Instil Bio Inc.
11/13/2025 | Press release | Distributed by Public on 11/13/2025 06:09
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2024 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 4, 2025. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "we," "us" and "our" refer to Instil Bio, Inc. and our consolidated subsidiaries.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, expectations regarding our collaborations and clinical trials, future financial position, future revenues, projected costs, prospects, and plans and objectives of management. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
We are a clinical-stage biopharmaceutical company focused on developing a pipeline of novel therapies. We are advancing the development of our lead product candidate, AXN-2510/IMM2510, or '2510, a bispecific antibody targeting both programmed death-ligand 1, or PD-L1, and the family of vascular endothelial growth factors, or VEGFs, in solid tumor cancers, and we seek to in-license or acquire and develop additional novel therapeutic candidates in diseases with significant unmet medical need.
In August 2024, our wholly owned subsidiary, Axion Bio, Inc., or Axion Bio, in-licensed certain bispecific antibodies, including '2510 and AXN-27M/IMM27M, a monoclonal antibody targeting cytotoxic T-lymphocyte associated antigen 4, from ImmuneOnco Biopharmaceuticals (Shanghai) Inc., or ImmuneOnco. '2510, the lead in-licensed product candidate, is a novel and differentiated PD-L1xVEGF bispecific antibody in development for the treatment of multiple solid tumor cancers. Pursuant to the license and collaboration agreement with ImmuneOnco, or the IO Collaboration Agreement, Axion Bio has an exclusive license to research, develop, manufacture and commercialize these product candidates outside of China, including mainland China, Hong Kong, Macau and Taiwan, or Greater China. ImmuneOnco retains development and commercialization rights in Greater China.
ImmuneOnco is conducting a Phase 1 open label trial in China of '2510 as monotherapy in patients with advanced solid tumors that have failed prior therapies, including triple-negative breast cancer, or TNBC, non-small cell lung cancer, or NSCLC, hepatocellular carcinoma, renal cell carcinoma, and rare solid tumors including soft tissue sarcomas and thymic cancer. ImmuneOnco has announced that 150 patients have been enrolled in this clinical trial as of June 30, 2025. In September 2025, ImmuneOnco presented preliminary efficacy (as of August 6, 2025) and safety (as of June 13, 2025) data from this study in patients with previously treated squamous NSCLC at the 2025 World Conference on Lung Cancer. ImmuneOnco reported that:
•23 patients with squamous NSCLC had been treated with monotherapy '2510.
•All patients had failed previous PD-(L)1 inhibitor plus platinum-doublet chemotherapy, and six patients had previously received VEGF-directed therapy.
•Patients were treated with '2510 at different dose levels (3, 6, 10, or 20 mg/kg Q2W), with the majority of patients treated at the 20 mg/kg Q2W dose level.
•In the 17 efficacy evaluable patients, the objective response rate was 35.3%, with the majority of responses seen in patients with negative and low PD-L1 TPS scores.
•In general, '2510 was well tolerated and had a manageable safety profile in the Phase 1 trial, with mostly manageable low grade infusion reactions in the first cycle, as previously reported. In the squamous subset there were two Grade 3 VEGF-related adverse events of proteinuria and bleeding.
ImmuneOnco is also conducting a Phase 2 open label, multicenter clinical trial of '2510 in combination with chemotherapy in front-line patients with advanced/metastatic NSCLC in China. In July 2025, ImmuneOnco announced the following preliminary safety and efficacy data from the Phase 2 trial (as of July 1, 2025):
•33 patients were dosed at 10 mg/kg of '2510, with 21 patients having at least one tumor assessment (efficacy evaluable).
•Partial responses were observed in 62% of efficacy evaluable patients, comprising partial responses in 80% (8/10) of patients with squamous NSCLC and 46% (5/11) of patients with non-squamous NSCLC. The majority of efficacy evaluable patients had only one tumor assessment at data cut-off.
•No dose-limiting toxicities were observed in the 33 safety evaluable patients. In these patients, there were no treatment-related adverse events, or TRAEs, leading to dose reduction or death, and only one TRAE leading to drug discontinuation. The most common Grade 3+ TRAEs were hematologic, with uncommon clinical sequelae.
•Adverse events typically associated with VEGF inhibition (e.g., hypertension, proteinuria, hemoptysis) and immune-related adverse events were uncommon and generally low-grade and infusion-related reactions were nearly all low-grade.
ImmuneOnco has also announced it is pursuing additional clinical trials in China of '2510, including studies of '2510 in combination with each of AXN-27M/IMM27M and IMM01 for advanced solid tumors. IMM01 is a recombinant human signal-regulatory protein alpha (SIRPα) immunoglobulin G1 (IgG1) fusion protein targeting CD47, currently in development by ImmuneOnco.
In July 2025, we announced the clearance of an Investigational New Drug (IND) application for '2510 by the U.S. Food and Drug Administration. Axion Bio has initiated a Phase 1 clinical trial of '2510 as monotherapy for adult patients with relapsed/refractory solid tumors, and the first patient was dosed in this study in October 2025.
Since inception, we have had significant operating losses. Our net loss was $13.6 million for the three months ended September 30, 2025 and $63.2 million for the nine months ended September 30, 2025. As of September 30, 2025, we had an accumulated deficit of $718.3 million. As of September 30, 2025, we had cash, cash equivalents, restricted cash, marketable securities and long-term investments of $83.4 million, which consists of $5.8 million in cash and cash equivalents, $0.3 million in restricted cash, $73.9 million in marketable securities and $3.4 million in long-term investments. We expect to continue to incur net losses for the foreseeable future.
Components of Operating Results
Operating Expenses
In-Process Research and Development
In-process research and development (IPR&D) expenses include IPR&D acquired as part of in-license payments made to ImmuneOnco for which there is no alternative future use, and are expensed as incurred.
Research and Development
Research and development expenses consist primarily of research and development, manufacturing, monitoring and other services payments and, to a lesser extent, salaries, benefits and other personnel-related costs,
including stock-based compensation, professional service fees, and facility and other related costs. In addition, research and development expense is presented net of reimbursements from reimbursable tax and expenditure credits and grants from the UK government.
We expect our future research and development expenses to change in line with our clinical development activities for '2510 and other potential business development activities. Our expenditures on future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of clinical trials and development of product candidates will depend on a variety of factors, including:
•the scope, rate of progress and expenses of clinical trials and other research and development activities;
•potential safety monitoring and other studies requested by regulatory agencies;
•significant and changing government regulation; and
•the timing and receipt of regulatory approvals, if any.
The process of conducting the necessary clinical research to obtain regulatory approval from the FDA, Medicines and Healthcare Products Regulatory Agency, or MHRA, European Medicines Agency, or EMA, and comparable foreign authorities is costly and time consuming and the successful development of product candidates is highly uncertain. The risks and uncertainties associated with our research and development projects are discussed more fully in the section of this Quarterly Report titled "Risk Factors." As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our product candidates.
General and Administrative
General and administrative expenses consist primarily of compensation and personnel-related expenses, including stock-based compensation, for our personnel in executive, finance and other administrative functions. General and administrative expenses also include professional fees paid for accounting, auditing, legal, tax and consulting services, insurance costs, recruiting costs, travel expenses, facility and other related costs, depreciation, and other general and administrative costs.
We expect to continue to incur expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, director and officer insurance expenses, and any investor relations related expenses, as well as other administrative and professional services.
Restructuring and Impairment Charges
Restructuring and impairment charges for the nine months ended September 30, 2025 consisted primarily of contract fees related to terminated contracts and an impairment loss recognized on long-lived assets held for sale in connection with listing our Tarzana facility for sale in March 2025.
Restructuring and impairment charges for the nine months ended September 30, 2024 consisted primarily of employee termination costs, contract terminations, and impairment loss recognized on long-lived assets held for sale, leasehold improvements, and right-of-use assets.
In January 2023, the Board of Directors approved a restructuring plan, or the 2023 Plan, and we announced the consolidation of the ITIL-306 Phase 1 clinical trial and related manufacturing of CoStAR-TIL to our operations in Manchester, UK and stopped recruiting for the ITIL-306 clinical trial.
In January 2024, we decided to initiate closure of our UK manufacturing and clinical operations related to our past development of our CoStAR-TIL technology, and in September 2024 we decided to close most of our remaining Manchester, UK operations related to our past development of our CoStAR-TIL technology, which resulted in the elimination of the majority of the remaining UK workforce, with the remaining reduction
substantially completed by the end of 2024, which we refer to as the 2024 Plan, and collectively with the 2023 Plan, as the Plan.
In March 2025, the Board of Directors approved a plan to sell the Tarzana facility and we listed our Tarzana facility for sale.
As a result of the Plan and the impairment loss related to listing our Tarzana facility for sale, we incurred restructuring and impairment charges of nil and $16.6 million during the three and nine months ended September 30, 2025, respectively.
Interest Income
Interest income consists of interest income from funds held in our cash and cash equivalent accounts, marketable securities and long-term investments.
Interest Expense
Interest expense consists of interest expense on our debt and amortization of loan origination costs.
Other Rental Income
Other rental income consists primarily of rental income related to our Tarzana facility.
Other (Expense) Income, Net
Other (expense) income, net consists primarily of derivative financial instrument fair value gain or loss, foreign exchange remeasurement gain or loss and other expenses and income.
Income Tax Provision
We are subject to income taxes in the United States and the United Kingdom. The United Kingdom has statutory tax rates that differ from those in the United States. Accordingly, our effective tax rates will vary depending on the relative proportion of United Kingdom to United States income, the availability of research and development tax credits, changes in the valuation of our deferred tax assets and liabilities and changes in tax laws.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due to the uncertainty of the business in which we operate, projections of future profitability are difficult and past profitability is not necessarily indicative of future profitability. We maintain full valuation allowance against net deferred tax assets for the United States and the United Kingdom. The valuation allowance has been provided based on the positive and negative evidence relative to our company, including the existence of cumulative net operating losses, or NOLs, since our inception, and the inability to carryback these NOLs to prior periods. Furthermore, we have determined that it is more likely than not that the benefit of these assets would not be realized in the foreseeable future. The timing and the reversal of our valuation allowance will continue to be monitored.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into the law. The OBBBA includes an elective deduction for domestic research and development (R&D) and a reinstatement of elective 100% first-year bonus depreciation, among other provisions. We do not expect the OBBBA to have a material impact on our 2025 condensed consolidated financial statements.
Results of Operations
Comparison of the Three Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands):
| Three Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | $ | |||||||||||||||
| Operating expenses: | |||||||||||||||||
| In-process research and development | $ | - | $ | 10,000 | $ | (10,000) | |||||||||||
| Research and development | 9,127 | 562 | 8,565 | ||||||||||||||
| General and administrative | 5,895 | 10,707 | (4,812) | ||||||||||||||
| Restructuring and impairment charges | - | 2,362 | (2,362) | ||||||||||||||
| Total operating expenses | 15,022 | 23,631 | (8,609) | ||||||||||||||
| Loss from operations | (15,022) | (23,631) | 8,609 | ||||||||||||||
| Interest income | 893 | 1,654 | (761) | ||||||||||||||
| Interest expense | (1,582) | (2,007) | 425 | ||||||||||||||
| Other rental income | 2,242 | 1,493 | 749 | ||||||||||||||
| Other expense, net | (118) | (530) | 412 | ||||||||||||||
| Net loss | $ | (13,587) | $ | (23,021) | $ | 9,434 | |||||||||||
In-process Research and Development Expenses
In-process research and development expenses were nil and $10.0 million for the three months ended September 30, 2025 and 2024, respectively. The net decrease of $10.0 million was due to the fact that there was a $10.0 million in-license payment to ImmuneOnco pursuant to the IO Collaboration Agreement in the three months ended September 30, 2024 and no in-license payments in the three months ended September 30, 2025.
Research and Development Expenses
Research and development expenses were $9.1 million and $0.6 million for the three months ended September 30, 2025 and 2024, respectively. The net increase of approximately $8.6 million was due to:
•$9.1 million increase in costs primarily related to research and clinical development activities from our ImmuneOnco collaboration; partially offset by
•$0.5 million decrease in expenses related to facilities and overhead, depreciation, and other expenses.
The following table shows our research and development expenses by program for the three months ended September 30, 2025 and 2024 (in thousands):
| Three Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| In-process research and development: | |||||||||||
| AXN-2510/IMM2510 | $ | - | $ | 10,000 | |||||||
| Research and development: | |||||||||||
| AXN-2510/IMM2510 | 9,040 | 437 | |||||||||
|
Other program expenses(1)
|
87 | 125 | |||||||||
| Total research and development expenses | 9,127 | 562 | |||||||||
| Total research and development by program | $ | 9,127 | $ | 10,562 | |||||||
_____________________________________________________________
(1) Other program expenses consist of costs related to our past development of our CoStAR-TIL technology.
General and Administrative Expenses
General and administrative expenses were $5.9 million and $10.7 million for the three months ended September 30, 2025 and 2024, respectively. The net decrease of $4.8 million was primarily due to:
•$2.5 million decrease in costs from reduced headcount, consisting of a decrease in wages, benefits, and other employee related expenses of $0.4 million and stock-based compensation expense of $2.1 million;
•$1.4 million decrease in facility and other office expenses; and
•$0.9 million decrease in consulting and professional services costs.
Restructuring and Impairment Charges
Restructuring and impairment charges were nil and $2.4 million for the three months ended September 30, 2025 and 2024, respectively. The net decrease of $2.4 million was due to:
•$1.5 million decrease in costs from impairments of assets held for sale;
•$1.5 million decrease in severance payments and benefits continuation costs;
•$0.6 million decrease in costs from right-of-use asset impairment; and
•$0.1 million decrease in costs from leasehold improvement impairments; partially offset by
•$1.3 million increase in costs resulting from a termination of a contract.
Interest Income, Interest Expense, Other Rental Income and Other Income (Expense), Net
Interest income, interest expense, other rental income and other income (expense), net was $1.4 million and $0.6 million of income for the three months ended September 30, 2025 and 2024, respectively. The net increase of $0.8 million was primarily due to:
•$1.0 million change in fair value from terminated derivative financial instrument;
•$0.8 million increase in rental income related to the Tarzana facility; and
•$0.4 million decrease in interest expense from our note payable; partially offset by
•$0.8 million decrease in interest income related to our investments; and
•$0.6 million change in loss on foreign currency transactions.
Comparison of the Nine Months Ended September 30, 2025 and 2024
The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):
| Nine Months Ended September 30, | Change | ||||||||||||||||
| 2025 | 2024 | $ | |||||||||||||||
| Operating expenses: | |||||||||||||||||
| In-process research and development | $ | 10,000 | $ | 10,000 | $ | - | |||||||||||
| Research and development | 21,241 | 10,739 | 10,502 | ||||||||||||||
| General and administrative | 21,161 | 33,837 | (12,676) | ||||||||||||||
| Restructuring and impairment charges | 16,622 | 7,146 | 9,476 | ||||||||||||||
| Total operating expenses | 69,024 | 61,722 | 7,302 | ||||||||||||||
| Loss from operations | (69,024) | (61,722) | (7,302) | ||||||||||||||
| Interest income | 3,112 | 5,635 | (2,523) | ||||||||||||||
| Interest expense | (4,262) | (5,988) | 1,726 | ||||||||||||||
| Other rental income | 6,726 | 1,493 | 5,233 | ||||||||||||||
| Other income (expense), net | 267 | (1,658) | 1,925 | ||||||||||||||
| Net loss | $ | (63,181) | $ | (62,240) | $ | (941) | |||||||||||
In-process Research and Development Expenses
In-process research and development expenses were $10.0 million for each of thenine months ended September 30, 2025 and 2024, reflecting $10.0 million of in-process research and development costs being paid to ImmuneOnco during each of the nine month periods ended September 30, 2025 and 2024.
Research and Development Expenses
Research and development expenses were $21.2 million and $10.7 million for the nine months ended September 30, 2025 and 2024, respectively. The net increasein research and development expenses of $10.5 million was primarily due to:
•$15.4 million increase in costs related to research and clinical development activities from our ImmuneOnco collaboration; partially offset by
•$3.1 million decrease in costs from reduced headcount, consisting primarily of a decrease of $2.9 million in wages and benefits, $1.0 million decrease in stock-based compensation expense, and $0.1 million decrease for other employee-related expenses in relation to our research and development personnel; partially offset by $0.9 million increase in expenses for professional services; and
•$1.8 million decrease in expenses related to facilities and overhead, depreciation, and other expenses.
The following table shows our research and development expenses by program for the nine months ended September 30, 2025 and 2024 (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| In-process research and development: | |||||||||||
| AXN-2510/IMM2510 | $ | 10,000 | $ | 10,000 | |||||||
| Research and development: | |||||||||||
| AXN-2510/IMM2510 | 20,351 | 437 | |||||||||
|
Other program expenses (1)
|
890 | 10,302 | |||||||||
| Total research and development expenses | 21,241 | 10,739 | |||||||||
| Total research and development by program | $ | 31,241 | $ | 20,739 | |||||||
______________________________________________________________
(1) Other program expenses consist of costs related to our past development of our CoStAR-TIL technology.
General and Administrative Expenses
General and administrative expenses were $21.2 million and $33.8 million for the nine months ended September 30, 2025 and 2024, respectively. The net decrease of approximately $12.7 million was primarily due to:
•$7.4 million decrease in costs from reduced headcount, mainly due to a decrease in wages of $2.4 million, a decrease in stock-based compensation expense of $4.7 million and a decrease in other employee-related expenses of $0.3 million;
•$3.8 million decrease in depreciation, facility costs, and insurance expenses; and
•$1.5 million decrease in consulting and professional services costs.
Restructuring and Impairment Charges
Restructuring and impairment charges were $16.6 million and $7.1 million for the nine months ended September 30, 2025 and 2024, respectively. The net increase of $9.5 million was primarily due to:
•$12.3 million increase in costs from impairments of assets held for sale, primarily an impairment of the Tarzana facility; and
•$0.8 million increase in costs resulting from termination of contracts; partially offset by
•$2.4 million decrease in severance payments and benefits continuation costs;
•$0.8 million decrease in costs from impairments of right-of-use assets; and
•$0.3 million decrease in costs from leasehold improvement impairments.
Interest Income, Interest Expense, Other Rental Income and Other Income (Expense), Net
Interest income, interest expense, other rental income and other income (expense), net were $5.8 million of income and $0.5 million of expense for the nine months ended September 30, 2025 and 2024, respectively. The net increase of $6.4 million was primarily due to:
•$5.2 million increase in rental income related to our Tarzana facility;
•$1.9 million change in fair value from terminated derivative financial instrument;
•$1.7 million decrease of interest expense from our note payable; and
•$0.1 million increase in gain on foreign currency transactions; partially offset by
•$2.5 million decrease of interest income related to our investments.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and we have incurred significant operating losses. We do not have any products that have achieved regulatory marketing approval and we do not expect to generate revenue from commercial sales of any product candidates for at least several years, if ever.
Prior to our initial public offering, or IPO, we funded our operations primarily through the issuance and sale of convertible preferred stock. From our inception through March 2021, prior to our IPO, we raised net cash proceeds of $380.1 million from the issuance and sale of our convertible preferred stock.
In the first quarter of 2021, we raised net proceeds of $339.0 million in our IPO, pursuant to which we sold an aggregate of 920,000 shares of common stock.
In June 2022, our wholly owned subsidiaries, Complex Therapeutics Mezzanine LLC, and Complex Therapeutics LLC, entered into a mortgage construction loan and mezzanine construction loan, or together, the Construction Loans, secured by Complex Therapeutics LLC's Tarzana, California land and building. Construction of the Tarzana facility was completed and the facility has been leased to AstraZeneca Pharmaceuticals LP, or Tenant. The initial principal amount of the Construction Loans was $52.1 million, with additional future principal of up to $32.9 million to fund then ongoing construction costs. During the year ended December 31, 2024, Complex Therapeutics LLC refinanced the outstanding principal amount under the Construction Loans and we treated it as an extinguishment for accounting purposes. On December 20, 2024, or the Closing Date, Complex Therapeutics LLC entered into a Term Loan Agreement and related loan documents with Midland National Life Insurance Company, or Lender, pursuant to which Lender loaned Complex Therapeutics LLC a term loan in the principal amount of $85.6 million, or the Loan, to refinance the Construction Loans secured by the facility in Tarzana, California. Substantially all of the Loan proceeds were used to repay in full the Construction Loans. As of September 30, 2025, the outstanding principal amount under the Loan was $85.6 million and unamortized debt issuance costs were $1.0 million.
The Loan has a term of two years with a one-year extension option. The extension option is subject to certain conditions being met, including: (a) no potential default or event of default, (b) payment of a 0.35% extension fee and the costs and expenses of Lender incurred in connection with the extension, (c) replenishing of all reserve funds as reasonably determined by Lender, and (d) compliance with minimum debt yield and debt service coverage ratio requirements. The Loan bears interest at a fixed rate of 6.35% per annum, with interest-only payments during the term of the Loan and the principal balance due in full at maturity.
The Loan may be prepaid in whole but not in part. If the Loan is prepaid on or prior to the 12-month anniversary of the Closing Date, a prepayment fee is required (other than in connection with a casualty or condemnation event) to make Lender whole for the interest it would have otherwise earned on the Loan during the first 12 months. There is no prepayment fee due if the Loan is prepaid after the 12-month anniversary of the Closing Date.
On November 13, 2024, we filed a shelf registration statement on Form S-3 with the SEC, which the SEC declared effective on November 21, 2024. Pursuant to our shelf registration statement we may, from time to time, sell up to an aggregate of $200 million of our common stock, preferred stock, debt securities or warrants.
In March 2025, we entered into an Open Market Sale AgreementSM, or the ATM Sales Agreement, with Jefferies LLC, or Jefferies, as sales agent, under which we may offer and sell, from time to time, shares of our common stock through Jefferies, with an aggregate offering price of up to $100.0 million by methods deemed to be an "at the market offering," or the ATM Program.
During the nine months ended September 30, 2025, we sold an aggregate of 185,837 shares of our common stock under the ATM Program for net proceeds of $6.6 million after deducting commissions and expenses of
approximately $0.3 million. The remaining availability under the ATM Program as of September 30, 2025 was approximately $93.1 million.
As of September 30, 2025, we had cash and cash equivalents, restricted cash, marketable securities and long-term investments of $83.4 million, which consisted of $5.8 million in cash and cash equivalents, $0.3 million in restricted cash, $73.9 million in marketable securities and $3.4 million in long-term investments. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.
Future Funding Requirements
Based on our current operating plan, we believe our existing cash, cash equivalents, restricted cash, marketable securities and long-term investments will be sufficient to fund our operating expenses and capital expenditure requirements beyond 2026.
In March 2025, the Board of Directors approved a plan to sell the Tarzana facility and we listed our Tarzana facility for sale. The facility is leased, and Tenant has a right of first offer to purchase it. If we are successful in selling the Tarzana facility, such a transaction could potentially extend our expected cash runway. We have based this estimate on assumptions that may prove to be wrong; we may not be successful in securing any sale of the Tarzana facility and it is uncertain when or if any sale will occur, and we could utilize our available capital resources sooner than we expect.
We use our cash to fund operations, primarily to fund our business development, research and development expenditures and related personnel costs. We expect our expenses to continue to be significant as we invest in research and development activities, particularly as we in-license or acquire product candidates, advance product candidates into later stages of development and conduct clinical trials, seek regulatory approvals for and commercialize any product candidates that successfully complete clinical trials, hire personnel and invest in and grow our business, expand and protect our intellectual property portfolio, and operate as a public company. Because of the numerous risks and uncertainties associated with acquiring product candidates, and the research, development and commercialization of product candidates, we are unable to estimate the exact timing and amount of our funding requirements. Our future operating expenditures will depend on many factors, including:
•the results of our collaboration with ImmuneOnco and the number and characteristics of any product candidates we develop or acquire;
•the scope, rate of progress, costs and results of future clinical and preclinical development activities;
•the costs, timing and outcome of regulatory review of any product candidates, and the number of trials required for regulatory approval;
•the cost of manufacturing any product candidates, as well as any products we successfully commercialize;
•the cost of commercialization activities of our product candidates, if approved for sale, including marketing, sales and distribution costs;
•the timing, receipt and amount of sales of any product candidates, if approved;
•costs related to our Tarzana facility and our ability to complete a sale of our Tarzana facility;
•the extent to which we acquire or in-license other companies' product candidates and technologies;
•our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such arrangements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;
•any product liability or other lawsuits or claims;
•the expenses needed to attract, hire and retain skilled personnel;
•our investments in our operational, financial and management information systems;
•the costs associated with operating as a public company;
•the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property portfolio; and
•any delays or issues resulting from the impact of adverse geopolitical and economic conditions.
As discussed above, on August 1, 2024, Axion Bio entered into the IO Collaboration Agreement with ImmuneOnco, under which it in-licensed several bispecific antibodies, including '2510 and AXN-27M/IMM27M. As part of this agreement, Axion Bio made a $10.0 million upfront payment to ImmuneOnco during the year ended December 31, 2024. This amount was fully expensed as IPR&D in the same year.
During the year ended December 31, 2024, Axion Bio made a $5.0 million prepayment for development costs, which was fully expensed in research and development as of March 31, 2025. A second $5.0 million prepayment for development costs was made in April 2025, which was fully expensed in research and development as of September 30, 2025. A third $5.0 million prepayment for development costs was made in August 2025. This amount was partially expensed under research and development, with a remaining prepaid balance of $1.6 million recorded as of September 30, 2025.
In June 2025, Axion Bio achieved Investigational New Drug (IND) clearance in the United States for a Phase 1 trial of '2510 in relapsed/refractory solid tumors. This milestone triggered a $10.0 million development payment, which was paid in August 2025. This amount was fully expensed as IPR&D during the second quarter of 2025.
ImmuneOnco is eligible to receive additional potential near-term payments of up to $15.0 million, up to $2.1 billion in commercial, development and regulatory milestones (including up to $270.0 million in longer term development and regulatory milestones and up to $1.8 billion in commercial milestones) plus single-digit to low double-digit percentage royalties on global net sales of the licensed products outside of Greater China.
We lease operating spaces in the United States and the United Kingdom under non-cancelable operating lease arrangements that expire on various dates through 2026. These arrangements require us to pay certain operating expenses, such as taxes, repairs, and insurance and contain landlord or tenant incentives or allowances, renewal and escalation clauses. As of September 30, 2025, our future minimum lease payments under committed or non-cancelable lease agreements were $0.3 million.
As discussed above, in connection with the Plan, we may incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Plan as well as additional costs in connection with any additional restructuring actions.
Until we can generate substantial revenue from sales of our product candidates, if that occurs, we plan to fund our operations through equity offerings, debt financings, or other capital sources. This may include leasing income, strategic collaborations or other arrangements with third parties. Additional funds may not be available to us on acceptable terms or at all. If we raise additional funds by issuing equity or convertible debt securities, our stockholders will suffer dilution, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities receive any distribution of our corporate assets. If we raise funds through collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to technologies, future revenue streams, product candidates or research programs or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our ability to raise additional funds may be adversely impacted by worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from, among other things, heightened inflation, fluctuations in interest rates, conflicts in Ukraine and the Middle East, tariffs and recent and potential trade wars. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. See "Risk Factors."
Cash Flows
The following table sets forth the significant sources and uses of cash for the periods set forth below (in thousands):
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Cash used in operating activities | $ | (29,543) | $ | (45,137) | |||||||
| Cash provided by investing activities | 17,658 | 40,974 | |||||||||
| Cash provided by financing activities | 7,292 | 159 | |||||||||
| Net decrease in cash, cash equivalents, and restricted cash | $ | (4,593) | $ | (4,004) | |||||||
Cash Flows from Operating Activities
Cash used in operating activities for the nine months ended September 30, 2025 was $29.5 million, which consisted of the net loss of $63.2 million and an approximately $0.6 million net change to our net operating assets and liabilities, partially offset by $34.3 million in non-cash charges and other adjustments to reconcile net loss to net cash used in operating activities. The non-cash charges primarily consisted of impairment of property, plant and equipment of $16.6 million, in-process research and development expenses of $10.0 million, stock-based compensation expense of $7.1 million, depreciation expense of $0.5 million, non-cash lease expense of $0.2 million, and non-cash interest expense of $0.6 million, partially offset by a change in foreign exchange remeasurement of $0.5 million, $0.1 million in restructuring costs, and accretion on invested securities of $0.1 million. The net change in our operating assets and liabilities was primarily due to a decrease of approximately $1.6 million in accrued expenses and other current liabilities, an increase of $3.1 million in accrued rent receivable, and a decrease of $1.6 million in operating lease liabilities, partially offset by an increase of $0.3 million in accounts payable, a decrease of $0.3 million in other long-term assets, and a decrease of $4.9 million in prepaid expenses and other current assets.
Cash used in operating activities for the nine months ended September 30, 2024 was $45.1 million, which consisted of the net loss of $62.2 million and a $8.5 million net change to our net operating assets and liabilities, offset by $25.6 million in non-cash charges and other adjustments to reconcile net loss to net cash used in operating activities. The net change in our operating assets and liabilities was primarily due to a decrease of $0.4 million in accrued expenses and other current liabilities, a decrease of $1.0 million in operating lease liabilities, an increase of $2.5 million in prepaid expenses and other current assets, an increase of $1.5 million in accrued rent receivable, and an increase of $3.1 million in other long-term assets. The non-cash charges primarily consisted of stock-based compensation expense of $12.8 million, in-process research and development expenses of $10.0 million, impairment of fixed assets and right-of-use assets, and loss on disposal of property and equipment of $5.5 million, change in fair value of interest cap derivative instrument and non-cash interest expense of $1.0 million, and depreciation expense of $2.9 million, partially offset by accretion on invested securities of $3.9 million and change in fair value of contingent consideration of $2.5 million.
Cash Flows from Investing Activities
Cash provided by investing activities for the nine months ended September 30, 2025 was $17.7 million, consisting primarily of approximately $27.3 million of cash provided by marketable securities investments and $0.4 million of cash received from held for sale assets, offset by $10.0 million of acquired in-process research and development.
Cash provided by investing activities for the nine months ended September 30, 2024 was $41.0 million, which consisted primarily of $52.0 million of cash provided by marketable securities investments and $0.5 million of cash received from held for sale assets, offset by $10.0 million of acquired in-process research and development and $1.6 million from the renewal of our derivative financial instrument.
Cash Flows from Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2025 was $7.3 million, and primarily consisted of net proceeds from our ATM Program of $6.6 million and net proceeds from the exercise of stock options of $0.9 million, partially offset by loan agreement closing costs of $0.2 million.
Cash provided by financing activities for the nine months ended September 30, 2024 was $0.2 million, which primarily consisted of proceeds from the exercise of stock options.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For a description of critical accounting policies that require significant judgments and estimates during the preparation of our financial statements, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates" and Note 2 to our Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024 and Note 2 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements applicable to us is included in Note 2 to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status and Smaller Reporting Company Status
We are an "emerging growth company" as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.
In addition, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to avail ourselves of this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company until the earliest of (i) December 31, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the
last business day of the second fiscal quarter of such year or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
We are also a "smaller reporting company," as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Instil Bio Inc. published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 12:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]