Executive Summary / Key Takeaways

• Instil Bio has undergone a significant strategic transformation, pivoting from its initial focus on tumor-infiltrating lymphocyte (TIL) therapies to concentrate on developing novel bispecific antibodies, led by the in-licensed candidate AXN-2510/IMM2510.
• The company reported a net loss of $28.2 million in Q1 2025, reflecting ongoing R&D investment and substantial restructuring charges ($16.1 million), primarily related to the planned sale of its Tarzana facility.
• AXN-2510/IMM2510, a PD-L1xVEGF bispecific antibody, is positioned as a potentially differentiated therapy leveraging a unique VEGF trap and PD-L1 anchoring mechanism, with initial clinical data from a China trial expected in 2H 2025.
• Instil anticipates initiating a U.S. clinical study for AXN-2510/IMM2510 in first-line NSCLC combination therapy before the end of 2025, marking a critical step in its new development strategy.
• While the company believes its cash position of $111.8 million as of March 31, 2025, is sufficient beyond 2026, successful execution of its clinical pipeline and potential future acquisitions will necessitate substantial additional funding in a highly competitive and capital-intensive biotechnology landscape.

A Transformative Shift in Pursuit of Novel Therapies

Instil Bio, Inc. ($TIL) is a clinical-stage biopharmaceutical company that has recently undergone a profound strategic pivot. Founded in 2018 with an initial focus on developing tumor-infiltrating lymphocyte (TIL) therapies, the company invested significantly in this area, including building manufacturing infrastructure like the Tarzana, California facility. However, challenges with its TIL program, including the ITIL-168 and ITIL-306 clinical trials, led to a series of restructurings starting in January 2023. These actions culminated in the discontinuation of the TIL development program, the closure of UK manufacturing and clinical operations, significant workforce reductions, and a plan to sell the Tarzana facility, marking a decisive shift away from its foundational technology.

This strategic reorientation has centered Instil on in-licensing and developing novel therapeutic candidates. A pivotal moment occurred in August 2024 with the in-licensing of certain bispecific antibodies, including AXN-2510/IMM2510, from ImmuneOnco Biopharmaceuticals (688065). This agreement granted Instil (via its subsidiary Axion Bio) exclusive global rights outside Greater China, establishing AXN-2510/IMM2510 as the new lead product candidate and fundamentally reshaping the company's pipeline and strategic direction towards bispecific antibodies for solid tumors.

The competitive landscape in oncology, particularly in solid tumors and non-small cell lung cancer (NSCLC), is intensely competitive. Instil faces established pharmaceutical giants like Bristol-Myers Squibb (BMY) and Merck (MRK), with broad immunotherapy portfolios and significant financial resources, as well as specialized biotechnology firms such as Iovance Biotherapeutics (IOVA), a leader in the emerging TIL therapy space, and others like Akeso Therapeutics (9926), AstraZeneca (AZN), Beigene (BGNE), and Novartis (NVS), all vying for market share with various modalities including checkpoint inhibitors, targeted therapies, and other novel antibodies. These larger competitors often possess substantially greater financial, technical, and human resources, along with extensive experience in drug development, regulatory approval, and commercialization. Instil's strategic positioning now hinges on its ability to differentiate its bispecific antibody technology and execute efficiently in this crowded field, leveraging its focused approach against the broader portfolios and scale of its rivals.

Technological Edge and Clinical Advancement

At the heart of Instil's new strategy is AXN-2510/IMM2510, a novel PD-L1xVEGF bispecific antibody. This candidate is designed to target two key pathways involved in tumor growth and immune evasion. The technology is described as differentiated, featuring a unique VEGF trap that binds multiple VEGF receptor ligands beyond just VEGF-A. It also leverages the PD-L1 component to anchor the antibody within the tumor microenvironment, potentially concentrating the therapeutic effect where it's needed most. Furthermore, the antibody is engineered for enhanced antibody-dependent cellular cytotoxicity (ADCC), aiming to direct the killing of tumor cells that express PD-L1.

While specific quantifiable performance metrics for this technology compared to other bispecifics or existing therapies are not detailed, the stated goals imply potential advantages in tumor targeting, immune activation, and broader anti-angiogenic effects. The strategic intent behind focusing on these differentiators is to create a competitive moat in solid tumors, particularly in indications like NSCLC where both PD-L1 and VEGF pathways are implicated and where current therapies, while effective for many, still leave significant unmet needs.

Clinical development for AXN-2510/IMM2510 is underway, primarily led by ImmuneOnco in China under the collaboration agreement. ImmuneOnco is conducting a Phase 1 monotherapy trial in various advanced solid tumors, which had enrolled over 100 patients as of January 2025. More critically for Instil's near-term outlook, ImmuneOnco is also running a Phase 1b/2 trial of AXN-2510/IMM2510 in combination with chemotherapy in first-line advanced/metastatic NSCLC patients in China. The first patient in this combination trial was dosed in January 2025, and ImmuneOnco anticipates presenting initial clinical data from the first-line NSCLC cohort in the second half of 2025. This data is expected to be valuable in informing Instil's development strategy. Instil itself is targeting the initiation of a potential U.S. clinical study for AXN-2510/IMM2510 in combination with chemotherapy in first-line NSCLC before the end of 2025, contingent upon receiving the necessary regulatory approvals. Management has indicated that positive data from ImmuneOnco's trial could potentially position Instil to open a global registrational study in this indication.

Financial Footprint and Capital Requirements

Instil's financial performance in the first quarter of 2025 reflects its transition and ongoing investment in the new pipeline. The company reported a net loss of $28.2 million for the three months ended March 31, 2025, an increase from the $24.3 million net loss in the same period of 2024. This brings the accumulated deficit to a substantial $683.3 million as of March 31, 2025, underscoring the significant investment required in early-stage biopharmaceutical development.

Operating expenses saw shifts aligned with the restructuring and strategic pivot. Research and development expenses decreased by $1.9 million year-over-year to $5.4 million in Q1 2025. This reduction was primarily driven by a $2.6 million decrease in employee-related costs due to reduced headcount and a $0.8 million decrease in facility and overhead expenses, outcomes of the discontinued TIL program. However, these savings were partially offset by a $1.5 million increase in costs associated with the ImmuneOnco collaboration, highlighting the new focus area. General and administrative expenses also decreased by $3.3 million to $9.1 million, similarly benefiting from reduced employee-related costs ($2.6 million) and other operational savings.

A significant factor impacting the Q1 2025 results was a sharp increase in restructuring and impairment charges, totaling $16.1 million compared to $4.3 million in Q1 2024. This $11.8 million increase was largely attributable to a $14.0 million increase in impairment recognized on long-lived assets held for sale, predominantly related to the Tarzana facility. This reflects the financial impact of the decision to divest the facility following the change in strategic direction. Other income/expense showed a positive swing of $2.7 million, primarily due to $2.2 million in rental income from the leased Tarzana facility and a $0.9 million decrease in interest expense following the refinancing of the facility's debt.

As of March 31, 2025, Instil held cash, cash equivalents, restricted cash, marketable securities, and long-term investments totaling $111.8 million. This includes $15.4 million in cash and cash equivalents, $1.0 million in restricted cash, $88.3 million in marketable securities, and $7.2 million in long-term investments. The company believes this existing capital is sufficient to fund operations and capital expenditures beyond 2026, based on its current operating plan. The potential sale of the Tarzana facility, if successful, could further extend this cash runway.

However, the company acknowledges the need for substantial additional funding in the future to support its clinical development activities, particularly as AXN-2510/IMM2510 advances and as it pursues potential in-licensing or acquisition opportunities. Future capital requirements are dependent on numerous factors, including the pace and cost of clinical trials, manufacturing expenses, regulatory outcomes, and commercialization costs. Instil has access to potential funding sources, including a shelf registration statement allowing the sale of up to $200 million in securities and an ATM Sales Agreement for up to $100 million in common stock (none sold as of Q1 2025). Raising additional capital may lead to stockholder dilution or involve restrictive debt covenants.

Risks and Future Considerations

Investing in Instil Bio involves significant risks inherent in the clinical-stage biopharmaceutical sector. The company has a limited operating history focused on its new strategy and no track record of successfully completing clinical trials or commercializing products. It has incurred substantial losses since inception and expects this to continue, with no guarantee of achieving profitability.

The success of Instil's new direction hinges heavily on the clinical development and potential regulatory approval of AXN-2510/IMM2510. As an early-stage candidate, it faces a high risk of failure in clinical trials. The regulatory approval process is lengthy, complex, and unpredictable. Reliance on ImmuneOnco for clinical trial data from China introduces risks regarding the acceptance of this data by the FDA and other non-Chinese regulatory authorities, as well as limited control over the trial conduct. Manufacturing biologics is complex, and reliance on third-party CDMOs (including ImmuneOnco's) poses risks to supply, cost, quality, and regulatory compliance.

The competitive landscape is a major challenge. The NSCLC market, a key target for AXN-2510/IMM2510, is dominated by established players with approved products and deep pipelines. Instil's ability to compete will depend on demonstrating a compelling advantage in efficacy, safety, or convenience, and securing favorable pricing and reimbursement in a healthcare environment increasingly focused on cost containment. Legislative and regulatory changes, such as those introduced by the ACA and IRA (including drug price negotiation provisions), could negatively impact future revenue and profitability. The uncertainty surrounding the sale of the Tarzana facility and potential impacts from U.S.-China trade relations on the ImmuneOnco collaboration also represent notable risks.

Conclusion

Instil Bio has decisively shifted its focus, moving beyond its initial TIL therapy challenges to concentrate on the potential of bispecific antibodies, led by AXN-2510/IMM2510. This strategic pivot represents a high-stakes play, aiming to leverage the potential differentiation of its lead candidate in competitive solid tumor markets like first-line NSCLC. The upcoming initial clinical data from the China trial in the second half of 2025 and the planned initiation of a U.S. study before the end of 2025 are critical milestones that will provide the first tangible readouts on the potential of this new direction.

While the company's current cash position provides runway beyond 2026, successful advancement through costly clinical trials and potential future business development will necessitate further capital. The investment thesis for $TIL is now fundamentally tied to the clinical and commercial success of AXN-2510/IMM2510 and the company's ability to execute its new pipeline strategy in a challenging and competitive environment, balancing the promise of its differentiated technology against significant financial and development risks.