IO Biotech(US:IOBT)2025-05-14 12:54PART I. FINANCIAL INFORMATION Item 1. Interim Financial Statements (Unaudited) IO Biotech reported a $22.4 million net loss for Q1 2025, with cash decreasing to $37.1 million, raising going concern doubts without further financing Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $37,086 | $60,031 | | Total current assets | $42,342 | $64,951 | | Total assets | $45,736 | $67,699 | | Total current liabilities | $18,286 | $19,486 | | Total liabilities | $19,314 | $20,684 | | Total stockholders' equity | $26,422 | $47,015 | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Research and development | $16,375 | $14,311 | | General and administrative | $6,209 | $5,886 | | Loss from operations | $(22,584) | $(20,197) | | Net loss | $(22,421) | $(19,457) | | Net loss per share, basic and diluted | $(0.34) | $(0.30) | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,071) | $(24,932) | | Net cash used in investing activities | $(28) | $(11) | | Net decrease in cash, cash equivalents and restricted cash | $(23,099) | $(24,943) | - Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern for one year after the financial statements are issued, as existing cash of $37.1 million is not sufficient to fund operating expenses for at least 12 months4447 - The company plans to fund operations through financing activities, including drawing down on its EIB loan facility On May 6, 2025, the company drew down €10.0 million from Tranche A of this facility45109 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the T-win® platform and Cylembio® Phase 3 trial, reporting a $22.4 million net loss for Q1 2025, with $37.1 million cash raising going concern doubts and ongoing efforts to remediate a material weakness in internal controls Overview IO Biotech, a clinical-stage biopharmaceutical company, has its lead candidate Cylembio® in a Phase 3 trial for advanced melanoma, with PFS data expected in Q3 2025, facing an accumulated deficit of $381.7 million and going concern doubts - The lead candidate, Cylembio® (IO102-IO103), is being evaluated in a potentially registrational Phase 3 trial (IOB-013/KN-D18) for first-line advanced melanoma, with 407 patients enrolled113118 - The primary endpoint readout for PFS in the Phase 3 trial is expected in the third quarter of 2025119 - As of March 31, 2025, the company had an accumulated deficit of $381.7 million and $37.1 million in cash and cash equivalents138 Results of Operations For Q1 2025, R&D expenses increased 14.4% to $16.4 million, and G&A expenses rose 5.5% to $6.2 million, leading to a net loss of $22.4 million due to higher costs and lower other income Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $16,375 | $14,311 | $2,064 | 14.4% | | General and administrative | $6,209 | $5,886 | $323 | 5.5% | | Total operating expenses | $22,584 | $20,197 | $2,387 | 11.8% | - The increase in R&D expenses was primarily driven by a $1.4 million rise in personnel compensation costs and a $0.5 million increase in clinical trial-related activities for Cylembio®156 - The decrease in other income was mainly due to a $1.2 million reduction in interest income from the company's money market fund158 Liquidity and Capital Resources The company's liquidity relies on equity and an EIB loan facility, with $37.1 million cash as of March 31, 2025, raising substantial doubt about its going concern ability without further financing, including a recent €10.0 million EIB drawdown - The company's operations are financed by proceeds from equity offerings and a new EIB Loan Facility On May 6, 2025, the company drew down €10.0 million from this facility159 - Management believes existing cash of $37.1 million as of March 31, 2025, will be sufficient to fund development activities into Q2 2026 only if it draws down on the first three committed tranches of the EIB loan facility163171 Cash Flow Summary (in thousands) | Period | Net cash used in operating activities (in thousands) | | :--- | :--- | | Q1 2025 | $(23,071) | | Q1 2024 | $(24,932) | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, IO Biotech is not required to provide market risk disclosures for this item - As a smaller reporting company as defined by Item 10 of Regulation S-K, IO Biotech is not required to provide the information otherwise required under this item199 Item 4. Controls and Procedures Management concluded that disclosure controls were not effective as of March 31, 2025, due to a material weakness in internal control over financial reporting related to CRO accruals, which the company is actively remediating - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of March 31, 2025202 - The ineffectiveness is due to a material weakness in internal control over financial reporting related to the accounting for CRO-related accruals and prepayments202 - The company is implementing enhancements to remediate the material weakness, with full implementation expected during the fiscal year ending December 31, 2025203 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, nor is it aware of any pending or threatened - The company is not currently a party to any material legal proceedings206 Item 1A. Risk Factors Key risks include limited operating history, net losses, going concern doubts, dependence on Cylembio®, funding needs, competition, potential Nasdaq delisting, intellectual property, and a material weakness in internal controls - The company has a limited operating history, has incurred net losses since inception (including $22.4M for Q1 2025), and has substantial doubt about its ability to continue as a going concern211214 - The company will need substantial additional funding to complete development and commercialization Existing cash of $37.1 million as of March 31, 2025, is not sufficient to fund operations for one year without drawing on the EIB loan facility216217 - A material weakness in internal control over financial reporting has been identified, which could impact the ability to provide timely and reliable financial information213450 - The company received a notice from Nasdaq on December 26, 2024, for non-compliance with the minimum bid price requirement of $1.00 per share and must regain compliance by June 24, 2025, to avoid potential delisting429 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable482 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None483 Item 4. Mine Safety Disclosures The company reports no mine safety disclosures - None484 Item 5. Other Information The company reports no other information for this item - None485 Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications required under the Sarbanes-Oxley Act of 2002 and Inline XBRL documents - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002486