Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis ofFinancial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in Part I, Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 31, 2025 and Part II, Item 1A. "Risk Factors" of our Quarterly Report on Form 10-Q for the three months ended March 31, 2025 filed with the SEC on May 14, 2025 and Part II, Item 1A. "Risk Factors" of our Quarterly Report on Form 10-Q for the six months ended June 30, 2025 filed with the SEC on August 14, 2025, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the section entitled "Risk Factors" in our Annual Report on Form 10-K to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in the section entitled "Cautionary Note Regarding Forward-Looking Statements."

Overview

We are a clinical-stage biopharmaceutical company developing novel, immune-modulatory, off-the-shelf therapeutic cancer vaccines based on our T-win® platform. Our T-win product candidates are designed to kill both tumor cells and immune-suppressive cells in the tumor microenvironment ("TME") by stimulating the activation and expansion of T cells against target antigen positive cells. This results in the modulation of the TME, creating a more pro-inflammatory environment, and the potentiation of anti-tumor activity by unleashing the tumor killing by T cells. We believe that our product candidates have the potential to advance the oncology treatment paradigm, amplifying immune-oncology treatment effects across the spectrum of melanoma and other tumor types.

Our lead therapeutic cancer vaccine candidate, IO102-IO103, which in the U.S. is known as Cylembio®(imsapepimut and etimupepimut, adjuvanted), is designed to target cancer cells and immune-suppressive cells in the TME that express indoleamine 2,3-dioxygenase ("IDO") and programmed death ligand 1 ("PD-L1"). In an investigator-initiated, single-arm Phase 1/2 trial of 30 anti PD-1/PD-L1 naïve patients with metastatic melanoma, IO102-IO103 in combination with nivolumab, an anti-programmed cell death 1 ("PD-1") checkpoint inhibitor, demonstrated proof of concept by increasing the overall response rate ("ORR") and median progression free survival ("PFS") compared to what has been reported with an anti-PD-1 antibody alone. The primary endpoint of the trial was feasibility and safety, secondary endpoints included efficacy and immunogenicity. The clinical efficacy endpoints in this trial included objective response ("OR"), PFS and overall survival ("OS"). The combination induced meaningful tumor regression and achieved rapid, deep and durable responses with a favorable tolerability profile without adding systemic toxicity to what is typically seen with an anti-PD-1 monotherapy in this patient population. As of the January 5, 2023 data cut as published in the May 2023 Journal for ImmunoTherapy of Cancer, we observed a confirmed ORR of 73% as per RECIST 1.1, a complete response rate ("CRR") of 50% and 25.5 months of PFS. Based on the results from this study, IO102-IO103, in combination with pembrolizumab, was granted BTD by the FDA for treatment of unresectable/metastatic melanoma and we initiated a global Phase 3 trial.

Recent Developments

On August 11, 2025, the Company issued a press release announcing topline results from our Phase 3 trial of Cylembio plus KEYTRUDA® (pembrolizumab) for the treatment of first-line advanced melanoma. In the trial, Cylembio plus pembrolizumab demonstrated clinical improvement in PFS compared to pembrolizumab alone, but statistical significance was narrowly missed on the primary endpoint. The randomized, open-label study enrolled 407 patients across more than 100 sites worldwide. Patients received either Cylembio in combination with pembrolizumab (n=203) or pembrolizumab alone (n=204). The primary endpoint was PFS as assessed by a blinded independent review committee per RECIST v1.1. The early and sustained separation of PFS curves demonstrated an improvement with a hazard ratio of 0.77 [95% CI: 0.58-1.00; p=0.056; threshold for significance p≤0.045]. Based on an intent-to-treat analysis, patients in the study treated with Cylembio in combination with pembrolizumab achieved 19.4 months of median progression free survival compared to 11.0 months in patients treated with pembrolizumab alone. Although overall survival is not yet mature, a trend favoring the combination arm was observed [HR 0.79 (95% CI: 0.57-1.10)]; the Company projects OS results to be available in 2026.

The Company is supporting an investigator-initiated study ("IIT") (NCT05912244) evaluating the combination of Cylembio plus nivolumab-relatlimab for the first-line treatment of patients with unresectable advanced melanoma at three study sites in the United States. The IIT has completed enrollment with 43 patients. Preliminary analysis of data as of September 2025 for 32 patients, with median follow up not yet mature, showed an early trend suggestive of improved clinical activity for patients treated with the combination of Cylembio plus nivolumab-relatlimab as compared to historic data for patients treated with nivolumab-relatlimab alone. Importantly, no additional systemic toxicity was observed in the IIT in patients treated with the combination of Cylembio plus nivolumab-relatlimab. No head-to-head trials of Cylembio plus nivolumab-relatlimab versus nivolumab-relatlimab have been conducted and cross clinical trial comparisons should be interpreted with caution.

On September 29, 2025, the Company issued a press release announcing that the FDA has recommended that the Company not

submit a Biologics License Application ("BLA") based on the data from the IOB-013 clinical trial. The Company has scheduled a meeting with the FDA in December 2025, to align on the design of a potential new registrational study for Cylembio® in patients with advanced melanoma and plans to discuss the data from our IOB-013 study with European regulators and determine a path to submission in the EU.

As part of the September press release, we also announced that the Company is implementing the Plan to conserve capital while it pursues a pathway to regulatory approval for Cylembio and works to complete ongoing studies. The Company is restructuring to reduce the Company's ongoing expense structure and incurred a non-recurring charge of $0.9 million in the third quarter of 2025 related to the restructuring, which includes an approximate 50% percent reduction in full-time employees.

T-win®Platform

Our T-win platform is a novel approach to therapeutic cancer vaccines designed to activate pre-existing T cells to target immunosuppressive mechanisms. Our T-win product candidates are designed to employ a dual mechanism of action: (1) direct killing of immune-suppressive cells, including both tumor cells and genetically stable cells in the TME, that express IDO and/or PD-L1 (in the case of IO102-IO103), Arginase 1 (in the case of IO112) or transforming growth factor beta ("TGFβ", in the case of IO170), and (2) modulation of the TME into a more pro-inflammatory, anti-tumor environment. Our T-win platform is built upon our team's deep understanding of both the TME and a tumor's ability to evade surveillance and destruction by the immune system. Our approach is in contrast to previous methods that have sought to either block singular immunosuppressive pathways or to direct the immune system against specific identified antigens expressed by tumor cells.

We are developing a pipeline of product candidates that leverage our T-win platform to address targets within the TME. In addition to melanoma, we are currently evaluating IO102-IO103 in multiple solid tumor indications. We are also focusing on additional targets that play key roles in immunosuppression and that are expressed in a broad range of solid tumors. Our current pipeline of product candidates and expected upcoming milestones are summarized in the tables below.

* In combination with pembrolizumab

NSCLC = non-small cell lung cancer, SCCHN = squamous cell carcinoma of the head and neck

Phase 3 IOB-013/KN-D18 Trial

We enrolled the first patient in a Phase 3 trial for IO102-IO103 in combination with pembrolizumab as first-line treatment in advanced melanoma, the IOB-013/KN-D18 trial, in May of 2022. In June 2023, we announced that we amended the protocol and increased the target number of patients to be enrolled in the Phase 3 trial from an original 300 patients to a revised 380 patients to potentially accelerate the timeline to reach the analysis of the primary endpoint of PFS. In November 2023, we fully enrolled the Phase

3 trial (380 patients) ahead of schedule with nearly half the patients enrolled during the final six months of enrollment. We included all patients who met the study criteria and who were in screening when the target enrollment was achieved, resulting in a total of 407 patients being enrolled in our IOB-013/KN-D18 trial.

The randomized, open-label study enrolled 407 patients across more than 100 sites worldwide. Patients received either Cylembio in combination with pembrolizumab (n=203) or pembrolizumab alone (n=204). The primary endpoint was PFS as assessed by a blinded independent review committee per RECIST v1.1. The early and sustained separation of PFS curves demonstrated an improvement with a hazard ratio of 0.77 [95% CI: 0.58-1.00; p=0.056; threshold for significance p≤0.045]. Based on an intent-to-treat analysis, patients in the study treated with Cylembio in combination with pembrolizumab achieved 19.4 months of median progression free survival compared to 11.0 months in patients treated with pembrolizumab alone. Although overall survival is not yet mature, a trend favoring the combination arm was observed [HR 0.79 (95% CI: 0.57-1.10)]; the Company projects OS results to be available in 2026.

Improvement in PFS was achieved across virtually all subgroups, regardless of PD-L1 status, including those with poor prognostic factors, with a profound effect in PD-L1 negative patients treated with Cylembio plus pembrolizumab compared to patients treated with pembrolizumab monotherapy; HR 0.54; 95% CI, 0.35-0.85), BRAFV600 mutated tumors (HR 0.60; 95% CI, 0.40-0.90), and elevated LDH (HR 0.60; 95% CI, 0.39-0.92).

The combination was well tolerated, with no increase in immune-mediated adverse events (34.0% vs 38.4%) or grade ≥3 treatment-related events (14.5% vs 15.6%) compared to pembrolizumab alone. Injection site reactions, were reported in 56% of patients receiving Cylembio plus pembrolizumab, they were transient and resolved on treatment without the need for active intervention. To ensure the safety of patients in the IOB-013/KN-D18 trial, safety reviews continue to be conducted by the independent data monitoring committee ("IDMC"). As of September 30, 2025, the fifth and final IDMC safety review has been completed for an assessment of patient safety across both treatment arms in the trial. The recommendation after the IDMC reviews was that the trial continue without modifications.

On September 29, 2025, the Company issued a press release that the FDA has recommended that the Company not submit a BLA based on the data from the IOB-013 clinical trial. The Company plans to continue the dialogue with FDA to align on the design of a potential new registrational study for Cylembio®. The Company also plans to discuss the data from the IOB-013 clinical trial with European regulators.

On October 20, 2025, the Company presented detailed results from the Phase 3 IOB-013 clinical trial at the European Society for Medical Oncology ("ESMO") conference held in Berlin. The data, presented as a proffered paper at the Melanoma and other skin tumors session expanded upon topline results reported in August 2025.

Phase 2 IOB-022/KN-D38 Basket Trial

We are also investigating IO102-IO103 in several other solid tumor indications. We are conducting a Phase 2 basket trial, the IOB-022/KN-D38 trial, which is investigating multiple first-line solid tumor indications in treatment naïve patients for metastatic disease. This basket trial is designed to investigate the safety and efficacy of IO102-IO103 in combination with pembrolizumab in patients with metastatic non-small cell lung cancer ("NSCLC"), adenocarcinoma histology, with PD-L1 TPS ≥ 50% (cohort A), and recurrent and/or metastatic squamous cell carcinoma of the head and neck ("SCCHN") with CPS ≥ 20 (cohort B). We initiated the IOB-022/KN-D38 trial in April 2022 and closed enrollment in June 2024 with 37 patients enrolled in cohort A and 21 patients enrolled in cohort B. Study protocol-specified pembrolizumab monotherapy benchmarks for the primary endpoint of ORR are Keynote-042 study (39%) for the NSCLC cohort A and Keynote-048 study (23%) for the SCCHN cohort B.

As presented at the ESMO conference held in Barcelona in September 2024, results from the IOB-022/KN-D38 Phase 1/2 study of IO102-IO103 in combination with pembrolizumab in recurrent and/or metastatic SCCHN met its primary end point of ORR. Of the 21 patients enrolled in cohort B, 18 were efficacy evaluable and met the primary endpoint for this cohort with a confirmed ORR of 44.4%. Among the secondary endpoints, the data showed an encouraging 6.6-month median PFS, and a 66.7% disease control rate ("DCR").

As presented at the Society for Immunotherapy of Cancer ("SITC") annual meeting in Houston, Texas in November 2024, preliminary results from the IOB-022/KN-D38 Phase 1/2 study of IO102-IO103 in combination with pembrolizumab in first line metastatic NSCLC were encouraging. Of the 37 patients enrolled in cohort A, 31 were efficacy evaluable and the data demonstrated promising activity with a 55% unconfirmed/48% confirmed ORR, respectively, in efficacy evaluable patients, an encouraging 8.1-month median PFS, no disease progression at 12 months in approximately 50% of the patients, and an 81% DCR. Duration of response ("DOR") had not yet matured at this data cut off period.

Most common reported adverse events in the trial were Grade 1-2 injection site reaction. Safety profile of the combination in this study was consistent with previously reported data when combined with anti-PD-1 monotherapy, with no added significant systemic toxicity.

The Company presented final data from the Phase 2 basket trial (IOB-022/KN-D38), evaluating Cylembio in combination with pembrolizumab as first-line treatment for patients with NSCLC (PD-L1 TPS ≥50%) or SCCHN (PD-L1 CPS ≥20) at the October 2025

ESMO conference. Among 49 efficacy-evaluable patients (31 with NSCLC and 18 with SCCHN), mPFS was 8.1 months at 21.4 months of follow-up in NSCLC and 7.0 months at 18 months of follow-up in SCCHN, with durable responses and encouraging 18-month OS rates. The combination's safety profile remained consistent with anti-PD-1 monotherapy, with no new safety signals. The poster can be found on the "Posters & Publications" page of the Company's website.

The cohort B efficacy study results satisfied certain clinical conditions precedent in the Company's loan facility with the European Investment Bank ("EIB") that provided the Company access to the Tranche B loan in principal amount of €12.5 million, which was drawn down on July 4, 2025. For more information on the EIB Loan Facility, please see Note 8, "Term Loan Facility" within this Quarterly Report on Form 10-Q.

Phase 2 IOB-032/PN-E40 Basket Trial

We have initiated a basket trial to investigate IO102-IO103 in combination with pembrolizumab in a perioperative cancer setting. In April 2023, the FDA cleared the Company's Investigational New Drug ("IND") application for the evaluation of IO102-IO103 in combination with pembrolizumab, given before (neoadjuvant) and after (adjuvant) surgery in patients with resectable melanoma and SCCHN, the IOB-032/PN-E40 trial. The trial is a Phase 2, open-label, multi-cohort trial evaluating neoadjuvant and adjuvant treatment with IO102-IO103 in combination with pembrolizumab in patients with resectable melanoma (cohorts A and C) or SCCHN (cohort B). Cohorts A and B are single-arm, whereas in cohort C, melanoma patients are randomized 1:1 to neoadjuvant treatment with either combination IO102-IO103 with pembrolizumab or pembrolizumab alone.

In the neoadjuvant period, treatment is every three weeks (Q3W) for three cycles (melanoma) or two to three cycles (SCCHN). Patients entering the study will be scheduled for surgery and begin neoadjuvant treatment 4-9 weeks prior to surgery. Surgery will then be followed by adjuvant treatment with the same regimen for 15 cycles. Cohort C patients with poor pathological response to pembrolizumab alone in the neo-adjuvant phase (>10% residual viable tumor) may cross over to combination treatment post-surgery. The primary endpoint is major pathological response at surgery (≤10% residual viable tumor; central assessment). Safety, event-free survival ("EFS") and disease-free survival ("DFS") are secondary endpoints. For translational research purposes, paired pre- and post-treatment tumor tissue and blood samples will be collected. As of January 2025, the study has completed enrollment for all cohorts ahead of schedule. We expect data to be presented at medical meetings in 2026.

Preclinical Development

IO112 is our fully owned, novel investigational product candidate containing a single arginase 1-derived peptide designed to engage and activate arginase 1-specific human T cells. IO112 is designed to target T cells that recognize epitopes derived from arginase 1, which is an immunoregulatory enzyme highly expressed in difficult-to-treat tumors associated with high levels of myeloid-derived suppressor cells ("MDSCs") including renal cell carcinoma, head and neck, breast, pancreatic, ovarian, colorectal and prostate cancers. Arginase overexpression is a well-documented tumor escape mechanism.

Arginase 1-derived peptides have been studied in two single-arm first-in-human Phase 1 trials in patients with solid tumor and hematological cancers. The two phase 1 trials have been conducted independent of the Company by the National Center for Cancer Immune Therapy using the arginase 1-derived peptide vaccine, which has shown safety and tolerability in both solid tumors and hematologic malignancies in both Phase 1 trials at the University Hospital of Herlev, Copenhagen. There were no significant safety concerns and no reported vaccine related Grade 3-4 events. Nine out of ten patients had measurable peptide specific immune responses in peripheral blood.

As presented at SITC in November 2025, preclinical data for IO Biotech's second T-win®vaccine candidate, IND-ready IO112 targeting Arginase 1, demonstrates anti-tumor activity with dynamic changes in the TME driven by the vaccine-targeted modulation of immunosuppressive myeloid cells, including tumor-associated macrophages ("TAMs"). The Company anticipates filing an IND for IO112 in 2026.

In addition to IO102, IO103 and IO112, we are evaluating additional product candidates that we believe have potential for use in solid tumors. All our compounds in preclinical development are designed to target well-documented immunosuppressive molecules that are known to be overexpressed in the TME across a wide range of tumors. These targets provide additional opportunities across multiple cancer indications.

We believe that targeting TGFβ expressing cells in the TME via a vaccine approach presents a novel and attractive way to modulate the pathway and drive therapeutic benefit in the cancer setting. We are developing and characterizing TGFβ-selective peptide vaccines capable of inducing strong immune responses. Preclinical data thus far demonstrate that treatment with TGFβ vaccines leads to both activation of T cells and reduction of tumor growth, associated with proinflammatory signatures in the TME. We are currently conducting further experimental work to elucidate the cellular and molecular mechanisms of a TGFβ vaccine to support further development of a TGFβ vaccine (IO170) to modulate the TME for therapeutic benefit in a wide range of cancer indications. We plan to continue IND-enabling studies for IO170 in 2026.

On April 28, 2025, a poster presentation of new nonclinical data on IO170 was delivered at the American Association for Cancer Research ("AACR") Annual Meeting in Chicago, Illinois. Murine surrogate IO170 ("mIO170") demonstrated significant tumor growth inhibition in preclinical breast and prostate cancer models. The IO170 treatment led to infiltration of vaccine-specific T cells with increased density of CD8+ T-cells in the tumor and reshaped the tumor microenvironment to favor immune activation. Spatial analysis in prostate tumors showed reduction in immune suppressive myeloid cell populations and increased cytotoxic T cells-tumor cell interaction.

In addition, we have presented new IO170 preclinical data at SITC in November 2025 that vaccination with IO170 demonstrated significant tumor growth inhibition and reduction of lung metastasis in a prostate cancer model.

Development of IO102 and IO103

Our development of IO102-IO103 is based on our prior separate development of IO102 and IO103. IO102 is our fully owned novel product candidate containing a single IDO1-derived peptide sequence designed to engage and activate IDO1-specific human T cells. IDO small molecule inhibitors have shown clinical potential in combination with PD-1 antibodies in early clinical trials, but have not been able to demonstrate the same level of efficacy in later-stage clinical trials. Our Phase 1 non-randomized trial of IO101, our first-generation IDO therapy, in NSCLC resulted in proof-of-concept for our approach, with 47% of patients displaying clinical benefit and an OS of 26 months in the treatment arm compared to 8 months in the group receiving standard of care. There were no Grade 3 or higher adverse events.

On April 9, 2024, a poster presentation of new non-clinical data further supporting the dual mechanism of action of IO102-IO103 was delivered at the American Association for Cancer Research ("AACR") Annual Meeting in San Diego, California. While further studies are needed to fully discern the relationship between IDO1+/PD-L1+ target populations within the TME and the impact of IDO1/PD-L1 targeted vaccination, we believe the data presented support the use of a dual antigen approach to reduce immunosuppression and enhance anti-tumor effects.

On April 28 2025, a poster presentation of new non-clinical data further supporting the dual mechanism of action of IO102-IO103 was delivered at the AACR Annual Meeting in Chicago, Illinois. The data presented provided further insight into the mode of action of IO102-IO103: treatment with murine surrogate for IO102-IO103 resulted in strong T-cell responses leading to tumor growth control, where IDO1 and PD-L1 vaccine each contributing through different molecular programs. Additional gene expression profiling showed that the vaccine triggered unique molecular changes not seen with PD-1 or PD-L1 inhibitors, indicating a potentially synergistic mechanism.

Components of Operating Results

Operating Expenses

Our operating expenses since inception have consisted primarily of research and development expenses and general and administrative costs.

Research and Development

Our research and development expenses consist primarily of costs incurred for the development of our product candidates and our drug discovery efforts, which include:

We expense all research and development costs in the periods in which they are incurred. Costs for certain research and development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.

From time to time, we obtain grants from public and private funds for our research and development projects. The grant income for a given period is recognized as a cost reimbursement and is typically based on the time and the costs that we have spent on the specific project during that period.

We have historically met the requirements to receive a tax credit in Denmark of up to 5.5 million Danish Kroner per year for losses resulting from research and development costs of up to 25 million Danish Kroner per year. The tax credit is presented as a reduction to research and development expense in the consolidated statements of operations.

We use our personnel and infrastructure resources across multiple research and development programs directed toward identifying and developing product candidates. We have not tracked our research and development expenses on a program-by-program basis, as our lead product candidate, Cylembio®, is used in each of our ongoing clinical trials across all target oncology indications that we are researching. Substantially all of our direct research and development expenses in the years ended December 31, 2024 and 2023 and in the nine months ended September 30, 2025 were on Cylembio and consisted primarily of external costs, such as consultants, third-party contract organizations that conduct research and development activities on our behalf, costs related to production of preclinical and clinical materials, including fees paid to contract manufacturers, and laboratory and vendor expenses related to the execution of our ongoing and planned preclinical studies and clinical trials.

We expect to incur significant research and development expenses for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, including investments in conducting clinical trials, manufacturing and otherwise advancing our programs. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain.

Because of the numerous risks and uncertainties associated with product development and the current stage of development of our product candidates and programs, we cannot reasonably estimate or know the nature, timing and estimated costs necessary to complete the remainder of the development of our product candidates or programs. We are also unable to predict if, when, or to what extent we will obtain approval and generate revenues from the commercialization and sale of our product candidates. The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:

We may never succeed in achieving regulatory approval for any of our product candidates. We may obtain unexpected results from our preclinical studies and clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of these factors could mean a significant change in the costs and timing associated with the development of our current and future preclinical and clinical product candidates. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development, or if we experience significant delays in execution of or enrollment in any of our preclinical studies or clinical trials, we could be required to expend significant additional financial resources and time on the completion of preclinical and clinical development.

Research and development activities account for a significant portion of our operating expenses. We expect to incur significant development expenses for the foreseeable future as we continue to implement our business strategy, which is primarily focused on advancing Cylembio through clinical development, regulatory review and potential approval. In addition, product candidates in later stages of clinical development generally incur higher development and regulatory costs than those in earlier stages of clinical development. However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.

General and Administrative Expenses

Our general and administrative expenses consist primarily of personnel costs, depreciation expense and other expenses for outside professional services, including legal fees relating to patent and corporate matters, human resources, audit and accounting services and facility-related fees not otherwise included in research and development expenses. Personnel costs consist of salaries, benefits and equity-based compensation expense, for our personnel in executive, finance and accounting, business operations and other administrative functions. We expect to continue to incur significant general and administrative expenses to support our continued research and development activities, manufacturing activities, and to continue to operate as a public company. These costs will likely include retaining key personnel, fees to outside consultants, lawyers and accountants, and costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, director and officer insurance premiums and investor relations costs.

Other Income (Expense), Net

Our other income (expense), net is comprised of:

Results of Operations

Comparison of the three months ended September 30, 2025 and 2024

The following sets forth our results of operations:

Research and Development Expenses

Research and development expenses were comprised of:

Research and development expenses were $13.7 million for the three months ended September 30, 2025, compared to $20.2 million for the three months ended September 30, 2024. The decrease of $6.4 million was primarily related to a decrease in clinical trial-related activities of $6.6 million for Cylembio®, our therapeutic cancer vaccine candidate, in the execution of our Phase 3 clinical trial.

General and Administrative Expenses

General and administrative expenses were comprised of:

General and administrative expenses were $5.6 million for the three months ended September 30, 2025, compared to $6.3 million for the three months ended September 30, 2024. The decrease of $0.7 million was related to a decrease of $0.6 million in personnel expense due to a decrease in employee related compensation costs and a decrease of $0.6 million in other costs due to a decrease in insurance premiums and market research spend that was offset by an increase in professional services of $0.5 million primarily related to an increase in legal expenses.

Other Income (Expense), Net

Other income (expense), net was comprised of:

Other income (expense), net was $9.3 million for the three months ended September 30, 2025, compared to $2.7 million for the three months ended September 30, 2024. The increase of $6.6 million was primarily due to an increase of $9.8 million related to the change in fair value of the warrants issued to the EIB that was offset by $0.9 million in interest expense recognized due to our EIB debt, a decrease of $0.8 million in interest income recognized on our money market fund and a decrease of $1.5 million in foreign currency impacts.

Comparison of the nine months ended September 30, 2025 and 2024

The following sets forth our results of operations:

Research and Development Expenses

Research and development expenses were comprised of:

Research and development expenses were $46.8 million for the nine months ended September 30, 2025, compared to $50.3 million for the nine months ended September 30, 2024. The decrease of $3.6 million was primarily related to a decrease in clinical trial-related activities of $6.3 million for Cylembio®, our therapeutic cancer vaccine candidate, in the execution of our Phase 3 clinical trial that was offset by an increase of $2.9 million in personnel expense due to an increase in headcount and contractor related costs of $2.2 million.

General and Administrative Expenses

General and administrative expenses were comprised of:

General and administrative expenses were $18.3 million for the nine months ended September 30, 2025, compared to $17.9 million for the nine months ended September 30, 2024. The increase of $0.4 million was primarily related to an increase in professional services of $1.6 million primarily related to an increase in legal expenses that were offset by a decrease of $0.5 million in compensation related costs for personnel and a decrease of $0.7 million in other costs due to a decrease in insurance premiums and new hire recruiting costs.

Other (Expense) Income, Net

Other income (expense), net was comprised of:

Other income (expense), net was $6.7 million for the nine months ended September 30, 2025, compared to $5.1 million for the nine months ended September 30, 2024. The increase of $1.6 million was primarily due an increase of $7.3 million related to the change in fair value of the warrants issued to the EIB that was offset by a decrease in interest income of $3.0 million recognized on our money market fund, $1.5 million in foreign currency impacts and $1.1 million in interest expense recognized due to our EIB debt.

Liquidity and Capital Resources

Sources of Liquidity

Our operations to date have been financed primarily by aggregate net proceeds of $394.0 million from the issuance of convertible preference shares, convertible notes, ordinary shares, our IPO, our Private Placement, the EIB Loan Facility and the ATM. On May 6, 2025, we drew down on the EIB Tranche A loan facility to obtain €10.0 million and on July 4, 2025, we drew down on the EIB Tranche B loan facility to obtain €12.5 million, each amount before payment of certain fees and transaction related expense.

In December 2024, IO Biotech ApS, our wholly-owned subsidiary, entered into the Finance Contract (the "Finance Contract") with the EIB establishing the EIB Loan Facility, which consists of 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"). Concurrently with the execution of the Finance Contract, IO Biotech ApS entered into a non-binding side letter, pursuant to which EIB may, in its discretion and subject to approvals by its investment committee, make available to the Company an additional €20.0 million in funding related to the Company's ongoing clinical trials. We do not expect to have €15.0 million in additional committed funds available related to the EIB Tranche C loan facility based upon certain agreed upon conditions of the agreement. The EIB may elect to provide €20.0 million in uncommitted funds in its sole discretion.

On August 7, 2023, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company agreed to sell and issue (i) 37,065,647 shares of the Company's Common Stock, and (ii) 37,065,647 Warrants in the Private Placement. 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 for each share of Common Stock and Warrant was $2.025. The Warrants are exercisable at an exercise price of $2.47 per share, subject to adjustment as set forth therein. The Warrants are exercisable until the earlier of (i) February 9, 2027, and (ii) one day prior to the closing of an acquisition, as defined in the Warrants. The Warrants may be exercised on a cashless basis if there is no effective registration statement registering the shares underlying the Warrants. The Private Placement closed on August 9, 2023. The Company received $75.1 million in gross proceeds from the Private Placement, before deducting offering expenses of $3.2 million. The Company intends to use the net proceeds of $71.9 million from the Private Placement for general corporate purposes.

In addition, on February 15, 2023, we filed a new prospectus supplement with the SEC with respect to the offer and sale of shares of our common stock, par value $0.001 per share, with an aggregate offering price of up to $19.5 million, establishing an at-the-market equity program. On February 15, 2023, we also entered into a 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 issued 3,810,040 shares pursuant to our at-the-market equity program as of September 30, 2025 and the Company has received net proceeds from the program of $6.6 million, after deducting sale commissions.

We currently expect that our cash and cash equivalents of $30.7 million as of September 30, 2025 will be sufficient to continue funding our development activities through the first quarter of 2026. However, additional funding will be necessary to fund our future clinical and preclinical activities. If additional capital is not available on a timely basis, or at all, the Company will have to significantly delay, scale back or discontinue its research and development programs. If the Company becomes unable to continue as a going concern, it may have to terminate its operations and dispose of its assets and might realize significantly less than the values at which they are carried on its consolidated financial statements. These actions may cause the Company's stockholders to lose all or part of their investment in the Company's common stock. The accompanying consolidated financial statements have been prepared on the basis that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

Net Cash Used in Operating Activities

Cash used in operating activities of $61.4 million for the nine months ended September 30, 2025 was primarily attributable to our net loss of $57.0 million, a net decrease of $4.0 million in our working capital accounts and a decrease in non-cash items of $0.4 million primarily due the change in fair value of warrants issued to the EIB that was offset by equity-based compensation.

Cash used in operating activities of $62.7 million for the nine months ended September 30, 2024 was primarily attributable to our net loss of $64.2 million and a net decrease of $3.0 million in our working capital accounts, partially offset by an increase in non-cash items of $4.4 million primarily due to equity-based compensation.

Net Cash Used in Investing Activities

Cash used in investing activities of $0.1 million and $0.03 million for the nine months ended September 30, 2025 and 2024, respectively, was related to the purchase of property and equipment.

Net Cash Provided by Financing Activities

Cash provided by financing activities of $32.8 million for the nine months ended September 30, 2025 was related to the net proceeds obtained from the EIB Tranche A and Tranche B loan facility funding as well as net proceeds related to issuance of common shares under our ATM facility. We had no cash provided by financing activities for the nine months ended September 30, 2024.

Funding Requirements

Any product candidates we may develop may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. As a result, until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses; costs related to third-party clinical research, manufacturing and development services; lease costs relating to our headquarters and our other offices, laboratories and manufacturing facility; license payments or milestone obligations that may arise; laboratory expenses and costs for related supplies; clinical costs; manufacturing costs; legal and other regulatory expenses; and general overhead costs.

Based upon our current operating plan, we believe that our existing cash and cash equivalents of $30.7 million as of September 30, 2025 will be sufficient to continue funding our development activities through the first quarter of 2026. To finance our operations beyond that point we will need to raise additional capital, which, though we were successful in raising additional capital through the Private Placement, and the EIB Loan Facility, cannot be assured and which we may not be able to pursue successfully again. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. We will continue to require additional financing to advance our current product candidates through clinical development and potential regulatory approval and to fund operations for the foreseeable future. We will continue to seek funds through equity offerings, debt financings or other capital sources, potentially including collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to raise capital, we may need to delay, reduce or terminate planned activities to reduce costs.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.

Contractual Obligations and Commitments

In March 2021, we entered into a lease for our office space in Copenhagen, Denmark that was amended in September 2022 and is set to expire in December 2027. The lease for our office space in Copenhagen, Denmark is terminable upon six months' notice. In January 2023, we entered into a lease for laboratory space in Copenhagen, Denmark that expires in December 2027. In December 2024, we entered into a lease for additional office space in Copenhagen, Denmark that expires in December 2027. In August 2021, we entered into a lease for laboratory facilities and office space in Rockville, Maryland that expires in May 2027. In October 2021, we entered into a lease for office space in New York, New York that expires in January 2027. In June 2023, we entered into a lease for office space in Newport, United Kingdom that expired in May 2025.

We enter into contracts in the ordinary course of business with third-party service providers for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts generally provide for termination upon notice of 30 to 90 days, and therefore, we believe that our non-cancelable obligations under these agreements are not material and we cannot reasonably estimate whether they will occur. However, in the event of a termination of any contracts with CROs or other institutions and with respect to active patients enrolled in our clinical trials, we may be financially obligated for a period beyond the contractual termination notice periods.

We may also enter into additional research, manufacturing, supplier, lease and other agreements in the future, which may require up-front payments and even long-term commitments of cash.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.

Going Concern

Our evaluation of our ability to continue as a going concern requires us to evaluate our future sources and uses of cash sufficient to fund our currently expected operations in conducting research and development activities. We evaluate the probability associated with each source and use of cash resources in making our going concern determination. The research and development of pharmaceutical products is inherently subject to uncertainty. We currently expect that our cash and cash equivalents of $30.7 million as of September 30, 2025 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.

Research and Development Costs

We incur substantial expenses associated with clinical trials. Accounting for clinical trials relating to activities performed by CMOs, CROs and other external vendors requires management to exercise significant estimates in regard to the timing and accounting for these expenses. We estimate costs of research and development activities conducted by service providers, which include costs associated with the conduct of sponsored research, preclinical studies, contract manufacturing activities and pass-through costs. The diverse nature of services being provided under CRO and other arrangements, the different compensation arrangements that exist for each type of service and the lack of timely information related to certain clinical activities complicates the estimation of accruals for services rendered by CROs and other vendors in connection with clinical trials. We record the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and allocate these costs in the accrued and other current liabilities or prepaid expenses on the balance sheets and within research and development expense on the statements of operations. In estimating the duration of a clinical study, we evaluate the start-up treatment and wrap-up periods, compensation arrangements and services rendered attributable to each clinical trial. Fluctuations are regularly tested against payment plans and trial completion assumptions.

We estimate these costs based on factors such as estimates of the work completed and budget provided and in accordance with agreements established with our collaboration partners and third-party service providers. We make significant judgments and estimates in determining the accrued liabilities and prepaid expense balances in each reporting period. As actual costs become known, we adjust our accrued liabilities or prepaid expenses. We have not experienced any material differences between accrued costs and actual costs incurred since our inception.

Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions, CMOs and CROs that may be used to conduct and manage clinical trials, chemistry and testing and manufacturing services on our behalf. We generally accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity. If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.

Equity-based Compensation

We issued stock-based compensation awards through the granting of warrants and stock options, which generally vest over a four-year period. We issued 2,709,284 stock options with a weighted average exercise price of $1.13 under our 2021 Equity Plan during the nine months ended September 30, 2025. We did not issue stock options from the 2023 Inducement Award Plan during the nine months ended September 30, 2025. We also issued 3,087,382 and 310,000 stock options with a weighted average exercise price of $1.60 and $1.58 to certain employees, board members and advisors from the 2021 Equity Incentive Plan and 2023 Inducement Award Plan, respectively, during the year ended December 31, 2024.

We account for equity-based compensation in accordance with ASC 718, Compensation-Stock Compensation ("ASC 718"). In accordance with ASC 718, compensation cost is measured at estimated fair value and is included as compensation expense over the vesting period during which service is provided in exchange for the award on a straight-line basis. Vesting of the awards depend solely on service conditions required of the employee. The Company reverses any previously recognized compensation cost associated with forfeited awards in the period of the forfeiture occurs.

We use a Black-Scholes option pricing model to determine fair value of our warrants and stock options. The Black-Scholes option pricing model includes various assumptions, including the fair value of common shares, expected life of warrants and stock options, the expected volatility and the expected risk-free interest rate. These assumptions reflect our best estimates, but they involve inherent uncertainties based on market conditions generally outside our control. As a result, if other assumptions had been used, equity-based compensation cost could have been materially impacted. Furthermore, if we use different assumptions for future grants, share-based compensation cost could be materially impacted in future periods.

We will continue to use judgment in evaluating the assumptions utilized for our equity-based compensation expense calculations on a prospective basis. In addition to the assumptions used in the Black-Scholes model, the amount of equity-based compensation expense we recognize in our financial statements includes warrant forfeitures as they occurred.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted statutory tax rates expected to apply to taxable income in the jurisdictions and years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Based on the level of historical operating results and projections for the taxable income for the future, we have determined that it is more likely than not that our net deferred tax assets will not be realized. Accordingly, we have recorded a full valuation allowance to reduce our net deferred tax assets in IO Biotech ApS, IO Bio US, Inc. and IO Biotech, Inc.

We recognize tax benefits from uncertain tax positions only if, based on the technical merits of the position, it is more likely than not that the tax positions will be sustained on examination by the tax authority. The tax benefits recognized in the financial statements from such positions are measured based on the largest amount that is more than 50% likely to be realized upon ultimate settlement. We recognize interest and penalties related to unrecognized tax benefits within the provision for taxes in our statements of operations and comprehensive loss.

We operate in Denmark and may be subject to audits from various tax authorities. Management's judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, liabilities for uncertain tax positions, and any valuation allowance recorded against our net deferred tax assets. We will monitor the extent to which our deferred tax assets may be realized and adjust the valuation allowance accordingly.

We elected to claim a research and development tax credit on the federal income tax return filed for the years ended December 31, 2023 and December 31, 2024 and plan to continue to make this election on the federal income tax return filed for the year ended December 31, 2025 based on law currently enacted. The Company included $0.3 million and $0.7 million in research and development tax credits in the U.S. provision for income taxes for the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively. Additionally, as a result of the One Big Beautiful Bill Act enacted during the current year, we reported a $1.4 million tax benefit as a result of changes to the deductibility of research and development expenditures and related tax credits. We will continue to monitor impacts of further proposed or enacted law changes on the cost to benefit of making this election.

Warrants Issued in Connection with a Sale of Common Stock or Issuance of Debt

The Company accounts for warrants issued as a separable unit in connection with sale of common stock or debt as either liability or equity in accordance with Accounting Standards Codification 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity ("ASC 480-10") or ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock ("ASC 815-40"). Under ASC 480-10, warrants are considered liabilities if they are mandatorily redeemable and they require settlement in cash or other assets, or a variable number of shares. If warrants do not meet liability classification under ASC 480-10, the Company considers the requirements of ASC 815-40 to determine whether the warrants should be classified as liability or equity. If warrants do not require liability classification under ASC 815-40 or other applicable generally accepted accounting principles in the United States of America ("U.S. GAAP") the warrants should be classified as equity. The debt is measured at amortized cost and the amount of interest recognized in the consolidated statements of operations is calculated by applying the loan's effective interest rate to its carrying amount.

The proceeds received from the sale of equity classified warrants and shares of common stock in a bundled transaction are allocated based on the relative fair values of warrants and shares with no changes in fair value of warrants recognized after the issuance date. For liability classified warrants, the stand-alone fair value of the warrants are classified as debt issuance costs that directly reduce the outstanding debt on the consolidated balance sheet upon funding. Warrants issued prior to the date of funding are accounted for as a deferred financing asset within "Prepaid expenses and other current assets" on the consolidated balance sheet and will be reclassified to debt issuance costs on the date of funding. The change in fair value of warrants each balance sheet date are recognized in the consolidated statements of operations and comprehensive loss after the issuance date.

Recently Adopted Significant Accounting Policies

Refer to Note 2, "Summary of Significant Accounting Policies," in the accompanying notes to our consolidated financial statements for the nine months ended September 30, 2025 and 2024 appearing elsewhere in this Quarterly Report on Form 10-Q for a discussion of recently issued accounting standards.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.

Emerging Growth Company ("EGC") Status

As an EGC under the JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Other exemptions and reduced reporting requirements under the JOBS Act for EGCs include presentation of only two years of audited financial statements in a registration statement for an IPO and in an Annual Report on Form 10-K, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board ("PCAOB") regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements.

We may remain classified as an EGC until December 31, 2026, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of any year before that time, or if we have annual gross revenues of $1.235 billion or more in any fiscal year, we would cease to be an EGC as of December 31 of the applicable year. We also would cease to be an EGC if we issue more than $1.0 billion of non-convertible debt over a three-year period.