Instil Bio, Inc. — Q1 2024 Form 10-Q
Business context and reporting period
Clinical-stage biopharmaceutical company focused on novel therapies, including CoStAR-engineered tumor-infiltrating lymphocyte (TIL) technology. This unaudited report covers the three months ended March 31, 2024; comparisons are with Q1 2023. Instil has no product sales or approved products and reported no active clinical trials.
In January 2024, the company approved a restructuring plan to close its Manchester, UK manufacturing and clinical operations and discontinue the ITIL-306-202 trial. It intends to retain selected staff for early-stage research and to support a China collaboration. The collaborator has completed initial feasibility studies for a potential investigator-initiated NSCLC trial using the company’s FRα CoStAR construct and has an option to exclusively license the product in China and Taiwan.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $7.3 million | $20.7 million |
| General and administrative expense | $12.4 million | $13.2 million |
| Restructuring and impairment charges | $4.3 million | $24.6 million |
| Total operating expenses / operating loss | $24.0 million | $58.4 million |
| Net loss | $24.3 million | $57.1 million |
| Basic and diluted net loss per share | $3.74 | $8.77 |
| Net cash used in operating activities | $14.4 million | $34.7 million |
Margins are not meaningful because the company had no revenue. The lower operating expenses and net loss chiefly reflect reduced headcount and lower restructuring and impairment charges. Interest expense rose to $2.0 million from $0.6 million, primarily due to the construction loan.
At March 31, 2024, cash and cash equivalents were $5.5 million, marketable securities $148.3 million, and long-term investments $7.7 million, totaling $161.5 million. Total assets were $306.3 million; current liabilities were $11.4 million and stockholders’ equity was $205.8 million. The company reported an accumulated deficit of $605.3 million. Management believes existing cash, cash equivalents and investments will fund operating expenses and capital requirements beyond 2026, subject to assumptions; a sale or lease of the Tarzana facility or subleases could extend runway.
Loan payable was $81.7 million net of debt issuance costs ($82.8 million principal). It is secured by the Tarzana property, bears interest at one-month SOFR plus 5.25%, and is due July 2025, with an option to extend to July 2027. The company reported compliance with loan covenants, including a requirement to maintain consolidated net worth and liquid assets of at least $85 million as defined in the loan agreement. Operating cash use was partly offset by $9.2 million of net investing cash inflow, primarily from marketable-security maturities and purchases; there were no financing proceeds in the quarter.
Material changes, outlook and risks
- R&D expense fell $13.4 million year over year, primarily from reduced employee costs and lower facilities and overhead costs. G&A declined $0.8 million.
- Q1 restructuring charges included $2.5 million of impairment on assets held for sale, $0.7 million of employee termination benefits and $0.5 million of contract termination expense, among other items. The company expects up to $1.3 million of additional 2024 Plan charges by year-end; estimates may change. The UK workforce reduction is expected to be substantially complete by the end of 2024.
- The company is evaluating a potential sale or lease of the Tarzana manufacturing site and subleases of other facilities, but gives no assurance that transactions will occur or recover carrying value. Further impairment charges are possible.
- Management expects near-term R&D and G&A expenses to generally decrease as the company operates at reduced scale. It expects losses to continue and states that revenue from product sales is not expected for several years, if ever. It may need additional capital in the future; financing may be unavailable or dilutive, and collaboration terms could require relinquishing rights.
- Development is highly uncertain: the China IIT would be led by the collaborator, with Instil’s control of trial conduct and access to results limited. The filing notes that data from China may not be accepted by U.S. regulators. Manufacturing, regulatory, funding, competition and collaboration risks remain significant.
- No material legal proceedings were reported. Management concluded disclosure controls and procedures were effective at March 31, 2024; no material change in internal control over financial reporting was reported during the quarter.
Important facts for investors to verify
- Whether the collaborator advances the planned China IIT, the timing and availability of trial data, and the terms or exercise of its China/Taiwan licensing option.
- Actual cash burn and whether the stated runway beyond 2026 remains achievable as research, business-development and restructuring plans evolve.
- Progress and economics of a potential Tarzana sale or lease and other facility subleases, including any resulting impairment charges.
- Loan covenant compliance, the interest-rate cap/swap terms, and repayment or extension plans ahead of the July 2025 maturity.
- Actual restructuring costs versus estimates, including the remaining UK closure and contract termination costs.
- Potential dilution and trading supply: 6,503,913 common shares were outstanding at March 31, 2024 and May 8, 2024; the filing also describes equity awards and registration rights that could permit additional shares to enter the market.