Transactions, and Director Independence is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[855](index=855&type=chunk) [Item 14. Principal Accounting Fees and Services](index=163&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding Principal Accounting Fees and Services is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders[856](index=856&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=164&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the Form 10-K, including corporate documents and key collaboration agreements, with schedules omitted as information is in the financial statements - This item lists exhibits, including Amended and Restated Certificate of Incorporation and Bylaws, Indemnification Agreements, 2021 Equity and Incentive Plan, and 2021 Employee Stock Purchase Plan[858](index=858&type=chunk) - Key agreements listed include Option Assignment Agreements and a Framework Assignment Agreement with Herlev Hospital, and Clinical Trial Collaboration and Supply Agreements with MSD International GmbH[858](index=858&type=chunk)[859](index=859&type=chunk) - Financial statement schedules have been omitted because they are either not required or the information is included in the consolidated financial statements or their notes[858](index=858&type=chunk) [Item 16. Form 10-K Summary](index=165&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[861](index=861&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ WASHINGTON, DC 20549 Commission File Number: 001-41008 IO Biotech, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 Delaware 87-0909276 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Ole Maaløes Vej 3 DK-2200 Copenhagen N Denmark NA (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: +45 7070 298 ...

For the transition period from __________________ to __________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-41008 IO Biotech, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 87-0 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) (Address of principal executive offices) (Zip Code) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-41008 IO BIOTECH, INC. (Exact name of Registrant as specified in its Charter) Del ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for IO Biotech ApS, including balance sheets, statements of operations and comprehensive loss, statements of convertible preference shares and stockholders' deficit, and statements of cash flows, along with detailed notes explaining significant accounting policies, fair value measurements, collaboration agreements, and equity-related transactions [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific reporting dates | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $45,477 | $3,405 | | Total current assets | $51,993 | $5,635 | | Total assets | $52,038 | $5,653 | | Total current liabilities | $33,786 | $3,050 | | Total liabilities | $33,786 | $3,050 | | Total stockholders' deficit | $(82,637) | $(35,303) | - Cash and cash equivalents increased significantly from **$3,405 thousand** at December 31, 2020, to **$45,477 thousand** at September 30, 2021, primarily due to financing activities[18](index=18&type=chunk) - Total stockholders' deficit widened from **$(35,303) thousand** to **$(82,637) thousand**, reflecting accumulated losses[18](index=18&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines the company's financial performance over specific periods, reporting revenues, expenses, and net loss | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | R&D Expenses | $4,128 | $2,777 | $13,712 | $6,254 | | G&A Expenses | $2,914 | $654 | $6,127 | $1,352 | | Total Operating Expenses | $7,042 | $3,431 | $19,839 | $7,606 | | Loss from Operations | $(7,042) | $(3,431) | $(19,839) | $(7,606) | | Other income (expense), net | $2,580 | $(57) | $(26,731) | $(1,882) | | Net Loss | $(4,462) | $(3,488) | $(46,570) | $(9,488) | | Net Loss per Class A Ordinary Share (Basic & Diluted) | $(36.88) | $(23.41) | $(296.70) | $(63.04) | - Net loss significantly increased to **$(46,570) thousand** for the nine months ended September 30, 2021, from **$(9,488) thousand** in the prior year, primarily driven by fair value adjustments on preference shares tranche obligations[21](index=21&type=chunk) - Research and development expenses more than doubled for the nine-month period, reaching **$13,712 thousand** in 2021, reflecting increased clinical trial and manufacturing activities[21](index=21&type=chunk) [Condensed Consolidated Statements of Convertible Preference Shares and Stockholders' Deficit](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preference%20Shares%20and%20Stockholders'%20Deficit) This section details changes in the company's equity, including preference share issuances, equity-based compensation, and accumulated deficit | Metric (in thousands) | Balance, Jan 1, 2021 | Issuance of Class C Preference Shares | Equity-based Compensation | Currency Translation | Net Loss | Balance, Sep 30, 2021 | | :-------------------- | :------------------- | :------------------------------------ | :------------------------ | :------------------- | :------- | :-------------------- | | Class B Preference Shares Amount | $37,906 | — | — | — | — | $37,906 | | Class C Preference Shares Amount | — | $62,983 | — | — | — | $62,983 | | Additional Paid-In Capital | $1,110 | — | $492 | — | — | $1,602 | | Accumulated Other Comprehensive Loss | $1,961 | — | — | $(1,256) | — | $705 | | Accumulated Deficit | $(38,402) | — | — | — | $(46,570) | $(84,972) | | Total Stockholders' Deficit | $(35,303) | — | $492 | $(1,256) | $(46,570) | $(82,637) | - The company issued **538,088 Class C preference shares** for **$62,983 thousand** during the nine months ended September 30, 2021[24](index=24&type=chunk) - Accumulated deficit increased by **$46,570 thousand** due to net loss, reaching **$(84,972) thousand** by September 30, 2021[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(21,406) | $(6,862) | | Net cash used in investing activities | $(3) | — | | Net cash provided by financing activities | $65,408 | $5,102 | | Net increase (decrease) in cash and cash equivalents | $43,999 | $(1,760) | | Cash and cash equivalents, end of period | $45,477 | $6,319 | - Net cash used in operating activities increased to **$(21,406) thousand** for the nine months ended September 30, 2021, from **$(6,862) thousand** in the prior year, driven by higher net loss[27](index=27&type=chunk)[129](index=129&type=chunk) - Net cash provided by financing activities significantly increased to **$65,408 thousand** in 2021, primarily from the issuance of Class C convertible preference shares[27](index=27&type=chunk)[132](index=132&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's significant accounting policies, financial statement line items, and other relevant financial information [1. Description of Business, Organization and Liquidity](index=9&type=section&id=1.%20Description%20of%20Business,%20Organization%20and%20Liquidity) This section describes the company's core business, organizational structure, and its ability to meet short-term financial obligations - IO Biotech ApS is a clinical-stage biotechnology company focused on immune therapies for cancer, utilizing its T-win technology platform[30](index=30&type=chunk) - The company has incurred significant losses and negative cash flows since inception, with an accumulated deficit of **$85.0 million** as of September 30, 2021[35](index=35&type=chunk) - Existing cash and cash equivalents (**$45.5 million** as of Sep 30, 2021), along with **$84.1 million** from Class C preference shares (Oct 2021) and **$103.3 million** net proceeds from the IPO (Nov 2021), are expected to fund operations for at least 12 months from the financial statement issuance date[35](index=35&type=chunk) - The COVID-19 pandemic has impacted clinical trial sites and timelines, and its future effects on business and financial performance remain uncertain[37](index=37&type=chunk)[38](index=38&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the key accounting principles and methods used in preparing the financial statements, including recent accounting pronouncements - The company's condensed consolidated financial statements include subsidiaries IO Bio US, Inc. and IO Biotech Limited, and following a Corporate Reorganization in October 2021, IO Biotech ApS became a wholly-owned subsidiary of IO Biotech, Inc[40](index=40&type=chunk) - An error in recording an accrued expense as of June 30, 2021, led to an overstatement of R&D expenses, resulting in a restatement of prior period financial statements[42](index=42&type=chunk)[43](index=43&type=chunk) - The company is currently assessing the potential impact of recently issued accounting standards, including ASU 2016-02 (Leases), ASU 2016-13 (Credit Losses), ASU 2019-12 (Income Taxes), and ASU 2020-06 (Convertible Instruments)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [3. Fair Value Measurements](index=11&type=section&id=3.%20Fair%20Value%20Measurements) This section details the valuation techniques and inputs used to measure financial instruments at fair value, particularly preference shares tranche obligations | Financial Liability (in thousands) | September 30, 2021 | | :------------------------------- | :----------------- | | Preference shares tranche obligations | $28,276 | | Total financial liabilities measured at fair value | $28,276 | - The Class C Preference Shares Tranche Obligation is measured at fair value using a Black-Scholes option pricing model, classified as Level 3 due to unobservable inputs[52](index=52&type=chunk) - Convertible notes issued in July 2019 were accounted for at fair value and converted into Class B preference shares in April 2020[50](index=50&type=chunk)[51](index=51&type=chunk) [4. License and Collaboration Agreements](index=12&type=section&id=4.%20License%20and%20Collaboration%20Agreements) This section describes the company's strategic partnerships and agreements related to the development of its product candidates - The company has clinical collaborations with MSD International GmbH (Merck) to evaluate IO102 and IO102-IO103 in combination with KEYTRUDA® for metastatic non-small cell lung cancer and metastatic melanoma, respectively[54](index=54&type=chunk)[55](index=55&type=chunk) - Under these agreements, IO Biotech sponsors the clinical trials, MSD provides KEYTRUDA® free of charge, and both parties share data rights, with IO Biotech retaining global commercial rights to its product candidates[54](index=54&type=chunk)[55](index=55&type=chunk) [5. Prepaid Expenses and Other Current Assets](index=13&type=section&id=5.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This section provides a breakdown of the company's short-term assets, including prepaid costs and tax credit receivables | Item (in thousands) | September 30, 2021 | December 31, 2020 | | :------------------ | :----------------- | :---------------- | | Prepaid contract research and development costs | $1,622 | $359 | | Research and development tax credit receivable | $1,712 | $904 | | Deferred offering costs | $2,413 | — | | Total prepaid expenses and other current assets | $6,516 | $2,230 | - Deferred offering costs of **$2,413 thousand** were a new component of prepaid expenses in 2021, reflecting IPO-related expenditures[57](index=57&type=chunk) [6. Accrued Expenses and Other Current Liabilities](index=13&type=section&id=6.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This section details the company's short-term liabilities, such as accrued R&D costs and professional fees | Item (in thousands) | September 30, 2021 | December 31, 2020 | | :------------------ | :----------------- | :---------------- | | Accrued contract research and development costs | $1,011 | $1,487 | | Employee compensation costs | $538 | $785 | | Professional fees | $1,445 | $9 | | Total accrued expenses and other current liabilities | $3,344 | $2,528 | - Professional fees increased significantly to **$1,445 thousand** at September 30, 2021, from **$9 thousand** at December 31, 2020, indicating increased legal, audit, and tax services[58](index=58&type=chunk) [7. Commitments and Contingencies](index=13&type=section&id=7.%20Commitments%20and%20Contingencies) This section outlines the company's contractual obligations and potential liabilities arising from leases, legal matters, and other agreements - The company has operating leases for office space in Copenhagen, Denmark, with a new lease expiring in January 2025[59](index=59&type=chunk) - No material legal proceedings were pending or threatened during the reported periods[60](index=60&type=chunk) - Upon IPO completion in November 2021, the company became obligated to pay Herlev University Hospital **DKK 13.6 million** (approximately **$2.1 million**) for specific services and support[61](index=61&type=chunk) [8. Convertible Preference Shares](index=15&type=section&id=8.%20Convertible%20Preference%20Shares) This section describes the terms, rights, and outstanding amounts of the company's convertible preference shares - As of September 30, 2021, **584,583 Class B preference shares** and **538,088 Class C preference shares** were issued and outstanding[66](index=66&type=chunk) - In January 2021, the company entered into a Class C Investment Agreement, leading to the issuance of **505,520 Class C preference shares** for **$61.5 million**, and a Preference Shares Tranche Obligation of **$2.4 million**[69](index=69&type=chunk)[70](index=70&type=chunk) - Preference shares have liquidation preference (Class C over Class B over Class A), are convertible to Class A ordinary shares, carry voting rights, and include anti-dilution protection[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) [9. Ordinary Shares](index=16&type=section&id=9.%20Ordinary%20Shares) This section details the characteristics, rights, and outstanding amounts of the company's ordinary shares - As of September 30, 2021, **177,200 Class A ordinary shares** were authorized, issued, and outstanding[78](index=78&type=chunk) - Holders of Class A ordinary shares are entitled to pro rata distribution of remaining proceeds after preference shares in a Liquidity Event and have one vote per share[78](index=78&type=chunk)[79](index=79&type=chunk) [10. Equity-Based Compensation](index=17&type=section&id=10.%20Equity-Based%20Compensation) This section provides information on the company's equity incentive plans, including warrant grants and associated compensation expenses - The company issued **695,313 warrants** with an exercise price of **$19.62** to employees, board members, and advisors during the nine months ended September 30, 2021[81](index=81&type=chunk) | Metric | Outstanding Dec 31, 2020 | Granted (9M 2021) | Outstanding Sep 30, 2021 | | :-------------------- | :----------------------- | :------------------ | :----------------------- | | Number of Warrants | 89,935 | 695,313 | 785,248 | | Weighted-average exercise price per share | $15.00 | $19.62 | $19.09 | | Equity-based Compensation Expense (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $163 | $5 | $166 | $16 | | General and administrative | $320 | $11 | $326 | $32 | | Total equity-based compensation | $483 | $16 | $492 | $48 | [11. Income Taxes](index=17&type=section&id=11.%20Income%20Taxes) This section discusses the company's income tax position, including deferred tax assets and valuation allowances - The company did not record a provision or benefit for income taxes and maintains a full valuation allowance against all deferred tax assets due to a history of cumulative net losses[85](index=85&type=chunk)[86](index=86&type=chunk) [12. Net Loss Per Share](index=18&type=section&id=12.%20Net%20Loss%20Per%20Share) This section presents the calculation of basic and diluted net loss per share, considering potentially dilutive securities | Metric | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss attributable to class A ordinary shareholders | $(6,535) | $(4,149) | $(52,576) | $(11,171) | | Net loss per class A ordinary share, basic and diluted | $(36.88) | $(23.41) | $(296.70) | $(63.04) | | Weighted-average number of shares | 177,200 | 177,200 | 177,200 | 177,200 | - Potentially dilutive securities, including convertible preference shares (**1,122,671** in 2021) and stock warrants (**785,248** in 2021), were excluded from diluted EPS calculation as their effect was anti-dilutive[87](index=87&type=chunk) [13. Subsequent Events](index=18&type=section&id=13.%20Subsequent%20Events) This section reports significant events that occurred after the balance sheet date but before the financial statements were issued, such as stock splits and IPO - A **3.544-for-1 stock split** of Class A ordinary shares and proportional adjustment to preference share conversion ratios became effective November 1, 2021[88](index=88&type=chunk) - The company completed its IPO in November 2021, selling **8,222,500 shares** of common stock at **$14.00 per share**, generating net proceeds of approximately **$103.3 million**[91](index=91&type=chunk) - Immediately prior to the IPO, all outstanding Class A ordinary shares and convertible preference shares converted into **20,592,413 shares** of common stock, resulting in **28,815,267 shares** outstanding post-IPO[92](index=92&type=chunk)[94](index=94&type=chunk) - In October 2021, the Board granted **1,611,174 warrants** to purchase Class A ordinary shares with an exercise price of **$12.64**[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of the company's business, financial performance, and future outlook, highlighting significant operating losses, funding strategies, and the impact of the COVID-19 pandemic. It details the components of operating results, including research and development, general and administrative expenses, and other income/expense, with a comparative analysis for the three and nine months ended September 30, 2021 and 2020. The discussion also covers liquidity, capital resources, funding requirements, contractual obligations, and critical accounting policies [Overview](index=21&type=section&id=Overview) This section provides a high-level summary of the company's business, clinical progress, financial performance, and future funding outlook - IO Biotech is a clinical-stage biopharmaceutical company developing novel immune-modulating cancer therapies based on its T-win technology platform, with lead candidate IO102-IO103 targeting IDO and PD-L1[98](index=98&type=chunk) - IO102-IO103, in combination with nivolumab, showed a confirmed Overall Response Rate (ORR) of **73%** and a Complete Response (CR) rate of **47%** in a Phase 1/2 metastatic melanoma trial, leading to FDA Breakthrough Therapy Designation (BTD) for IO102-IO103 with pembrolizumab[98](index=98&type=chunk) - The company has incurred significant operating losses since inception, with a net loss of **$46.6 million** for the nine months ended September 30, 2021, and an accumulated deficit of **$85.0 million**[99](index=99&type=chunk) - The company expects its existing cash and cash equivalents, combined with recent IPO proceeds (**$103.3 million** net) and Class C preference share proceeds (**$84.1 million** gross), to fund operations into mid-2024, but additional funding will be necessary[101](index=101&type=chunk) [Components of Operating Results](index=22&type=section&id=Components%20of%20Operating%20Results) This section breaks down the key revenue and expense categories that contribute to the company's overall operating performance [Operating Expenses](index=22&type=section&id=Operating%20Expenses) This section describes the primary cost drivers for the company, including research and development and general and administrative expenses - Operating expenses primarily consist of research and development (R&D) and general and administrative (G&A) costs[105](index=105&type=chunk) [Research and Development](index=22&type=section&id=Research%20and%20Development) This section details the nature and expected trends of expenses incurred for the discovery and development of product candidates - R&D expenses include personnel costs, external consultant/CRO/CMO fees, laboratory expenses, collaboration research costs, patent filing, and facility-related expenses[106](index=106&type=chunk) - The company expects R&D expenses to increase substantially due to ongoing clinical trials, manufacturing, and expansion of development programs[110](index=110&type=chunk) - Successful development is highly uncertain and depends on factors like preclinical/clinical trial completion, regulatory approvals, manufacturing capabilities, and market acceptance[111](index=111&type=chunk)[112](index=112&type=chunk) [General and Administrative Expenses](index=24&type=section&id=General%20and%20Administrative%20Expenses) This section outlines the costs associated with the company's overall management and administrative functions - G&A expenses primarily cover personnel costs, professional services (legal, audit, accounting), and facility-related fees[115](index=115&type=chunk) - G&A expenses are expected to increase as the company supports R&D, expands operations, and incurs costs associated with being a public company[115](index=115&type=chunk) [Other Expense, Net](index=24&type=section&id=Other%20Expense,%20Net) This section explains non-operating income and expenses, including foreign exchange fluctuations and fair value adjustments - Other expense, net, includes foreign exchange gains/losses, fair value adjustments on preference shares tranche obligations and convertible notes, and interest expense[116](index=116&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance over different reporting periods [Comparison of the three months ended September 30, 2021 and 2020](index=25&type=section&id=Comparison%20of%20the%20three%20months%20ended%20September%2030,%202021%20and%202020) This section analyzes the financial performance and key changes in operating results for the three-month periods | Metric (in thousands) | 3 Months Ended Sep 30, 2021 | 3 Months Ended Sep 30, 2020 | Change Amount | Change Percent | | :-------------------- | :-------------------------- | :-------------------------- | :------------ | :------------- | | R&D Expenses | $4,128 | $2,777 | $1,351 | 48.6% | | G&A Expenses | $2,914 | $654 | $2,260 | 345.6% | | Total Operating Expenses | $7,042 | $3,431 | $3,611 | 105.2% | | Loss from Operations | $(7,042) | $(3,431) | $(3,611) | 105.2% | | Other income (expense), net | $2,580 | $(57) | $2,637 | (4,626.3)% | | Net Loss | $(4,462) | $(3,488) | $(974) | 27.9% | - R&D expenses increased by **$1.4 million (48.6%)** due to higher CMC activities (**$0.4 million**) and personnel costs (**$1.1 million**), partially offset by a decrease in clinical trial-related activities (**$0.5 million**)[118](index=118&type=chunk) - G&A expenses surged by **$2.3 million (345.6%)** due to increased professional services (**$0.3 million**), personnel costs (**$1.1 million**), and other consulting costs (**$0.8 million**)[119](index=119&type=chunk) - Other income (expense), net, shifted from a net expense of **$57 thousand** in 2020 to a net income of **$2.6 million** in 2021, primarily due to fair value adjustments on preference shares tranche obligations[120](index=120&type=chunk)[123](index=123&type=chunk) [Comparison of the nine months ended September 30, 2021 and 2020](index=26&type=section&id=Comparison%20of%20the%20nine%20months%20ended%20September%2030,%202021%20and%202020) This section analyzes the financial performance and key changes in operating results for the nine-month periods | Metric (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | Change Amount | Change Percent | | :-------------------- | :-------------------------- | :-------------------------- | :------------ | :------------- | | R&D Expenses | $13,712 | $6,254 | $7,458 | 119.3% | | G&A Expenses | $6,127 | $1,352 | $4,775 | 353.2% | | Total Operating Expenses | $19,839 | $7,606 | $12,233 | 160.8% | | Loss from Operations | $(19,839) | $(7,606) | $(12,233) | 160.8% | | Other expense, net | $(26,731) | $(1,882) | $(24,849) | 1,320.4% |\ | Net Loss | $(46,570) | $(9,488) | $(37,082) | 390.8% | - R&D expenses increased by **$7.5 million (119.3%)** due to higher clinical trial-related activities (**$1.8 million**), CMC activities (**$1.8 million**), and personnel costs (**$2.7 million**)[121](index=121&type=chunk) - G&A expenses increased by **$4.8 million (353.2%)** due to higher professional services (**$1.8 million**), personnel costs (**$1.3 million**), and other consulting costs (**$1.6 million**)[125](index=125&type=chunk) - Other expense, net, increased by **$24.8 million**, primarily due to **$26.8 million** in fair value adjustments on preference shares tranche obligations[126](index=126&type=chunk)[129](index=129&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, its funding sources, and future capital needs [Sources of Liquidity](index=28&type=section&id=Sources%20of%20Liquidity) This section identifies the primary means by which the company has financed its operations and its available cash resources - The company's operations have been financed by **$101.2 million** from convertible preference shares, convertible notes, ordinary shares, and IPO proceeds[126](index=126&type=chunk) - Post-September 30, 2021, the company received **$84.1 million** gross from Class C preference shares and **$103.3 million** net from its IPO[126](index=126&type=chunk) - As of September 30, 2021, the company had **$45.5 million** in cash and cash equivalents and an accumulated deficit of **$85.0 million**[126](index=126&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) This section analyzes the cash generated from or used in operating, investing, and financing activities | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(21,406) | $(6,862) | | Net cash used in investing activities | $(3) | — | | Net cash provided by financing activities | $65,408 | $5,102 | | Net increase (decrease) in cash and cash equivalents | $43,999 | $(1,760) | - Operating activities used **$21.4 million** in cash in 2021, primarily due to net loss, partially offset by non-cash fair value adjustments[129](index=129&type=chunk) - Financing activities provided **$65.4 million** in cash in 2021, mainly from the issuance of Class C convertible preference shares[132](index=132&type=chunk) [Funding Requirements](index=29&type=section&id=Funding%20Requirements) This section outlines the company's anticipated capital needs to support its ongoing operations and development programs - The company expects current capital to fund operations through mid-2024, but significant additional funding will be required for future clinical and preclinical activities[134](index=134&type=chunk) - Future funding will depend on factors such as clinical trial progress, regulatory review, manufacturing costs, and the impact of the COVID-19 pandemic[135](index=135&type=chunk) - Failure to raise additional capital could lead to delays, reductions, or termination of R&D programs and commercialization efforts, potentially diluting existing stockholders[134](index=134&type=chunk) [Contractual Obligations and Commitments](index=30&type=section&id=Contractual%20Obligations%20and%20Commitments) This section details the company's future payment obligations under various agreements - As of September 30, 2021, the company had commitments of approximately **$5.0 million** with CROs and other institutions for clinical trial services due within 21 months[137](index=137&type=chunk) - Upon IPO completion, the company is obligated to pay Herlev University Hospital approximately **$2.1 million**[137](index=137&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=30&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section highlights the accounting policies that require management's most difficult, subjective, or complex judgments - The company's ability to continue as a going concern relies on evaluating future cash sources and uses for R&D activities[140](index=140&type=chunk) - Significant estimates are required for accounting for clinical trial expenses, equity-based compensation (using Black-Scholes model), and fair value measurements of convertible notes and preference shares tranche obligations[141](index=141&type=chunk)[145](index=145&type=chunk)[152](index=152&type=chunk) - The company maintains a full valuation allowance against deferred tax assets due to historical net losses and uncertainty of future taxable income[155](index=155&type=chunk) [Off-balance Sheet Arrangements](index=34&type=section&id=Off-balance%20Sheet%20Arrangements) This section discloses any transactions, agreements, or other contractual arrangements that are not recorded on the balance sheet - The company did not have any off-balance sheet arrangements during the periods presented[159](index=159&type=chunk) [Emerging Growth Company Status](index=34&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's classification under the JOBS Act and the associated regulatory relief - The company is an 'emerging growth company' (EGC) under the JOBS Act, allowing it to delay adoption of certain accounting standards and benefit from reduced disclosure requirements[160](index=160&type=chunk)[161](index=161&type=chunk) - The company has elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[161](index=161&type=chunk) [Legal Proceedings](index=34&type=section&id=Legal%20Proceedings) This section confirms the absence of material legal proceedings affecting the company - The company is not currently a party to any material legal proceedings[163](index=163&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, IO Biotech is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[164](index=164&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were not effective due to a material weakness in financial reporting, which led to a restatement of prior financial information. The company is implementing measures to remediate this weakness, and there have been no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=34&type=section&id=Disclosure%20Controls%20and%20Procedures) This section details management's assessment of the effectiveness of the company's disclosure controls and procedures - Management concluded that disclosure controls and procedures were not effective as of September 30, 2021, due to a material weakness in internal control over financial reporting[166](index=166&type=chunk) - The material weakness was related to the financial statement close process, specifically a lack of finance capacity, knowledge, or expertise to perform timely and accurate financial reporting and account for complex GAAP areas[167](index=167&type=chunk) - An error in recording an accrued expense as of June 30, 2021, led to an overstatement of R&D expenses and a restatement of previously reported financial information[166](index=166&type=chunk)[167](index=167&type=chunk) - The company is implementing measures, including hiring a new CFO and improving processes, to remediate the material weakness[167](index=167&type=chunk) [Changes in Internal Control](index=36&type=section&id=Changes%20in%20Internal%20Control) This section reports any material changes in the company's internal control over financial reporting - There has been no change in internal control over financial reporting during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting[168](index=168&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including a summary of risks, legal proceedings, equity sales, and exhibits [Summary of the Material and Other Risks Associated with Our Business](index=37&type=section&id=Summary%20of%20the%20Material%20and%20Other%20Risks%20Associated%20with%20Our%20Business) This section provides a high-level overview of the significant risks facing the company, including its limited operating history, financial losses, early-stage product development, potential clinical trial failures, manufacturing complexities, intense competition, and the impact of the COVID-19 pandemic. It also highlights risks related to intellectual property, internal controls, and stock price volatility - Key risks include limited operating history, ongoing net losses, early-stage clinical development, potential for clinical trial failures, manufacturing difficulties, and intense competition[171](index=171&type=chunk) - The company has identified a material weakness in internal control over financial reporting, which could impact financial statements and stock price[171](index=171&type=chunk) - The COVID-19 pandemic poses a material adverse impact on business, financial condition, and clinical trial execution[171](index=171&type=chunk) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings, though it may face litigation in the ordinary course of business, which could incur costs and divert management resources - The company is not currently a party to any material legal proceedings[173](index=173&type=chunk) - Litigation, even if not material, can have an adverse impact due to defense and settlement costs and diversion of management resources[173](index=173&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section details the significant risks that could materially and adversely affect the company's business, financial condition, and results of operations. These risks span across its limited operating history, the early stages of product development, manufacturing and commercialization challenges, reliance on third parties, industry-specific and operational risks, intellectual property protection, and factors affecting its common stock [Risks Related to Limited Operating History, Financial Position and Capital Requirements](index=38&type=section&id=Risks%20Related%20to%20Limited%20Operating%20History,%20Financial%20Position%20and%20Capital%20Requirements) This section details the financial challenges and funding risks inherent in the company's early stage of development - The company has a limited operating history, has incurred net losses since inception (**$46.6 million** for 9M 2021), and expects to continue incurring significant losses, with no assurance of future profitability[175](index=175&type=chunk) - Substantial additional funding will be required to complete product development and commercialization, and the inability to raise capital could force delays or elimination of programs[177](index=177&type=chunk) - Raising additional capital through equity or convertible debt will dilute stockholders' ownership, and debt financing may impose restrictive covenants[181](index=181&type=chunk) - A material weakness in internal control over financial reporting has been identified, which could lead to inaccurate financial statements and adversely impact investor confidence and stock price[183](index=183&type=chunk) [Risks Related to the Discovery, Development and Regulatory Approval of Our Product Candidates](index=41&type=section&id=Risks%20Related%20to%20the%20Discovery,%20Development%20and%20Regulatory%20Approval%20of%20Our%20Product%20Candidates) This section outlines the significant uncertainties and potential setbacks in bringing new product candidates to market - All product candidates are in early clinical or preclinical development, and successful advancement, regulatory approval, and commercialization are uncertain and subject to significant delays[186](index=186&type=chunk)[187](index=187&type=chunk) - Preclinical and early clinical trial results are not always predictive of future outcomes, and product candidates may fail in later stages or encounter unforeseen safety/efficacy issues[189](index=189&type=chunk) - The novel nature of the T-win technology platform makes development unpredictable, and there's no assurance of broad market acceptance or sufficient reimbursement for approved products[190](index=190&type=chunk)[192](index=192&type=chunk) - Delays or difficulties in patient enrollment and retention in clinical trials, exacerbated by factors like the COVID-19 pandemic, could significantly delay regulatory approvals[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[231](index=231&type=chunk) - Breakthrough Therapy Designation for IO102-IO103 does not guarantee faster development, review, or approval, nor does it increase the likelihood of marketing approval[217](index=217&type=chunk) - Post-approval, products will be subject to ongoing regulatory obligations, potentially costly post-market studies, and risks of recall or market withdrawal due to unanticipated safety issues[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - The company anticipates using its product candidates in combination with third-party drugs (e.g., KEYTRUDA®), over which it has limited control regarding supply, regulatory status, or approval[223](index=223&type=chunk) [Risks Related to Manufacturing and Commercialization](index=53&type=section&id=Risks%20Related%20to%20Manufacturing%20and%20Commercialization) This section addresses the challenges associated with producing and successfully launching product candidates - Manufacturing product candidates on a commercial scale is complex, and difficulties in production, scaling, or quality control could delay or halt supply for clinical trials or commercial use[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) - Changes in manufacturing methods or formulation during development may require additional testing or regulatory approval, leading to increased costs or delays[244](index=244&type=chunk) - Even with marketing approval, product candidates may fail to achieve sufficient market acceptance from physicians, patients, and payors, impacting commercial success[245](index=245&type=chunk)[246](index=246&type=chunk) - Unfavorable pricing regulations or third-party coverage and reimbursement policies could make it difficult to sell products profitably, as coverage and adequate reimbursement are critical for market acceptance[247](index=247&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) - The company lacks internal sales and marketing capabilities and may struggle to establish them or find suitable third-party partners, hindering commercialization[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - Promoting products for unapproved or 'off-label' uses could lead to substantial fines, criminal penalties, and damage to reputation[263](index=263&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - Failure to obtain regulatory approval or commercialize products in jurisdictions outside the US and EU would limit market potential[270](index=270&type=chunk)[272](index=272&type=chunk) [Risks Related to Reliance on Third Parties](index=59&type=section&id=Risks%20Related%20to%20Reliance%20on%20Third%20Parties) This section highlights the risks stemming from the company's dependence on external partners for key operational aspects - Reliance on third-party organizations (CROs, clinical investigators) for clinical trials means less control over conduct, potentially leading to delays or increased costs[274](index=274&type=chunk)[276](index=276&type=chunk) - Dependence on Contract Manufacturing Organizations (CMOs) for product candidate manufacturing exposes the company to risks of supply disruption, quality issues, and regulatory non-compliance[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - Loss of sole-source or limited-number third-party suppliers for critical materials and equipment could lead to significant delays in clinical studies or commercialization[286](index=286&type=chunk)[287](index=287&type=chunk) - Sharing trade secrets with third parties increases the risk of misappropriation or disclosure, potentially harming the company's competitive position[290](index=290&type=chunk) - Future partnerships or collaborations may not yield expected benefits, could incur significant costs, dilute existing stockholders, or disrupt management[292](index=292&type=chunk)[294](index=294&type=chunk) [Risks Related to Our Industry and Business Operations](index=64&type=section&id=Risks%20Related%20to%20Our%20Industry%20and%20Business%20Operations) This section covers broad operational, regulatory, and market risks affecting the biopharmaceutical industry and the company - The COVID-19 pandemic has caused and may continue to cause significant disruptions to clinical trials, supply chains, and global financial markets, adversely impacting business operations and financial condition[295](index=295&type=chunk)[297](index=297&type=chunk)[299](index=299&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - Disruptions at regulatory agencies (FDA, EMA) due to funding shortages or health crises could delay product review and approval[303](index=303&type=chunk)[304](index=304&type=chunk)[306](index=306&type=chunk) - Brexit introduces considerable uncertainty and potential administrative burdens, which may delay regulatory approvals in the EU and UK and increase operating expenses[307](index=307&type=chunk)[308](index=308&type=chunk) - The company is exposed to foreign currency exchange risk due to international operations, which could adversely affect financial results[309](index=309&type=chunk) - Misconduct by employees, investigators, or partners, including non-compliance with regulatory standards and fraud, could lead to significant penalties and reputational harm[310](index=310&type=chunk)[311](index=311&type=chunk) - The company faces potential product liability claims, which could result in substantial liability, costs, and damage to reputation, even if claims are successfully defended[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - Future success depends on retaining key senior management and attracting/motivating qualified personnel in a highly competitive biopharmaceutical industry[315](index=315&type=chunk)[317](index=317&type=chunk) - The biopharmaceutical industry is highly competitive, with larger companies possessing greater resources, potentially leading to competitors developing and commercializing products more quickly[319](index=319&type=chunk)[322](index=322&type=chunk) - Challenges to transfer pricing procedures by tax authorities or the treatment of the Corporate Reorganization could result in higher tax liabilities, interest, and penalties[324](index=324&type=chunk)[325](index=325&type=chunk) - The company's net operating losses (NOLs) may be devalued or limited in utilization due to insufficient future taxable income, reduced corporate tax rates, or ownership changes[328](index=328&type=chunk)[329](index=329&type=chunk)[332](index=332&type=chunk) - Compliance with federal and state healthcare fraud and abuse laws, transparency laws, and other healthcare regulations is complex and non-compliance could lead to substantial penalties[336](index=336&type=chunk)[338](index=338&type=chunk) - Healthcare legislative reforms, such as the ACA and state-level initiatives, could adversely affect product pricing, reimbursement, and overall business operations[339](index=339&type=chunk)[340](index=340&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - The company is subject to various privacy and data security laws (e.g., EU GDPR, UK GDPR, CCPA), and non-compliance or security breaches could result in regulatory investigations, fines, and reputational damage[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) [Risks Related to Intellectual Property](index=78&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section discusses the challenges and uncertainties in protecting the company's proprietary technology and product candidates - Inability to obtain and maintain sufficient patent protection for its T-win technology platform and product candidates could allow competitors to commercialize similar products, eroding the company's competitive position[353](index=353&type=chunk)[354](index=354&type=chunk)[359](index=359&type=chunk) - The patent position in the biopharmaceutical industry is highly uncertain, costly to enforce, and subject to litigation, with no guarantee that issued patents will be valid or enforceable[357](index=357&type=chunk)[358](index=358&type=chunk) - Reliance on trade secret protection for unpatentable know-how carries risks of disclosure or independent development by competitors, harming the company's competitive position[360](index=360&type=chunk)[390](index=390&type=chunk)[391](index=391&type=chunk) - Failure to comply with obligations under intellectual property licenses could lead to loss of rights essential to the business[363](index=363&type=chunk)[364](index=364&type=chunk) - Being sued for infringing third-party intellectual property rights could result in costly and time-consuming litigation, preventing or delaying product development and commercialization[369](index=369&type=chunk)[370](index=370&type=chunk) - Changes in patent law, such as the Leahy-Smith America Invents Act, could diminish the value of patents and increase uncertainties and costs in protecting inventions[379](index=379&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) - Patent terms may be inadequate to protect product candidates for a sufficient period, leading to earlier competition from generic medications[384](index=384&type=chunk) - Limited geographical patent protection means competitors can use technologies in unprotected countries and export infringing products, impacting market advantage[386](index=386&type=chunk)[387](index=387&type=chunk) [Risks Related to Common Stock](index=89&type=section&id=Risks%20Related%20to%20Common%20Stock) This section addresses factors that could impact the trading price and value of the company's common stock - The trading price of the common stock is likely to be highly volatile and subject to wide fluctuations due to various factors, including operating performance, clinical trial results, regulatory developments, and market conditions[397](index=397&type=chunk)[398](index=398&type=chunk)[399](index=399&type=chunk) - Principal stockholders and management own a significant percentage of voting stock (**44.7%** as of Sep 30, 2021), enabling them to exert significant control over matters requiring stockholder approval[400](index=400&type=chunk) - Substantial sales of common stock by directors, executive officers, and significant stockholders after lock-up periods end could cause the stock price to decline[401](index=401&type=chunk)[403](index=403&type=chunk) - Delaware law and provisions in the company's charter and bylaws could make mergers or tender offers difficult, potentially depressing the stock price[404](index=404&type=chunk)[405](index=405&type=chunk) - Future sales and issuances of common stock or rights to purchase common stock, including under equity incentive plans, could result in additional dilution for stockholders and cause the stock price to fall[411](index=411&type=chunk)[412](index=412&type=chunk) - The company does not intend to pay dividends, so returns for stockholders will be limited to stock appreciation[413](index=413&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' the company benefits from reduced disclosure requirements, which may make its common shares less attractive to some investors and potentially increase stock price volatility[414](index=414&type=chunk)[415](index=415&type=chunk)[417](index=417&type=chunk)[418](index=418&type=chunk) [General Risk Factors](index=95&type=section&id=General%20Risk%20Factors) This section covers overarching risks related to public company operations, economic conditions, and information security - Operating as a public company will incur significantly increased costs and require substantial management time for new compliance initiatives, including Sarbanes-Oxley Act requirements[419](index=419&type=chunk) - Failure to build adequate finance infrastructure and improve accounting systems/controls could impair compliance with financial reporting and internal control requirements for publicly traded companies[420](index=420&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) - Disclosure controls and procedures, no matter how well-designed, may not prevent or detect all errors or acts of fraud, as evidenced by a recent restatement[423](index=423&type=chunk)[424](index=424&type=chunk) - Changes in tax laws or regulations, such as the TCJA or future reforms, could adversely affect the business, cash flow, and financial condition[426](index=426&type=chunk)[427](index=427&type=chunk)[428](index=428&type=chunk) - Unstable market and economic conditions, exacerbated by the COVID-19 pandemic, may adversely affect the business, financial condition, and stock price, making financing more difficult and costly[429](index=429&type=chunk) - The company's broad discretion in using existing cash and cash equivalents may not lead to effective investments or increased share value[430](index=430&type=chunk) - Internal information technology systems or those of third parties may fail or suffer security breaches, leading to disruptions, data loss, liability, and reputational damage[431](index=431&type=chunk)[432](index=432&type=chunk)[433](index=433&type=chunk)[434](index=434&type=chunk) - Operations as a global company expose it to various risks, including currency fluctuations, adverse tax consequences, and compliance burdens[435](index=435&type=chunk) - Failure to comply with environmental, health, and safety laws could result in fines, penalties, or significant costs[438](index=438&type=chunk)[440](index=440&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=101&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the unregistered sales of equity securities, including Class C preference shares issued in January, March, and October 2021, and warrants granted in July, August, and October 2021. It also confirms the use of proceeds from the November 2021 IPO, which generated approximately $103.3 million in net proceeds, consistent with the planned use described in the prospectus [Issuances of Capital Stock](index=101&type=section&id=Issuances%20of%20Capital%20Stock) This section details the private placements of equity securities, including preference shares - In January 2021, IO Biotech ApS issued **505,520 Class C preference shares** for approximately **$61.5 million**[443](index=443&type=chunk) - In March 2021, **35,825 Class C preference shares** were issued for approximately **$4.2 million**, later adjusted to **32,568 shares**[444](index=444&type=chunk) - In October 2021, **656,776 Class C preference shares** were issued for approximately **$84.1 million**[445](index=445&type=chunk) [Grants and Exercises of Stock Warrants](index=101&type=section&id=Grants%20and%20Exercises%20of%20Stock%20Warrants) This section provides information on the issuance and terms of stock warrants - In July and August 2021, warrants to purchase **695,313 Class A ordinary shares** were granted at an exercise price of **$19.62 per share**, which was later reduced to **$12.64** in October 2021 for unvested warrants[447](index=447&type=chunk) - In October 2021, warrants to purchase **1,611,174 Class A ordinary shares** were granted at an exercise price of **$12.64 per share**[448](index=448&type=chunk) [Use of proceeds from registered securities](index=101&type=section&id=Use%20of%20proceeds%20from%20registered%20securities) This section confirms how the funds raised from the company's initial public offering are being utilized - The company completed its IPO in November 2021, raising approximately **$103.3 million** in net proceeds after deducting underwriting discounts and commissions and other offering expenses[450](index=450&type=chunk)[451](index=451&type=chunk) - There has been no material change in the planned use of proceeds from the IPO as described in the prospectus[452](index=452&type=chunk) [Item 3. Defaults Upon Senior Securities](index=101&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[453](index=453&type=chunk) [Item 4. Mine Safety Disclosures](index=102&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - None[454](index=454&type=chunk) [Item 5. Other Information](index=102&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[455](index=455&type=chunk) [Item 6. Exhibits](index=103&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, officer certifications, and XBRL-related documents | Exhibit Number | Description | | :------------- | :---------- | | 3.1* | Amended and Restated Certificate of Incorporation of IO Biotech, Inc. | | 3.2* | Bylaws of IO Biotech, Inc. | | 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | 101.INS | Inline XBRL Instance Document | | 104 | Cover Page Interactive Data File | | * Filed herewith. | | [Signatures](index=104&type=section&id=Signatures) The report is duly signed on behalf of IO Biotech, Inc. by its Chief Executive Officer, Mai-Britt Zocca, Ph.D., and Chief Financial Officer, Keith Vendola, M.D., M.B.A., on December 17, 2021 - The report is signed by Mai-Britt Zocca, Ph.D., Chief Executive Officer and Director, and Keith Vendola, M.D., M.B.A., Chief Financial Officer, on December 17, 2021[460](index=460&type=chunk)[461](index=461&type=chunk)