Company: IOBT
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0000950170-25-047744
Chunk: 132

Company: IO Biotech, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7
Chunk 132
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 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. For the years ended December 31, 2024 and 2023, we issued 3,087,382 and 2,171,841 stock options, respectively, with a weighted average exercise price of $1.60 and $2.02, respectively, to certain employees, board members and advisors from the 2021 Equity Incentive Plan.  For the years ended December 31, 2024 and 2023, we issued 310,000 and 348,153 stock options, respectively, with a weighted average exercise price of $1.58 and $1.86, respectively, from the 2023 Inducement Plan. 

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