FDA Rejects IO Biotech's Cylembio BLA Submission, Morgan Stanley Sees Uncertainty Ahead

IO Biotech's (IOBT) Cylembio BLA submission has been opposed by the FDA, increasing near-term uncertainty. The company's stock price has been negatively impacted. IOBT had hoped to receive FDA approval for its lead product, Cylembio. Morgan Stanley has downgraded IOBT to Underweight from Equal Weight.

IO Biotech Inc (NASDAQ: IOBT) experienced a significant setback on September 12, 2025, when the U.S. Food and Drug Administration (FDA) recommended against submitting a Biologics License Application (BLA) for its lead product, Cylembio, a cancer vaccine candidate. The FDA's decision, based on results from the IOB-013 trial, where Cylembio plus pembrolizumab improved progression-free survival but narrowly missed statistical significance, has increased near-term uncertainty for the biopharmaceutical company IO Biotech stock plummets after FDA recommends against BLA submission^[1].

The company's stock price plummeted by 74.3% following the news, reflecting investor concerns about the potential impact on the company's financial prospects. IO Biotech's president and CEO, Mai-Britt Zocca, acknowledged the setback but expressed confidence in the therapeutic potential of Cylembio. The company plans to continue discussions with the FDA to align on the design of a potential new registrational study for Cylembio and intends to engage with European regulators to determine a potential pathway for submission in the EU IO Biotech stock plummets after FDA recommends against BLA submission^[1].

In response to the FDA's recommendation, IO Biotech has announced a restructuring plan to conserve capital. This includes a 50% reduction in full-time employees and a non-recurring charge of between $1.0 million to $1.5 million in the third quarter of 2025. Despite these challenges, the company expects its current capital to fund operations into the first quarter of 2026 IO Biotech stock plummets after FDA recommends against BLA submission^[1].

The setback has also led to a downgrade of IO Biotech's stock by Morgan Stanley, which has downgraded the stock to Underweight from Equal Weight. The investment firm believes the FDA's recommendation, combined with the company's limited cash, drives uncertainty and creates near-term challenges for its lead melanoma program. However, Morgan Stanley retains a positive outlook for Cylembio's potential in other indications such as squamous cell carcinoma of head and neck and non-small cell lung cancer. The investment firm has slashed its price target to $0.39 from $4 IO Biotech Faces Setback as FDA Opposes Cylembio BLA Submission, Morgan Stanley Says^[3].

IO Biotech's challenges underscore the importance of regulatory approval in the biopharmaceutical industry. As the company navigates these uncertainties, investors will closely monitor its progress in securing regulatory approval and its ability to execute its restructuring plan effectively.