Over 500% Growth in 2024. Can Instil Bio Continue to Grow Higher?

If you’re an investor looking for stocks that can make dramatic gains in a short period of time, you may have noticed a small-cap biopharmaceutical company called Instil Bio (TIL 81.92%) it rocketed higher.

From September 6 to September 12, shares of the clinical-stage drug maker rose about 235%. A big week has boosted its year-to-date gain to a spectacular 510%, and investors are wondering if it can climb even higher.

Here’s a quick look at Instil Bio’s actions and some of its challenges. In addition, I will also weigh the good news against the bad to see if average investors can reasonably expect this stock to continue to rise.

Why Instil Bio Stock Is Rising

As of early 2024, Instil Bio was still trying to develop cell-based cancer therapies that rely on tumor-infiltrating lymphocytes, or TILs. In August, the company shifted gears and licensed IMM2510, a bispecific antibody targeting programmed death ligand 1 (PD-L1) and vascular endothelial growth factor (VEGF).

Instil Bio’s collaboration partner, ImmuneOnco Biopharmaceuticals, is based in China, where another bispecific antibody targeting PD1 and VEGF is already approved. Akeso’s Ivonescimab won 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 trial with the world’s best-selling cancer therapy, Keytruda. In the Harmoni-2 study, patients with newly diagnosed lung cancer randomized to receive ivonescimab were 49% less likely to get worse than patients given Keytruda.

Instil Bio has not completed any clinical trials with IMM2510, and its partner has only completed a single-arm escalating dose trial. Despite the lack of data, its similarity to ivonescimab has Wall Street analysts suggesting it has a chance to eventually become a top cancer therapy as well.

TIL Market Cap data by YCharts.

In early September, you could have bought every outstanding share of Instil Bio for less than $100 million. Its market cap has grown, but it still looks very cheap for a company that may have a blockbuster drug in development. That’s why Baird analyst Jack Allen recently raised his price target for Instil Bio to $180 per share, implying a 235% gain from its price as of 9:40 a.m. ET on Friday, September 13.

Why Instil Bio stock is very risky

Ivonescimab and IMM2510 are both bispecific antibodies with similar targets, but there are significant differences. For example, ivonescimab binds exclusively to VEGF-A, whereas IMM2510 binds to both 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 trial with escalating doses of patients who have advanced solid tumors in the lungs and other organs, response rates were less than inspiring. IMM2510 shrank tumors for only three of the 25 patients tested, and none of the patients experienced a complete remission.

In addition to questioning whether IMM2510 can outperform ivonescimab, it is not certain that a bispecific antibody targeting PD-1 and VEGF is better than Keytruda (a PD1 drug) plus Avastin (an anti-VEGF drug).

Instil Bio recently leased a cell therapy manufacturing site AstraZeneca for 15 years at over 7.5 million dollars annually. This will reduce the cash burn rate, but not enough to prevent big losses. The company ended June with $152.6 million in cash after burning through $39.2 million in the first half of 2024.

Instil Bio is losing significant money, even though it only spent $10.2 million on research and development in the first half of 2024. If IMM2510 advances Phase 1 studies, spending will increase. In other words, this company will most likely have to ask investors for more capital long before they know if the IMM2510 has a chance to become a commercial product with recurring sales.

A buy now?

Instil Bio is the quintessential high-risk, high-reward action that the biotech industry is famous for. Positive data for IMM2510 and related candidates could send its stock higher, but it’s only in Phase 1 testing right now. There are a lot of things that could go wrong before this company has products to sell.

Instil Bio could go much higher, but this stock is only suitable for people with a high risk tolerance. If you still have to work for a living, it’s probably not right for your portfolio.