A candidate that Instil Bio in-licensed this August is similar to a candidate that recently outperformed the world’s top-selling cancer therapy.
If you’re an investor looking for stocks that can make dramatic gains in a short amount of time, you may have noticed a small-cap biopharmaceutical company called Instil Bio (TO 81.92%) has been rocketing higher.
From Sept. 6 through Sept. 12, shares of the clinical-stage drugmaker shot about 235% higher. A big week raised its year-to-date gain to an eye-popping 510%, and investors are wondering if it can climb higher still.
Here’s a quick look at what’s been pushing up shares of Instil Bio and some of its challenges. Plus, I’ll also measure the good news against the bad to see if everyday investors can reasonably expect this stock to continue climbing.
Why Instil Bio stock is soaring
At the beginning of 2024, Instil Bio was still trying to develop cell-based cancer therapies that rely on tumor-infiltrating lymphocytes, or TILs. In August, the company switched gears and in-licensed IMM2510, a bispecific antibody that targets programmed death ligand 1 (PD-L1) and vascular endothelial growth factor (VEGF).
Instil Bio’s collaboration partner, ImmuneOnco Biopharmaceuticals, is headquartered in China where another bispecific antibody that targets PD1 and VEGF is already approved. Ivonescimab from Akeso earned marketing approval in May to treat second-line lung cancer patients in China.
Akeso’s partner Summit Therapeutics (SMMT 16.49%) licensed rights to ivonescimab outside of China and Australia. It recently turned a lot of heads on Wall Street with positive results from a head-to-head study with the world’s top-selling cancer therapy, Keytruda. In the Harmoni-2 trial, newly diagnosed lung cancer patients randomized to receive ivonescimab were 49% less likely to worsen than patients given Keytruda.
Instil Bio hasn’t completed any clinical trials with IMM2510, and its partner has only completed a single-arm ascending dose study. Despite a lack of data, its similarity to ivonescimab is leading Wall Street analysts to assume it has a chance to eventually become a leading cancer therapy too.
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At the beginning of September, you could have bought every outstanding share of Instil Bio for less than $100 million. Its market cap has soared, but it still seems very inexpensive for a company that could have a blockbuster drug in its development pipeline. This is why Baird analyst Jack Allen recently raised his price target on Instil Bio to $180 per share which implies a gain of 235% from its price at 9:40 a.m. ET on Friday, Sept. 13.
Why Instil Bio stock is super risky
Ivonescimab and IMM2510 are both bispecific antibodies with similar targets, but there are significant differences. For example, ivonescimab binds to VEGF-A exclusively, while IMM2510 binds to VEGF-A and VEGF-B. The differences could improve its function, but it’s hard to tell with the limited data so far from Instil Bio and ImmuneOnco.
In a phase 1 ascending dose study with patients who have advanced solid tumors in the lungs and other organs, response rates were less than inspiring. IMM2510 shrank tumors for just three patients among 25 tested, and none of the patients experienced a complete remission.
In addition to wondering if IMM2510 can outperform ivonescimab, it’s not certain that a bispecific antibody that targets PD-1 and VEGF is any better than Keytruda (a PD1 drug) plus Avastin (an anti-VEGF drug).
Instil Bio recently leased out a cell therapy manufacturing site to AstraZeneca for 15 years at more than $7.5 million annually. This will lower its cash-burn rate but not enough to prevent heavy losses. The company finished June with $152.6 million in cash after burning through $39.2 million in the first half of 2024.
Instil Bio is losing significant sums even though it only spent $10.2 million on research and development in the first half of 2024. If IMM2510 advances past phase 1 studies, expenses will soar. In other words, this company will most likely need to ask investors for more capital long before we know if IMM2510 has a chance to become a commercial-stage product with recurring sales.
A buy now?
Instil Bio is the quintessential high-risk, high-reward stock that the biotech industry is famous for. Positive data for IMM2510 and related candidates could send its shares soaring much further, but it’s only in phase 1 trials right now. There’s an awful lot that could go wrong before this company has any products to sell.
Instil Bio could climb much higher, but this stock is only appropriate for folks with a huge tolerance for risk. If you still need to work to earn a living, it probably isn’t a good fit for your portfolio.
