Shares of IO Biotech Inc (NASDAQ:IOBT) declined 15.4% on Monday after Piper Sandler reduced its rating on the company in response to IO Biotech's announcement that it is undertaking a strategic review.
Analyst Allison M. Bratzel moved her rating from Overweight to Neutral and cut the price target to $0.50 from $3.00, citing uncertainty surrounding the process. Bratzel noted that the company is assessing a range of options intended to maximize shareholder value, including a potential merger, business combination, asset sale or liquidation. The company provided only limited information and said it would not provide additional updates until its Board of Directors deems it appropriate.
In her assessment, Bratzel wrote that the scientific premise behind IO Biotech's T-win platform and its lead candidate Cylembio appears promising, but that the company is constrained by capital. She added: "no assurance of these strategic alternatives panning out favorably, or that a transaction will be completed on attractive terms." The analyst's revised price target of $0.50 per share rests on roughly $0.20 per share in net cash plus what she describes as salvage value for the company's pipeline.
IO Biotech has faced financial pressure despite what some market observers consider encouraging technology in its immunotherapy pipeline. The stock reaction reflects investor concern about the firm's limited cash resources and how those constraints intersect with the timeline required to advance its development programs.
The company's announcement did not outline a timetable for the strategic review, nor did it identify potential partners or specific transaction structures. Management's statement limited public commentary and deferred further disclosures pending board decisions.
Given the combination of a reduced analyst rating, a sharply lower price target and the company's explicit consideration of extreme options such as liquidation, investor focus will likely remain on any future disclosures related to the strategic review and the company's financing position.
Readout: Piper Sandler downgraded IO Biotech to Neutral and cut its price target to $0.50 from $3.00 after the company announced a strategic review. The firm is weighing mergers, business combinations, asset sales or liquidation, and will provide no further updates until its board decides otherwise.