IO Biotech shares target cut by Jefferies, retains Buy rating

Jefferies has maintained its Buy rating on IO Biotech (NASDAQ: IOBT) but lowered the price target to $8.00 from the previous $10.00.

The adjustment follows a recent meeting with the company's management team. The analyst provided an update on the ongoing Phase 3 pivotal trial of IO102/103, a PD-L1/IDO peptide vaccine, in combination with pembrolizumab for treating first-line advanced melanoma.

The interim overall response rate (ORR) did not meet the high statistical threshold set for the trial, which was a p-value of less than or equal to 0.005.

Despite not meeting the interim ORR, the Independent Data Monitoring Committee (IDMC) has recommended the continuation of the study to the primary progression-free survival (PFS) analysis.

The analysis is expected to occur in the first half of 2025 and will be conducted with 89% statistical power at a p-value threshold of less than or equal to 0.045. This decision by the IDMC is supported by the company's financial position, with a cash runway extending into the fourth quarter of 2025.

The company also plans to present an update on its Phase 2 study for squamous cell carcinoma of the head and neck (SCCHN) at the upcoming European Society for Medical Oncology (ESMO) conference. This presentation is anticipated to provide potential near-term upside for the company's shares.

In other recent news, IO Biotech's ongoing Phase 3 trial of its cancer immunotherapy regimen, combining IO102-IO103 with pembrolizumab, continues despite not meeting the interim analysis objective response rate (ORR).

Piper Sandler and H.C. Wainwright maintained their Overweight and Buy ratings respectively, indicating a positive outlook. The company anticipates reaching the primary progression-free survival (PFS) endpoint in the first half of 2025, according to management guidance.

Updates from the ongoing Phase 2 trial of IO102-IO103 in combination with pembrolizumab are also expected, with data from the squamous cell carcinoma of the head and neck (SCCHN) cohort to be presented at the European Society for Medical Oncology (ESMO) conference. The non-small cell lung cancer (NSCLC) cohort data is anticipated to be disclosed at a fall medical meeting.

In governance news, Kathleen Sereda Glaub, Peter Hirth, and Mai-Britt Zocca were elected as class III directors, each to serve until the 2027 Annual Meeting of Stockholders, and EY Godkendt Revisionspartnerselskab was ratified as its independent registered public accounting firm for the fiscal year ending December 31, 2024.

InvestingPro Insights

Following Jefferies' recent analysis of IO Biotech, current InvestingPro data provides additional context for investors considering the company's financial health and market performance. IO Biotech holds a market capitalization of approximately $98.82 million, reflecting its current valuation in the market. Despite not having a positive P/E ratio, which stands at -0.99, the company's strong return over the last month of 22.95% highlights a recent uptick in investor confidence, potentially influenced by the ongoing clinical trials and upcoming ESMO conference presentation.

InvestingPro Tips indicate that while IO Biotech maintains more cash than debt, suggesting a stable financial position, analysts have concerns about the company's cash burn and anticipate that it will not be profitable this year. Additionally, with 2 analysts revising their earnings downwards for the upcoming period, there is a cautious view on the company's short-term earnings potential. For those interested in deeper analysis, InvestingPro offers a comprehensive list of additional tips that can provide further guidance on IO Biotech's stock prospects.

As investors monitor IO Biotech's progress, these InvestingPro Insights can offer a valuable supplement to the latest analyst ratings and company updates. With the primary progression-free survival analysis scheduled for the first half of 2025, the company's financial stability and market performance will be critical factors to watch.

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