IO Biotech considers next move after getting positive lung cancer data

Biotech company IO Biotech now has positive preliminary data from a phase II study testing the company's drug candidate in combination with MSD's cancer drug Keytruda. The next step is a crucial phase III study in 2021, and to finance this, the company will either find a partner or look for investors.

Mai-Britt Zocca, CEO, IO Biotech Photo: IO Biotech/ PR

Copenhagen-based IO Biotech has taken a big step closer to the billion-dollar market for lung cancer treatment.

Brand new data from the company's combined phase I and II study, which tested candidate IO102, is positive according to IO Biotech.

"It is huge, and a big milestone for IO Biotech," says Mai-Britt Zocca, CEO of IO Biotech, to MedWatch.

US pharmaceutical giant MSD was also involved in the study, as IO Biotech's immune-modulating vaccine was tested in combination with MSD's multi-blockbuster drug Keytruda (pembrolizumab).

The idea is that IO102 will strengthen the effect of PD-1 inhibitors like Keytruda.

It is huge, and a big milestone for IO Biotech

Mai-Britt Zocca, CEO of IO Biotech

The two drugs have been tested as a first treatment option for non-small-cell lung carcinoma (NSCLC). IO102 will be tested on newly-diagnosed metastasized lung cancers in combination with Keytruda alone, and in combination with Keytruda and chemotherapy.

"It is the first time that the drugs are being tested in a randomized study. It hasn't been done before with a peptide-based vaccine product like ours, and now that we can see the positive data, it is nothing less than huge," says Zocca.

Keytruda is already used as a first treatment option, and IO Biotech and MSD have therefore been able to start testing on patients who have not had any previous treatment for metastasized NSCLC.

"In short, the new data shows that when we use our vaccine as well as the standard treatment, which is Keytruda alone, then we can see a better effect in the patients treated with this combination," Zocca says.

Considering future financing

Around 96 patients are participating in the international phase I/II study, which is split across 17 locations in Europe. The study is financed by IO Biotech, while MSD is contributing by providing the study with as much Keytruda as it needs, which has so far been worth over USD 10 million.

In 2019 alone, MSD/Merk generated a USD 11.1 billion revenue with Keytruda, which is approved for use in 11 indications.

According to a new report from EvaluatePharma, MSD/Merk is expected to reach yearly sales of USD 17 billion (DKK 114 billion) by 2024, which would make Keytruda the world's best-selling drug.

With the positive phase II data in the bank, the next step for IO Biotech is a much bigger and potentially pivotal phase III study, which according to Zocca may start at the beginning of next year.

"The current study will be completed by the end of 2020 - that is when we will have the final reports of the study ready, and we will therefore be able to start the next, larger study over the course of 2021. We will need to recruit many more patients - several hundred," Zocca estimates.

A study like this costs money - a lot of money, which IO Biotech now needs to find.

"It is clear that we need to raise more money for further development. The question is whether we should find a partner, or whether we will raise the money for it ourselves. We haven't made a decision yet," says Zocca.

According to its last two yearly budget reports, IO Biotech has managed to double its deficit from the previous year - twice. By the end of 2018, which is the latest report available to the public, it was DKK - 54 million (USD -7.8 million). If the company did not manage to raise capital, it would not be able to keep running after 2019, the report reads.

Today, Zocca reveals that since the release of that report, the company has managed to raise money, so operations are financed until the end of 2020.

"We have good backing from our current investors to investigate the possibilities for future financing," she says, without revealing who they received money from, or how much they gained.

Good data increases financing possibilities

IO Biotech was founded at the start of 2015 and based on research conducted at Herlev Hospital's center for Cancer Immune Therapies (CCIT).

Investors in IO Biotech include Lundbeckfonden Emerge, Sunstone Capital and Novo Seeds, which have invested a total of DKK 150 million (USD 22 million) in the company.

Novo Seeds and Lundbeckfonden own between 25 and 33.3 percent of IO Biotech, the company (CVR) register shows, while Sunstone Capital owns between 20 and 25 percent.

In the 2019 yearly accounting report, which was released at the start of 2019, IO Biotech wrote that the company expected to close one more investment round for existing investors, and possibly new investors, before the year was over.

At the life science conference Bio-Europe, which was held at Bella Center in Copenhagen at the very end of the year, Zocca announced that she was on the hunt for a USD 54 million (DKK 370 million) investment during a presentation about the company.

So what is the status on that - is that investment on its way?

"I can say that the new data we have obtained has given us a reason to look at our plans again and re-evaluate our fundraising. That is what we are doing at the moment," says Zocca.

Does the fact that you can show off good data give you a better chance of raising money?

"Yes it does, absolutely. We are going to New York next week for an advisory board meeting, and I believe that over the course of the second quarter this year, we will have a concrete plan for how to raise money for further development," says Zocca.

On the market in 2025

Zocca thinks there is a "very high" likelihood that IO102 will make it to market, and if everything goes to plan, the product launch will be in 2025.

"I don't want to put a percentage on it, but the new results are very promising, and when you put all of the pieces together, there is a very good change that we will reach our goal," says Zocca.

As well as Zocca, a number of familiar names in Danish biotech with connections to CCIT are behind the firm, including Mads Hald Andersen, founder of listed company Rhovac, who also founded Survac, which just like IO Biotech, developed immune therapies for cancer. Survac was sold to Merk.

The new results are very promising, and when you put all of the pieces together, there is a very good change that we will reach our goal

Mai-Britt Zocca, CEO of IO Biotech

IO Biotech currently has seven targets in its pipeline, and is still adding more. As well as IO102, IO Biotech is testing drug candidate IO103 in a phase II study that has just started at Herlev hospital.

"We have just started an investigator-initiated phase II study of our other lead candidate at Herlev hospital. This candidate is a vaccine for PD-L1, and the preliminary data is very promising here as well," says Zocca.

NSCLC is the most common type of lunch cancer. It makes up around 85 percent of all cases, and five-year survival rate for patients with metastasized, stage 4 lung cancer is estimated to be 2 percent.

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