In a report released yesterday, Michael Ulz from Morgan Stanley downgraded IO Biotech to a Hold, with a price target of $0.39.
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Michael Ulz has given his Hold rating due to a combination of factors that contribute to the current uncertainty surrounding IO Biotech. The FDA’s recommendation against submitting a Biologics License Application (BLA) based on the Phase 3 melanoma trial data has created a significant hurdle for the company. Although the trial showed a favorable trend in progression-free survival, it narrowly missed statistical significance, which is a critical factor for regulatory approval.
Additionally, IO Biotech is facing financial constraints, with limited cash reserves expected to last until the first quarter of 2026. The company is planning a restructuring to conserve capital, including a substantial workforce reduction. Despite management’s confidence in the potential of their lead drug, Cylembio, these challenges contribute to the near-term uncertainty, leading to the Hold rating as the company navigates discussions with regulators and plans for a new study design.