Analyst Says IO Biotech's Cancer Treatment Approach 'Differentiated'

HC Wainwright has initiated coverage on Denmark-based cancer firm IO Biotech Inc IOBT with a Buy rating and a price target of $10.
The company's T-win platform works through a dual mechanism of action that involves the direct killing of immunosuppressive cells and modulation of the tumor microenvironment into a more pro-inflammatory anti-tumor environment.
The company's lead asset, IO102-IO103, is in development for several indications in solid tumors in combination with Merck & Co Inc MRK Ketyruda (pembrolizumab), with melanoma being the most advanced indication.
The company is now evaluating the IO102-IO103 + pembrolizumab combo in a Phase 3 study for front-line treatment of PD-1 naïve metastatic melanoma patients.
The analyst believes expectations are low given IDO inhibitor, epacadostat, and recent Nektar Therapeutics NKTR IL-2 agonist failures in Phase 3 due to less severe patients.
The company also has a Phase 2 basket study in 1L solid tumors, with initial data expected in 4Q22, and the analyst expects a neoadjuvant/adjuvant Phase 2 basket study to initiate in 2023.
IO Biotech's peptide approach is differentiated as it blocks all IDO functions rather than the single function blocked by IDO inhibitors.
HC Wainwright sees significant upside potential if initial data in 4Q22 for the basket study or interim Phase 3 melanoma data in mid-2023 are positive.
Cash on hand of $151.2 million is expected to support operations through anticipated data readouts into mid-2024.
Price Action: IOBT shares are down 2.84% at $2.81 on the last check Monday.