Instil Bio, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Instil Bio is a clinical-stage biopharmaceutical company developing autologous tumor-infiltrating lymphocyte (TIL) cell therapies. It has no approved products and does not generate product-sales revenue.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | $0 | $44,000 |
| Research and development expense | $14.4 million | $2.0 million |
| General and administrative expense | $9.0 million | $1.9 million |
| Operating loss | $23.4 million | $3.9 million |
| Net loss | $23.1 million | $4.1 million |
| Net loss per share, basic and diluted | $0.66 | $0.31 |
| Operating cash used | $17.7 million | $2.3 million |
At March 31, 2021, cash and cash equivalents were $609.6 million, versus $241.7 million at December 31, 2020; cash, cash equivalents and restricted cash totaled $609.7 million. Total assets were $696.1 million, total liabilities $31.0 million, and stockholders’ equity $665.2 million. The balance sheet reports no debt; it includes $12.5 million of contingent consideration related to the Immetacyte acquisition. The company had an accumulated deficit of $68.1 million.
Investing cash use was $9.1 million, mainly for property and equipment. Financing provided $394.7 million, including $340.9 million net IPO proceeds, $52.5 million from Series C preferred shares, and $1.4 million from stock-option exercises. The IPO closed March 23: 18.4 million shares were sold at $20 per share for $339.2 million net proceeds. Preferred shares converted into common stock at the IPO.
Changes and context
- Net loss increased by $19.0 million year over year as operating expenses rose $19.5 million. The company attributed higher R&D expense to expanded headcount, clinical and manufacturing activity, and facility costs; higher G&A reflected increased staffing, IPO-related consulting, facilities and insurance.
- The 2020 comparison is not fully like-for-like: Instil acquired Immetacyte in March 2020, and the prior-period revenue was related to Immetacyte.
- Property and equipment, net, rose to $62.9 million from $55.3 million. The company is developing its Tarzana, California site; $19.0 million was contractually committed to the project at quarter-end.
Outlook, risks and unusual items
- Management estimated that existing cash and IPO proceeds would fund operating expenses and capital requirements into 2023, based on assumptions that may prove incorrect. It expects continued losses and increases in R&D, G&A and capital spending; no revenue guidance was provided.
- Plans included initiating a Phase 2 ITIL-168 trial for advanced melanoma in the second half of 2021, Phase 1 trials in additional indications in the first half of 2022, and filing an IND for lead CoStAR-TIL candidate ITIL-306 in the first half of 2022. These are plans, not assured outcomes.
- A significant execution risk is manufacturing: the technology transfer of ITIL-168 from Manchester to Tarzana was still underway, and the company disclosed it had not yet successfully produced a batch at the new facility. Comparability testing is required before relying on that manufacturing process for trials.
- Other key risks include clinical and regulatory uncertainty, trial enrollment and safety, complex cell-therapy manufacturing and supply, competition, and possible COVID-19 disruption. Management said COVID-19 had not materially affected results or fundraising to date, but future impacts were uncertain.
- Maximum unpaid Immetacyte milestone consideration was $14.8 million. Future minimum operating lease payments were $5.9 million. The company reported no material legal proceedings and said disclosure controls were effective; no material internal-control changes were reported.
- The filing notes that 110.5 million shares were subject to lock-up agreements scheduled to expire September 15, 2021, with underwriters able to release holders earlier. No cash dividends had been declared.
Investor verification priorities
- Track whether the ITIL-168 Phase 2 trial and ITIL-306 IND milestones occur on the stated timelines, and review trial design, enrollment, safety and results.
- Confirm successful Tarzana manufacturing, comparability with Manchester-produced material, and progress on the facility build-out and committed spending.
- Monitor quarterly cash burn and capital expenditure against management’s stated runway into 2023; the estimate is assumption-dependent.
- Review the terms, timing and probability assumptions behind the $12.5 million fair-value contingent consideration and potential milestone payments.
- Assess potential share-supply effects from lock-up expirations, equity awards, and any early lock-up releases.