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Investing.com - TD Cowen has downgraded IO Biotech (NASDAQ:IOBT) from Buy to Hold following the FDA’s recommendation against filing a Biologics License Application (BLA) for Cylembio combined with pembrolizumab in melanoma. The stock, which has shown high volatility with a 71% year-to-date return, currently trades at $0.36.
The company is reducing its workforce by approximately 50% as it faces financial constraints, with cash reserves of approximately $38 million expected to last into the first quarter of 2026. According to InvestingPro data, while IOBT maintains more cash than debt on its balance sheet, the company is quickly burning through its reserves with negative free cash flow of -$83.4M.
Management plans to complete ongoing solid tumor and neoadjuvant/adjuvant basket trials, with data anticipated in the fourth quarter of 2025 or early 2026.
TD Cowen analyst Yaron Werber cited "a lack of late-stage catalysts" as a key reason for moving to the sidelines on the stock.
The firm will maintain its Hold rating pending further clarity on the outlook for Cylembio, IO Biotech’s cancer immunotherapy candidate.
In other recent news, IO Biotech has faced significant developments regarding its cancer vaccine candidate, Cylembio. The U.S. Food and Drug Administration (FDA) recommended against submitting a Biologics License Application (BLA) for Cylembio after the IOB-013 trial results showed improved progression-free survival but narrowly missed statistical significance. This recommendation has led to H.C. Wainwright downgrading IO Biotech from Buy to Neutral, citing a delay in Cylembio’s potential launch timeline to 2029 due to the need for an additional Phase 3 trial. Morgan Stanley also adjusted its outlook by lowering the price target for IO Biotech to $4.00 from $6.00, while maintaining an Overweight rating. Despite these setbacks, IO Biotech will present data from its Phase 3 trial of the IO102-IO103 vaccine combined with pembrolizumab for advanced melanoma at the European Society for Medical Oncology Congress. The presentation has been selected as a late-breaking abstract, indicating the research’s potential impact on clinical practice. These recent developments highlight the challenges and ongoing efforts in IO Biotech’s pursuit of advancing its cancer treatments.
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