Instil Bio, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2021. Amounts are in U.S. dollars; financial statement amounts below are in millions unless stated otherwise.
Business context
Instil Bio is a clinical-stage biopharmaceutical company developing autologous tumor-infiltrating lymphocyte (TIL) cell therapies for cancer. Its lead candidate, ITIL-168, is being developed for advanced melanoma; the company is also developing engineered TIL candidates using its CoStAR platform. It has no approved products and has not generated product-sales revenue.
Key financial results
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0.042 | $0 | $0.087 |
| Research and development expense | $21.2 | $2.2 | $35.6 | $4.2 |
| General and administrative expense | $14.2 | $2.4 | $23.2 | $4.3 |
| Net loss | $(35.3) | $(9.2) | $(58.4) | $(13.3) |
| Net loss per share, basic and diluted | $(0.27) | $(0.55) | $(0.71) | $(0.89) |
| Operating cash flow | Not separately stated | Not separately stated | $(50.0) | $(5.6) |
At June 30, 2021, cash and cash equivalents were $566.7 million; total current assets were $574.5 million and current liabilities $23.8 million. Total liabilities were $37.2 million, including $12.2 million of contingent consideration; the filing reports no borrowings or other debt balance. Stockholders’ equity was $635.5 million. No gross margin or operating margin is reported; revenue was negligible relative to operating expenses.
Investing cash outflow for the six months was $17.6 million, primarily property and equipment purchases. Financing provided $392.8 million, principally $339.0 million net IPO proceeds and $52.5 million from preferred-stock issuance. Cash, cash equivalents and restricted cash increased by $325.3 million.
Material changes versus prior comparable periods
- Operating expenses rose sharply as the company expanded clinical development, clinical manufacturing, headcount and facilities. Six-month R&D increased $31.4 million and G&A increased $18.9 million year over year.
- Cash and cash equivalents rose from $241.7 million at December 31, 2020 to $566.7 million at June 30, 2021, largely reflecting the IPO and Series C financing.
- The March 2021 IPO raised $339.0 million net. Outstanding preferred stock converted into common stock; 128.7 million common shares were outstanding at June 30.
- Q2 2020 and first-half 2020 interest and other expense included a $4.4 million loss related to the issuance of Series A preferred stock; this did not recur in 2021.
Outlook, commentary and risks
- Management expects existing cash and IPO proceeds to fund operating expenses and capital requirements into 2023, based on assumptions that could prove incorrect. It expects losses, R&D, G&A and capital expenditures to increase; no revenue guidance was provided.
- Management planned to initiate a Phase 2 ITIL-168 trial in advanced melanoma in the second half of 2021, with a potential BLA submission in 2023, and Phase 1 trials in additional indications in the first half of 2022. It anticipated filing an IND for lead CoStAR-TIL candidate ITIL-306 in the first half of 2022. These are plans, not assured outcomes.
- The ITIL-168 manufacturing technology transfer from Manchester to Tarzana was underway; the company disclosed it had not yet successfully produced a batch at the new facility and would need to establish comparability. Construction and facility execution are material risks.
- Tarzana development commitments were $43.0 million at June 30, 2021, versus $6.3 million at year-end 2020. Future minimum operating lease payments were $9.3 million. The maximum unpaid Immetacyte milestone consideration was $14.8 million, contingent on future events.
- Key risks include clinical and regulatory uncertainty, manufacturing scale-up and comparability, trial enrollment, competition, dependence on future funding, and potential COVID-19 disruption. The company said COVID-19 had not materially affected operations to date, while noting future effects were uncertain.
- The company reported no material legal proceedings. Management concluded disclosure controls were effective at period-end and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether ITIL-168’s planned Phase 2 trial began on schedule and whether clinical data support the stated development timeline.
- Progress, yield and comparability results for manufacturing at Tarzana, and the total cost and timing of facility construction.
- Actual cash burn and capital spending relative to management’s runway estimate into 2023, including the $43.0 million construction commitment.
- Future financing needs, dilution, and the timing and likelihood of contingent milestone payments.
- Potential stock supply: the filing stated that substantial shares subject to IPO lock-ups could become eligible for sale beginning September 15, 2021, subject to possible earlier release.