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Description of Business, Organization and Liquidity | 6 Months Ended
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Jun. 30, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Description of Business, Organization and Liquidity | 1. Description of Business, Organization and Liquidity Business IO Biotech, Inc. is a clinical-stage biopharmaceutical company developing novel, immune-modulatory, off-the-shelf therapeutic cancer vaccines based on our T-win® platform. As used in these financial statements, unless the context otherwise requires, references to the “Company,” “we,” “us,” and “our” refer to IO Biotech, Inc. and its subsidiaries. Corporate Reorganization IO Biotech ApS was incorporated in Denmark in December 2014. In November 2021, we completed a corporate reorganization (the “Corporate Reorganization”) whereby IO Biotech ApS became a wholly-owned subsidiary of the Company. In connection with the corporate reorganization, each issued and outstanding Class A ordinary share ($0.16 par value) was exchanged on a one-for-one basis into shares of common stock of the Company ($0.001 par value). Each Class B and Class C preference share of IO Biotech ApS was exchanged on a one-for-one basis into shares of Class B and Class C preferred stock of the Company. IO Bio US, Inc., a wholly owned subsidiary of IO Biotech ApS, was incorporated in Delaware in May 2021. IO Biotech Limited, a wholly owned subsidiary of IO Biotech ApS, was incorporated in the UK in August 2021. In November 2021, the Company engaged in a series of transactions, referred to collectively as the Corporate Reorganization. As a result of the Corporate Reorganization, IO Biotech ApS became a wholly-owned subsidiary of IO Biotech, Inc. IO Biotech, Inc. is a holding company formed in October 2021, which, prior to our initial public offering (“IPO”), had nominal assets and no liabilities, contingencies, or commitments, and which has not conducted any operations prior to our IPO other than acquiring the entire issued and outstanding stock of IO Biotech ApS. The Company, IO Biotech ApS, and the holders of all of the issued and outstanding equity interests of IO Biotech ApS entered into a Share Contribution and Exchange Agreement, dated as of October 29, 2021, pursuant to which the Corporate Reorganization was effected. IPO In November 2021, we completed our IPO, selling an aggregate of 8,222,500 shares of common stock at a price to the public of $14.00 per share, including 1,072,500 shares of common stock sold pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock. We received net proceeds from the IPO, after deducting underwriting discounts and commissions and other offering costs, of $103.3 million. Immediately prior to the consummation of the IPO, all outstanding shares of our Class A ordinary shares and Class B and Class C convertible preference shares were converted into 20,592,413 shares of common stock. Upon the closing of the IPO on November 9, 2021, a total of 28,815,267 shares of common stock were issued and outstanding. Our common stock began trading on the Nasdaq Global Market on November 5, 2021 under the symbol “IOBT.” On November 9, 2021, we amended and restated the certificate of incorporation of IO Biotech, Inc. to authorize the issuance of 300,000,000 shares of common stock and 5,000,000 shares of preferred stock. The shares of preferred stock are currently undesignated. August 2023 Private Placement On August 9, 2023, the Company completed a private placement transaction (the “Private Placement”), pursuant to which we sold an aggregate of 37,065,647 shares of the Company’s common stock, par value $0.001 per share, and 37,065,647 warrants to purchase up to 37,065,647 shares of common stock (the “Warrants”) to certain institutional investors and existing shareholders (the “Purchasers”). Each Purchaser’s Warrant is exercisable for a number of shares of common stock equal to one hundred percent of the aggregate number of shares of common stock purchased by such Purchaser. The purchase price per share of common stock and Warrant was $2.025 (the “Purchase Price”). The Company received net proceeds from the Private Placement, after deducting $3.2 million in underwriting discounts and commissions and other offering costs, of $71.9 million. Refer to Note 11, "Stockholders' Equity" in this Quarterly Report on Form 10-Q for additional detail on the Private Placement. At-The-Market Equity Program On February 15, 2023, we filed a new prospectus supplement with the U.S. Securities and Exchange Commission (the “SEC”) with respect to the offer and sale of shares of our Common Stock, with an aggregate offering price of up to $19.5 million, establishing an at-the-market equity program. We also entered into a common stock sales agreement, dated February 15, 2023 (the “Sales Agreement”) by and between the Company and Cowen and Company, LLC for shares with an aggregate offering price of up to $75.0 million, through which we may, from time to time, sell shares through Cowen and Company, LLC, acting as agent and/or principal. Any shares offered and sold through the at-the-market equity program will be issued pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-269569), which was declared effective on February 10, 2023, the prospectus supplement related to the offering that forms a part of the registration statement, and any applicable prospectus supplements that may form a part of the registration statement in the future. The aggregate market value of shares eligible for sale under the prospectus supplement and under the Sales Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. We have no t issued any shares pursuant to our at-the-market equity program as of June 30, 2025. European Investment Bank Term Loan Facility On December 19, 2024, the Company, through its subsidiary, IO Biotech ApS (the “Borrower”) entered into a Finance Contract (the “Finance Contract”) with the European Investment Bank (“EIB”), establishing a loan facility of up to €57.5 million that includes three committed tranches of potential financing in an aggregate principal amount of up to €37.5 million, subject to certain conditions precedent (the “EIB Loan Facility”), and one uncommitted accordion tranche of €20.0 million. See Note 8, “Term Loan Facility” in this Quarterly Report on Form 10-Q for additional detail. Risks and Uncertainties We are subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance reporting capabilities. Our product candidates are in preclinical research and clinical development. There can be no assurance that our research and development will be successfully completed, that adequate protection for our intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if our product development efforts are successful, it is uncertain when, if ever, we will generate significant revenue from product sales. We operate in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, we are dependent upon the services of our employees and consultants. Substantial Doubt About the Company’s Ability to Continue as a Going Concern and the Going Concern Basis of Accounting These consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since inception, we have devoted substantially all of our efforts to business planning, conducting research and development, recruiting management and technical staff, and raising capital. We have financed our operations primarily through the issuance of convertible preference shares, convertible notes, our IPO, the Private Placement and the EIB Loan Facility. Our continued discovery and development of product candidates will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if our product development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales. As of June 30, 2025, we had an accumulated deficit of $408.0 million. We have incurred losses and negative cash flows from operations since inception, including net losses of $48.6 million and $95.5 million for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively. We expect that our operating losses and negative cash flows will continue for the foreseeable future as we continue to develop our product candidates. We currently expect that our cash and cash equivalents of $28.1 million as of June 30, 2025 along with the second tranche of the EIB Loan will not be sufficient to fund our operating expenses and capital requirements for at least 12 months from the date the financial statements are issued. The Company has plans to obtain sufficient additional fundraising to fulfill its operating and capital requirements for the next 12 months. The Company’s plans include continuing to fund its operating losses and capital funding needs through public or private equity or debt financings, including the draw down of the available committed tranches of the EIB loan facility defined below in Note 8, “Term Loan Facility”, strategic collaborations, licensing arrangements, or other arrangements. The Company has drawn down on the Tranche A and Tranche B loan facility in principal amount of €10.0 million and €12.5 million, respectively, on May 6, 2025 and July 4, 2025, each before payment of certain fees and transaction related expense. The business conditions of the Tranche C loan facility have not been satisfied to draw up to €15.0 million as of the date of these interim financial statements. Further, the Company believes that its operations are scalable and, if there is a need, certain cost reduction measures may be taken to preserve cash. Although management believes such plans, if executed, should provide the Company sufficient financing to meet its needs, successful completion of such plans is dependent on factors outside of the Company’s control. Our future capital requirements will depend on many factors, including, but not limited to: • the scope, prioritization and number of our research and development programs; • the scope, progress, results and costs of our clinical trials, including the results of IOB-013; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the costs to scale up and secure manufacturing arrangements for commercial production of Cylembio® in combination with pembrolizumab as a first-line treatment in advanced melanoma; • the costs of establishing and maintaining commercialization capabilities for Cylembio in combination with pembrolizumab as a first-line treatment in advanced melanoma, and any product candidate that obtains regulatory approval; and • the level of sales achieved, and costs related to the commercialization of Cylembio in combination with pembrolizumab as a first-line treatment in advanced melanoma. Therefore, sufficient additional funds may not be available on a timely basis, on favorable terms or at all. As such, management cannot conclude that such plans will be effectively implemented in due time to secure sufficient funds to finance operations at least through one year after the date that the financial statements are issued. As a result, management has concluded that the aforementioned conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements are issued and therefore, the Company may not be able to continue its currently ongoing research and development activities as planned and realize its assets and satisfy its liabilities in the normal course of business. The Company will also require additional capital to commercialize Cylembio in combination with pembrolizumab as a first-line treatment in advanced melanoma, and to continue to fund future discovery research, preclinical, clinical activities and commercialization of any of our product candidates. If we receive regulatory approval for Cylembio, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing, medical affairs, distribution and other related functions, depending on where we choose to commercialize. Additional funds for such commercialization activities and future discovery research, preclinical, clinical activities may not be available on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our long-term business strategy. If we are unable to raise sufficient additional capital, we could be forced to curtail our planned operations and the pursuit of our growth strategy. We will seek additional funding through public financings, debt financings, collaboration agreements, strategic alliances and licensing arrangements. Although we have been successful in raising capital in the past, there is no assurance that we will be successful in obtaining such additional financing on acceptable terms, or at all, and we may not be able to enter into collaborations or other arrangements. If we are unable to obtain funding in due time, we could be forced to delay, reduce or eliminate our research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect our business prospects, even our ability to continue operations.

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