Piper Sandler maintains Overweight rating on IO Biotech shares

Piper Sandler has reaffirmed its Overweight rating and $10.00 price target for IO Biotech (NASDAQ: IOBT).

The firm's stance remains positive, citing recent data presented at the European Society for Medical Oncology (ESMO) conference.

The data pertains to IO102-IO103 in combination with pembrolizumab for treating patients with first-line PD-L1 high squamous cell carcinoma of the head and neck (SCCHN).

The updated dataset included 21 patients with recurrent/metastatic SCCHN, 18 of whom were evaluable for response. The results showed an objective response rate (ORR) of 44% and median progression-free survival (mPFS) of 6.6 months.

Piper Sandler views these results as generally consistent with the Phase 3 KEYNOTE-048 study, suggesting the combination therapy could offer efficacy similar to pembrolizumab plus chemotherapy but with an improved safety profile.

The firm noted, however, that due to the trial design and the relatively small patient sample size, more extensive data and follow-up will be necessary to address any concerns from investors about the treatment strategy.

Piper Sandler is not yet incorporating this particular opportunity into their valuation model, choosing instead to focus solely on the potential success of IO102-IO103 in treating advanced melanoma. Final PFS data from the Phase 3 study for this indication is expected in the first half of 2025.

In other recent news, IO Biotech continues to make strides in its research and development. Morgan Stanley maintains an Overweight rating on the company, underpinned by the potential of IO Biotech's IO102-103 in treating advanced head and neck squamous cell carcinoma.

Jefferies, Piper Sandler, and H.C. Wainwright also retain their positive ratings, despite the company's Phase 3 trial not meeting the interim analysis objective response rate.

The company's IO102-IO103 is also being tested for treating non-small cell lung cancer and melanoma, with Phase 3 progression-free survival data expected in 2025. Additionally, IO Biotech plans to present an update on its Phase 2 study for squamous cell carcinoma of the head and neck at the upcoming European Society for Medical Oncology conference.

In governance news, Kathleen Sereda Glaub, Peter Hirth, and Mai-Britt Zocca were elected as class III directors, serving 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

As Piper Sandler maintains a positive outlook on IO Biotech (NASDAQ:IOBT), it's worth noting some key metrics and insights from InvestingPro. The company's market capitalization stands at a modest $49.48 million, and it's trading near its 52-week low, which could signal a potential entry point for investors believing in the company's long-term prospects. An InvestingPro Tip highlights that IO Biotech holds more cash than debt on its balance sheet, providing some financial stability. Additionally, the Relative Strength Index (RSI) suggests the stock is currently in oversold territory, which might attract investors looking for undervalued stocks.

However, challenges are evident as IO Biotech is quickly burning through cash and analysts do not anticipate the company will be profitable this year. The negative earnings per share over the last twelve months and a significant drop in price total return over various periods, including a 60.05% year-to-date decline, reflect the hurdles the company faces. For a more comprehensive analysis, including additional InvestingPro Tips for IO Biotech, interested parties can explore further details on the InvestingPro platform.

InvestingPro also provides a fair value estimate of $0.93 for IO Biotech, which is below the $9.00 analyst target but above the previous close price of $0.75. With these insights, investors can better gauge the risk-reward scenario as they consider Piper Sandler's optimistic stance on IO Biotech's potential in treating advanced melanoma and possibly SCCHN in the future.

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