In-licensed SYN-2510/IMM2510, a potentially best-in-class PD-L1xVEGF bispecific antibody, and SYN-27M/IMM27M, a next-generation ADCC-enhanced anti-CTLA-4 antibody Entered into a 15-year lease for our cell therapy manufacturing facility to AstraZeneca Pharmaceuticals LP DALLAS, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Instil Bio, Inc. ("Instil") (Nasdaq: TIL), a clinical-stage biopharmaceutical company focused on developing a pipeline of novel therapies, today reported its second quarter 2024 financial results and ...

Core Viewpoint - Instil Bio has entered into a definitive agreement to in-license ex-China development and commercialization rights for ImmuneOnco's bispecific antibody IMM2510 and next-generation anti-CTLA-4 antibody IMM27M, indicating a strategic expansion in their oncology pipeline [1][4]. Group 1: Product Details - IMM2510 is a bispecific antibody that combines an anti-PD-L1 antibody with a VEGF receptor "trap," designed to enhance tumor penetration and improve tumor killing through enhanced antibody-dependent cellular cytotoxicity (ADCC) [2]. - IMM2510 has shown promising results in a dose-escalation clinical trial for advanced solid tumors, including responses in patients with squamous non-small cell lung cancer who had previously failed PD-1 inhibitors [2]. - IMM27M is a next-generation anti-CTLA-4 antibody with enhanced ADCC activity, aimed at improving efficacy and reducing toxicity compared to first-generation anti-CTLA-4 antibodies, and has also demonstrated anti-tumor activity in advanced solid tumors [3]. Group 2: Agreement Terms - Under the agreement, Instil's subsidiary will gain global rights for the development and commercialization of IMM2510 and IMM27M outside Greater China, while ImmuneOnco retains rights in Greater China, including Taiwan, Macau, and Hong Kong [4]. - ImmuneOnco will receive an upfront payment and potential near-term payments of up to $50 million, along with additional development, regulatory, and commercial milestones exceeding $2 billion, plus royalties on global ex-China sales [4]. Group 3: Company Background - Instil Bio is a clinical-stage biopharmaceutical company focused on developing novel therapies, with IMM2510 as its lead asset targeting multiple solid tumor cancers [5]. - ImmuneOnco is a clinical-stage biotech company dedicated to discovering and developing biologics for cancer treatment, currently advancing multiple assets, including one in phase III [6].

Core Insights - Instil Bio has entered into a definitive agreement to in-license ex-China development and commercialization rights for ImmuneOnco's bispecific antibody IMM2510 and next-generation anti-CTLA-4 antibody IMM27M [1][4] Group 1: Product Details - IMM2510 is a bispecific antibody that combines an anti-PD-L1 antibody with a VEGF receptor "trap," allowing it to bind multiple VEGF receptor ligands and potentially improve tumor penetration and efficacy [2] - IMM27M is designed to enhance ADCC activity and promote regulatory T cell depletion, aiming to improve efficacy and reduce toxicity compared to first-generation anti-CTLA-4 antibodies [3] Group 2: Clinical Development - IMM2510 has completed a dose-escalation clinical trial for advanced solid tumors, showing responses in patients with squamous non-small cell lung cancer who previously failed PD-1 inhibitors [2] - IMM27M has also completed a dose-escalation clinical trial and has entered combination studies with IMM2510 in China as of July 2024 [3] Group 3: Financial Terms - Under the agreement, Instil will pay an upfront fee and potential near-term payments totaling up to $50 million, along with additional milestone payments exceeding $2 billion and royalties on global ex-China sales [4]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 For the transition period from ________ to ________ 3963 Maple Avenue, Suite 350 Dallas, Texas Commission file number 001-40215 Instil Bio, Inc. FORM 10-Q (Exact name of registrant as specified in its charter) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ...

Financial Performance - As of March 31, 2024, Instil Bio had cash, cash equivalents, marketable securities, and long-term investments totaling $161.5 million, down from $175.0 million as of December 31, 2023[3] - Research and development expenses decreased to $7.3 million for Q1 2024, compared to $20.7 million for Q1 2023, representing a reduction of approximately 64.8%[4] - General and administrative expenses were $12.4 million for Q1 2024, down from $13.2 million in Q1 2023, a decrease of about 6.0%[4] - The net loss per share for Q1 2024 was $3.74, significantly improved from $8.77 in Q1 2023, reflecting a reduction of approximately 57.5%[5] - Non-GAAP net loss per share for Q1 2024 was $2.39, compared to $4.29 in Q1 2023, indicating a decrease of about 44.3%[5] - Total operating expenses for Q1 2024 were $23.96 million, down from $58.45 million in Q1 2023, a reduction of approximately 59.0%[15] - Total assets decreased to $306.3 million as of March 31, 2024, from $325.6 million as of December 31, 2023[13] Future Outlook - Instil Bio expects its cash resources to fund its current operating plan beyond 2026, indicating strong financial stability[3] - The company is preparing for a potential investigator-initiated trial in non-small cell lung cancer with its FRα-CoStAR TIL therapy[6] - Instil is exploring opportunities to in-license or acquire novel therapeutic candidates to address significant unmet medical needs[6]

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Instil Bio is a clinical-stage biopharmaceutical company focused on engineered TIL cell therapy, pivoting to a China collaboration for FRα CoStAR-TIL and seeking new therapeutic assets [Overview](index=5&type=section&id=Overview) Instil Bio is a clinical-stage biopharmaceutical company focused on engineered TIL cell therapy, ceasing ITIL-306 trials and initiating a China collaboration for FRα CoStAR-TIL - Instil Bio is a clinical-stage biopharmaceutical company focused on developing novel therapies, with its first program being an engineered tumor infiltrating lymphocyte (TIL) cell therapy for cancer, acquired in 2020[12](index=12&type=chunk) - The company's lead product candidate, ITIL-306, a genetically modified TIL targeting folate receptor alpha (FRα) using its Co-Stimulatory Antigen Receptor (CoStAR™) platform, had its Phase 1 clinical trial (ITIL-306-201) enrollment ceased in 2023, and all ITIL-306 Phase 1 clinical trial activities were ceased in January 2024[13](index=13&type=chunk) - An agreement was made in January 2024 with a third-party to develop an autologous FRα CoStAR-TIL (Collaboration Product) for potential open-label investigator-initiated trials (IITs) in NSCLC in China[14](index=14&type=chunk) [Our Strategy](index=5&type=section&id=Our%20Strategy) The company's strategy involves in-licensing/acquiring novel therapies and advancing the FRα CoStAR-TIL program with its collaborator, with potential future U.S. development - The company's goal is to leverage business development capabilities to in-license/acquire and develop a pipeline of novel therapies[15](index=15&type=chunk) - Key strategic elements include in-licensing/acquiring therapeutic assets and advancing the development of FRα CoStAR-TIL with its collaborator, with potential future development in the United States[15](index=15&type=chunk) [Our Current Pipeline](index=5&type=section&id=Our%20Current%20Pipeline) The company is building a pipeline of genetically engineered TIL product candidates using its modular CoStAR platform to enhance anti-tumor activity by targeting various cell surface antigens like FRα - The company is building a pipeline of genetically engineered TIL product candidates modified with CoStAR to augment TIL activation in the tumor microenvironment[15](index=15&type=chunk) - Preclinical studies showed CoStAR+ T cells had markedly increased activity, including enhanced cytokine expression and proliferative capacity, compared to normal T cells[15](index=15&type=chunk) - CoStAR's modular architecture allows targeting various cell surface antigens, with ITIL-306 designed to recognize FRα, expressed on numerous solid tumors like ovarian, uterine, NSCLC, and renal cancer[15](index=15&type=chunk) [Background on CoStAR-TILs](index=6&type=section&id=Background%20on%20CoStAR-TILs) CoStAR-TILs are genetically engineered T cells designed to enhance anti-tumor activity and cytokine secretion, offering a broad safety profile for targeting various tumor-associated antigens - T cells are crucial immune cells that target infected or cancerous cells, and TIL therapies, derived from resected tumors, have been used experimentally since 1988[16](index=16&type=chunk)[17](index=17&type=chunk) - A meta-analysis of TIL therapies for metastatic melanoma reported an Overall Response Rate (ORR) of **41%** in heavily pretreated patients, with **12%** achieving complete response (CR) and long-term durability[17](index=17&type=chunk) - The company is developing genetically engineered TILs expressing CoStAR molecules to enhance anti-tumor activity, believing this approach can benefit patients with immunotherapy-resistant cancers[18](index=18&type=chunk) - CoStAR-TILs are designed for enhanced cytokine secretion upon tumor neoantigen engagement, potentially converting poorly immunogenic tumors into inflamed tumors, which are more responsive to immunotherapies[19](index=19&type=chunk) - The CoStAR platform offers a broad safety profile, allowing targeting of a wide array of tumor-associated antigens, including those with extensive normal tissue expression, unlike conventional ADC or CAR-T therapies[20](index=20&type=chunk) [Commercialization Plan](index=6&type=section&id=Commercialization%20Plan) Upon product approval, the company plans to commercialize through an experienced sales, marketing, and distribution organization, including a national specialty oncology sales force - If product candidates are approved, the company plans to commercialize them with an experienced sales, marketing, and distribution organization, including a national specialty oncology sales force[21](index=21&type=chunk) [Competition](index=7&type=section&id=Competition) The company faces intense competition from major pharmaceutical and biotechnology companies, academic institutions, and other cell therapy developers, with efficacy, safety, and price as key competitive factors - The biotechnology and pharmaceutical industries are highly competitive, with rapid technological evolution and a strong emphasis on intellectual property[22](index=22&type=chunk) - Competitors include major pharmaceutical, specialty pharmaceutical, and biotechnology companies, academic institutions, and governmental agencies, many with significantly greater resources and expertise[22](index=22&type=chunk) - The company faces competition from other TIL or cell therapy developers (e.g., Achilles Therapeutics, AstraZeneca, Iovance Biotherapeutics) and CAR-T/TCR-T cell therapy companies (e.g., Bristol-Myers Squibb, Gilead)[23](index=23&type=chunk) - Broader competition exists in the oncology market from various treatments like surgery, radiation, chemotherapy, and other immunotherapies, with efficacy, safety, convenience, price, and reimbursement being key competitive factors[24](index=24&type=chunk)[25](index=25&type=chunk) [Intellectual Property](index=7&type=section&id=Intellectual%20Property) Commercial success depends on obtaining and maintaining patent and proprietary protection for its technology, including manufacturing processes and modified TIL programs, while avoiding third-party infringement - Commercial success depends on obtaining and maintaining patent and other proprietary protection for technology, inventions, and know-how, and operating without infringing third-party rights[26](index=26&type=chunk)[27](index=27&type=chunk) - The company is pursuing patent applications in the U.S. and abroad for its manufacturing process (including devices and methods for isolating and expanding TILs), with the earliest potential expiration in **2038**[28](index=28&type=chunk) - Patent applications are also being pursued for indication-specific methods of treatment and the modified TIL program, including targeted costimulation receptors for adoptive cell therapy[28](index=28&type=chunk) [Government Regulation](index=8&type=section&id=Government%20Regulation) The company's biologics development is extensively regulated by the FDA and other global authorities, covering all stages from research and development to manufacturing, approval, and marketing - The company's biologics development is extensively regulated by the FDA and other authorities globally, covering research, development, testing, manufacturing, approval, and marketing[29](index=29&type=chunk) [U.S. Biologics Regulation](index=8&type=section&id=U.S.%20Biologics%20Regulation) U.S. biologics regulation involves a multi-stage process from preclinical testing and IND submission to multi-phase clinical trials, BLA submission, cGMP compliance, and post-market oversight - U.S. biologics regulation involves preclinical testing (GLP), IND submission (effective after **30 days** unless FDA raises concerns), IRB approval, and human clinical trials (GCP)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) - Clinical trials typically proceed through three phases: Phase 1 (safety, dosage, side effects), Phase 2 (preliminary efficacy, optimal dosage, safety risks), and Phase 3 (expanded population, statistical efficacy, overall risk/benefit)[36](index=36&type=chunk)[38](index=38&type=chunk) - BLA submission requires successful completion of testing, detailed nonclinical and clinical data, manufacturing controls (cGMP), and FDA facility inspections; approval may include REMS or post-market studies[34](index=34&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) [Expedited Development and Review Programs](index=12&type=section&id=Expedited%20Development%20and%20Review%20Programs) The FDA offers expedited programs like Fast Track, Breakthrough Therapy, and Accelerated Approval to accelerate development and review for serious conditions, though approval standards remain unchanged - The FDA offers expedited programs like Fast Track (serious conditions, unmet needs, frequent interaction, rolling review), Breakthrough Therapy (substantial improvement over existing therapies, intensive FDA guidance), and Priority Review (potential for significant treatment improvement, **6-month** review goal)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Accelerated Approval is available for serious conditions based on surrogate or intermediate endpoints, requiring post-marketing studies to verify clinical benefit[47](index=47&type=chunk) - Regenerative Medicine Advanced Therapy (RMAT) designation offers breakthrough therapy benefits for cell/tissue therapies, including accelerated approval based on surrogate endpoints or real-world evidence[48](index=48&type=chunk)[49](index=49&type=chunk) - These designations expedite development/review but do not change approval standards and can be withdrawn[50](index=50&type=chunk) [Orphan Drug Designation and Exclusivity](index=13&type=section&id=Orphan%20Drug%20Designation%20and%20Exclusivity) Orphan drug designation provides financial incentives and 7 years of market exclusivity for rare diseases upon FDA approval, though exclusivity can be lost under specific conditions - Orphan drug designation is for rare diseases (fewer than **200,000** U.S. patients or unrecoverable development costs) and must be requested before BLA submission[51](index=51&type=chunk) - Designation provides financial incentives (grants, tax advantages, user-fee waivers) and, upon first FDA approval, **7 years** of market exclusivity for the designated indication, with limited exceptions[52](index=52&type=chunk) - Exclusivity can be lost if the designation request was defective, a competitor demonstrates clinical superiority, or the manufacturer cannot assure sufficient product supply[53](index=53&type=chunk) [Post-Approval Requirements](index=13&type=section&id=Post-Approval%20Requirements) Approved biologics are subject to continuous FDA regulation, including cGMP compliance, adverse event reporting, and strict marketing controls, with non-compliance leading to severe penalties - Approved biologics are subject to continuous FDA regulation, including record-keeping, adverse event reporting, product sampling, distribution, and advertising/promotion[55](index=55&type=chunk) - Manufacturers must register establishments, comply with cGMP, and are subject to unannounced inspections; changes to manufacturing or labeling require prior FDA approval[55](index=55&type=chunk) - Non-compliance or post-market problems can lead to severe consequences, including approval withdrawal, labeling revisions, post-market studies, distribution restrictions (REMS), fines, recalls, and civil/criminal penalties[56](index=56&type=chunk)[57](index=57&type=chunk) - The FDA strictly regulates marketing and promotion, prohibiting off-label use promotion by manufacturers, though physicians may prescribe off-label[57](index=57&type=chunk)[58](index=58&type=chunk) [Government Regulation Outside of the United States](index=15&type=section&id=Government%20Regulation%20Outside%20of%20the%20United%20States) Outside the U.S., the company faces diverse regulations for clinical studies and sales, including EU CTA/MAA processes, market exclusivity rules, ATMP classifications, and post-Brexit UK approval requirements - Outside the U.S., the company is subject to diverse regulations for clinical studies, sales, and distribution, with biologically sourced raw materials facing unique restrictions[59](index=59&type=chunk) - In the EU, a Clinical Trial Application (CTA) must be approved by national health authorities and ethics committees, with clinical trials adhering to GCP and the Declaration of Helsinki[60](index=60&type=chunk) - EU marketing authorization requires a Marketing Authorization Application (MAA), with innovative products potentially eligible for expedited programs like PRIME, conditional marketing authorization, or accelerated assessment[61](index=61&type=chunk) - EU market exclusivity includes **8 years** of data exclusivity and **2 years** of market exclusivity for new chemical entities, and **10 years** for orphan medicinal products (potentially reduced to **6 years**)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Medicinal products based on genes, cells, or tissues may be classified as Advanced Therapy Medicinal Products (ATMPs) in the EU, requiring EMA marketing authorization and subject to specific incentives[65](index=65&type=chunk) - Post-Brexit, the UK requires separate approval for medicinal products, with the MHRA responsible for approvals, and the Windsor Framework (effective Jan 2025) will further change regulations for Northern Ireland[69](index=69&type=chunk)[70](index=70&type=chunk) [Other Healthcare Laws](index=17&type=section&id=Other%20Healthcare%20Laws) Pharmaceutical companies are subject to federal and state anti-kickback, fraud and abuse, false claims, and data privacy laws, with non-compliance leading to severe administrative, civil, and criminal penalties - Pharmaceutical companies are subject to federal and state anti-kickback, fraud and abuse, false claims, data privacy and security, and physician transparency laws[73](index=73&type=chunk) - Key laws include the federal Anti-Kickback Statute, federal civil and criminal false claims laws (e.g., False Claims Act), HIPAA (health care fraud, privacy, security), and the Physician Payments Sunshine Act[74](index=74&type=chunk) - Analogous state and foreign laws also apply, varying significantly and complicating compliance efforts[75](index=75&type=chunk) - Violations can lead to severe penalties, including administrative, civil, and criminal penalties, fines, exclusion from federal healthcare programs, and imprisonment[76](index=76&type=chunk) [Coverage and Reimbursement](index=18&type=section&id=Coverage%20and%20Reimbursement) Product sales depend on third-party payor coverage and reimbursement levels, which are increasingly subject to reduction by government cost-containment programs, potentially limiting sales and demand - Product sales depend on third-party payor coverage (federal, state, foreign government programs, commercial insurance) and reimbursement levels, which are increasingly being reduced[77](index=77&type=chunk) - Government cost-containment programs, including price controls and restrictions, could limit sales; decreased reimbursement or non-coverage could reduce physician usage and patient demand[77](index=77&type=chunk) [Healthcare Reform](index=18&type=section&id=Healthcare%20Reform) Healthcare reforms like the ACA and IRA significantly impact the business by increasing Medicaid rebates, enabling Medicare drug price negotiation, and imposing inflation-based rebates - The Patient Protection and Affordable Care Act (ACA) significantly changed healthcare financing, increasing Medicaid rebates, requiring manufacturer participation in Medicare Part D discount programs, and imposing annual fees on pharmaceutical manufacturers[78](index=78&type=chunk)[79](index=79&type=chunk)[81](index=81&type=chunk) - The Inflation Reduction Act of 2022 (IRA) directs HHS to negotiate prices for certain high-expenditure drugs under Medicare and imposes rebates for price increases exceeding inflation, taking effect progressively from FY2023[79](index=79&type=chunk)[80](index=80&type=chunk) - States are also implementing regulations to control pharmaceutical pricing, including price constraints, discounts, and marketing cost disclosures[81](index=81&type=chunk) [Facilities](index=20&type=section&id=Facilities) The company owns a 128,097 sq ft manufacturing facility in Tarzana, California, and leases office/lab spaces in Dallas, Thousand Oaks, and the UK, with monetization or sublease options under evaluation - The company owns a **128,097 sq ft** clinical and commercial manufacturing facility in Tarzana, California, and is evaluating monetization options (sale or lease)[82](index=82&type=chunk) - Headquarters are in Dallas, Texas (**5,055 sq ft** leased office space, expires April 2026)[83](index=83&type=chunk) - Leases **42,240 sq ft** of laboratory and office space in Thousand Oaks, California (expires Oct 2026), and is evaluating sublease options[83](index=83&type=chunk) - Leased **11,389 sq ft** of laboratory and office space in Manchester, UK, expiring April 2024 (early notice served), and **7,728 sq ft** in Alderley Park, UK (expires Nov 2030)[84](index=84&type=chunk) [Employees and Human Capital Resources](index=20&type=section&id=Employees%20and%20Human%20Capital%20Resources) The company underwent multiple restructurings from 2022 to 2024, significantly reducing its workforce and closing UK operations, with 49 full-time employees as of March 2024, 33 of whom are in R&D - In December 2022, a restructuring plan reduced the U.S. workforce by **~60%** and discontinued the ITIL-168 program[86](index=86&type=chunk) - An expanded restructuring in January 2023 resulted in **~15** U.S. employees for global business operations and **~65** UK employees for R&D, clinical studies, and technical operations[87](index=87&type=chunk) - In January 2024, a new restructuring plan approved closing UK manufacturing and clinical trial operations, expecting a **~61%** reduction in UK workforce by H1 2024[88](index=88&type=chunk) - As of March 19, 2024, the company had **49** full-time employees, with **33** engaged in R&D activities[89](index=89&type=chunk) [Corporate Information](index=20&type=section&id=Corporate%20Information) Instil Bio, Inc. was incorporated in Delaware in August 2018, with its principal executive offices located in Dallas, Texas - Instil Bio, Inc. was incorporated in Delaware in August 2018, with principal executive offices in Dallas, Texas[91](index=91&type=chunk) [Available Information](index=20&type=section&id=Available%20Information) Annual, Quarterly, and Current Reports (10-K, 10-Q, 8-K) are available free of charge on the company's website after electronic filing with the SEC - Annual, Quarterly, and Current Reports (10-K, 10-Q, 8-K) are available free of charge on the company's website (instilbio.com) after electronic filing with the SEC[93](index=93&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant financial losses, early-stage product development uncertainties, complex manufacturing, intense competition, and stringent regulatory hurdles, requiring substantial future funding [Risks Associated with Our Business](index=21&type=section&id=Risks%20Associated%20with%20Our%20Business) The company faces significant business risks including substantial historical and expected future losses, a limited operating history with no commercialized products, a need for additional funding, and high uncertainty in product development - The company has incurred significant losses since inception and expects to continue to do so, with no guarantee of achieving or maintaining profitability[96](index=96&type=chunk) - A limited operating history and no prior experience in completing clinical trials or commercializing products make it difficult to evaluate future viability[96](index=96&type=chunk) - Substantial additional funding is required, and inability to raise capital could force delays or curtailment of development and growth strategy[96](index=96&type=chunk) - All product candidates are in preclinical or potential investigator-initiated clinical stages, and failure to successfully develop, receive regulatory approval, or commercialize them would harm the business[96](index=96&type=chunk) [Risks Related to our Financial Position and Capital Needs](index=22&type=section&id=Risks%20Related%20to%20our%20Financial%20Position%20and%20Capital%20Needs) The company has incurred significant net losses and an accumulated deficit, requiring substantial additional funding which may lead to ownership dilution or restrictive debt covenants, alongside ongoing restructuring and impairment charges Net Losses and Accumulated Deficit | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :----- | :---------------------- | :---------------------- | | Net Losses | $156.1 million | $223.2 million | | Accumulated Deficit (as of Dec 31, 2023) | $581.0 million | | Cash and Investments (as of Dec 31, 2023) | Category | Amount (in millions) | | :------- | :------------------- | | Cash and cash equivalents | $9.2 | | Restricted cash | $1.5 | | Marketable securities | $141.2 | | Long-term investments | $23.2 | | **Total** | **$175.0** | - The company believes existing capital is sufficient to fund operations beyond **2026**, but this estimate is based on assumptions that may prove wrong, potentially leading to earlier capital depletion[105](index=105&type=chunk) - Raising additional capital through equity or convertible debt will dilute ownership, and debt financing may impose restrictive covenants[108](index=108&type=chunk) - The company recorded aggregate restructuring and impairment charges of approximately **$72.0 million** in 2023, including **$16.3 million** for assets held for sale and **$7.7 million** for right-of-use assets, due to strategic reprioritization and facility closures[111](index=111&type=chunk) [Risks Related to the Development of our Product Candidates](index=26&type=section&id=Risks%20Related%20to%20the%20Development%20of%20our%20Product%20Candidates) Product candidate development faces high risks due to early-stage status, novel platform, costly trials with uncertain outcomes, potential safety/efficacy failures, regulatory hurdles, market size limitations, and external factors like Brexit - All product candidates are in early-stage development, and the company has no prior experience completing clinical trials or working in collaborator-led IITs, making successful development and commercialization highly uncertain[113](index=113&type=chunk)[114](index=114&type=chunk)[156](index=156&type=chunk) - The CoStAR platform is novel, and there's no assurance it will deliver effective TIL therapies or achieve marketing approval[117](index=117&type=chunk) - Preclinical studies and clinical trials are expensive, time-consuming, and have uncertain outcomes, with potential for delays, redesigns, or termination due to various factors including manufacturing issues (e.g., ITIL-168 pause in 2022)[124](index=124&type=chunk)[125](index=125&type=chunk)[129](index=129&type=chunk) - Interim or preliminary clinical trial results may change, and regulatory agencies may not accept or agree with the company's interpretations of data, potentially requiring additional trials[127](index=127&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Product candidates may fail to demonstrate safety and efficacy, or serious adverse side effects (e.g., thrombocytopenia, cytokine release syndrome) could emerge, leading to development halts, limited approvals, or increased costs[145](index=145&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Negative public opinion of TIL therapies, evolving competition, or increased regulatory scrutiny could adversely impact development and commercial strategy[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - Delays or difficulties in patient enrollment and retention in clinical trials could prevent or delay regulatory approvals[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - Orphan drug designation may not be successful or maintained, and breakthrough therapy designation does not guarantee faster approval[162](index=162&type=chunk)[164](index=164&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - Conducting clinical trials outside the U.S. (e.g., China) carries risks that data may not be accepted by the FDA or other foreign regulatory authorities, requiring additional costly and time-consuming trials[169](index=169&type=chunk)[170](index=170&type=chunk) - The market opportunities for product candidates may be smaller than projected, potentially limiting revenue and profitability[174](index=174&type=chunk)[176](index=176&type=chunk) - Developing products in combination with other therapies exposes the company to additional regulatory risks, including potential revocation of approval or supply issues with co-administered agents[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - Brexit may negatively affect global economic conditions, financial markets, and the company's business, particularly regarding regulatory frameworks for product importation, approval, and commercialization in the UK and EU[180](index=180&type=chunk)[181](index=181&type=chunk) [Risks Related to the Manufacturing of our Product Candidates](index=42&type=section&id=Risks%20Related%20to%20the%20Manufacturing%20of%20our%20Product%20Candidates) Biologics manufacturing is technically complex and subject to cGMP requirements, with risks including process errors, contamination, raw material shortages, past production failures, and reliance on third-party manufacturers, all potentially delaying development - Manufacturing biologics, especially cell therapies, is technically complex and difficult, requiring substantial expertise and capital investment, with production difficulties potentially delaying clinical studies[182](index=182&type=chunk)[183](index=183&type=chunk)[185](index=185&type=chunk) - Manufacturers must comply with cGMP requirements; non-compliance can lead to delays, clinical holds, fines, or withdrawal of approvals[183](index=183&type=chunk) - Delays or failures in cell therapy manufacturing can result from process errors, equipment failure, contamination, logistical issues, variations in patient starting material, or inability to procure raw materials[186](index=186&type=chunk)[187](index=187&type=chunk) - The company experienced a voluntary pause in clinical trials in October 2022 due to decreased successful manufacturing rates for ITIL-168, highlighting ongoing manufacturing risks[188](index=188&type=chunk) - Reliance on third-party manufacturers (including collaborators) for manufacturing and quality testing exposes the company to reduced control and risks of disruptions[189](index=189&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Contamination or interruption in the manufacturing process, or shortages of raw materials, could delay clinical development or marketing schedules[201](index=201&type=chunk) - Changes in manufacturing methods or formulation may incur additional costs or delays, potentially requiring further testing or regulatory approval[202](index=202&type=chunk) [Risks Related to the Commercialization of our Product Candidates](index=47&type=section&id=Risks%20Related%20to%20the%20Commercialization%20of%20our%20Product%20Candidates) Commercialization faces risks from insufficient market acceptance, lack of sales infrastructure, smaller patient populations, intense competition, reimbursement challenges, product liability, cybersecurity threats, and stringent data privacy and environmental regulations - Even if approved, product candidates may fail to achieve sufficient market acceptance by physicians, patients, and third-party payors, impacting revenue and profitability[203](index=203&type=chunk) - Market acceptance depends on efficacy, safety, competitive advantages, pricing, ease of administration, product labeling, and patient/physician willingness to adopt new treatments[204](index=204&type=chunk) - The company lacks sales and marketing infrastructure and faces risks in establishing its own or relying on third parties, potentially leading to lower revenue and profitability[205](index=205&type=chunk)[206](index=206&type=chunk) - Treatable patient populations may be smaller than projected, limiting addressable markets and potentially hindering profitability[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) - Off-label use or misuse of products could harm reputation, lead to costly product liability suits, and result in penalties for non-compliance with regulatory requirements[211](index=211&type=chunk)[212](index=212&type=chunk) - The company faces significant competition from other biotechnology and pharmaceutical companies, including those developing TIL, CAR-T, and TCR-T cell therapies, as well as academic institutions[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Competition from biosimilar products, if approved, could lead to competitive pressure and adverse consequences[221](index=221&type=chunk)[222](index=222&type=chunk) - Success depends on obtaining and maintaining coverage and adequate reimbursement from third-party payors, which are increasingly focused on cost containment and may not cover or adequately pay for new products[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - Product liability lawsuits could result in substantial liabilities, decreased demand, reputational damage, and significant costs, potentially exceeding insurance coverage[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Computer system failures, cyberattacks, or cybersecurity deficiencies (internal or third-party) could disrupt operations, lead to data loss, reputational harm, and significant financial and legal consequences[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) - The company is subject to stringent and evolving U.S. and foreign data privacy and security laws (e.g., HIPAA, CCPA, UK GDPR), with non-compliance leading to investigations, fines, litigation, and business disruptions[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) - Failure to comply with environmental, health, and safety laws could result in fines, penalties, or costs that harm the business[249](index=249&type=chunk)[250](index=250&type=chunk) [Risks Related to Our Dependence on Third Parties](index=56&type=section&id=Risks%20Related%20to%20Our%20Dependence%20on%20Third%20Parties) Dependence on third parties for clinical trials and collaborations introduces risks of reduced control, unsatisfactory performance, conflicts of interest, and challenges in negotiating favorable terms, potentially delaying development or increasing costs - Reliance on third parties (CROs, collaborators) for clinical trials reduces control over activities, and their unsatisfactory performance or non-compliance could delay regulatory approvals or commercialization[251](index=251&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) - Investigator-initiated trials (IITs) provide data but offer limited control over protocols, administration, and regulatory compliance, potentially affecting data integrity and future development[253](index=253&type=chunk) - Principal investigators' financial relationships with the company could create conflicts of interest, potentially jeopardizing clinical data integrity[259](index=259&type=chunk) - Seeking collaborations for development or commercialization carries risks, including collaborators' discretion over resources, potential for competing products, and disagreements over proprietary rights[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - Inability to negotiate additional collaborations on favorable terms could force the company to curtail development programs or increase expenditures, requiring additional capital[265](index=265&type=chunk) [Risks Related to our Intellectual Property](index=60&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property) Intellectual property risks include inability to obtain or protect patents and trade secrets, uncertain patent strength, costly litigation, third-party infringement claims, and limited global protection, all of which could hinder competitive effectiveness - Inability to obtain or protect intellectual property (patents, trade secrets) related to product candidates could hinder competitive effectiveness[266](index=266&type=chunk) - Patent strength is uncertain; applications may not issue, issued patents may be invalid/unenforceable, or competitors may design around claims[267](index=267&type=chunk)[268](index=268&type=chunk) - Trade secrets are difficult to protect and can be disclosed or independently developed by competitors, harming the company's competitive position[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[274](index=274&type=chunk) - Patent terms may be inadequate due to lengthy development and regulatory review, and failure to obtain extensions (e.g., Hatch-Waxman Amendments) could lead to earlier generic competition[275](index=275&type=chunk)[276](index=276&type=chunk) - Failure to comply with future intellectual property license obligations could result in loss of crucial rights[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - Patent reform legislation (e.g., Leahy-Smith Act) and court rulings increase uncertainties and costs in patent prosecution and enforcement[280](index=280&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk) - Lawsuits to protect or enforce patents are expensive, time-consuming, and may be unsuccessful, potentially leading to patent invalidation or narrow interpretation[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk)[287](index=287&type=chunk) - Incorrect identification or interpretation of third-party patents could adversely affect product development and marketing[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Inability to license or acquire necessary third-party intellectual property could force abandonment of development programs[291](index=291&type=chunk) - Third parties may allege infringement of their intellectual property rights, leading to costly litigation, potential injunctions, or substantial damages[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk) - Claims of wrongful use or disclosure of confidential information by employees or consultants, or challenges to inventorship/ownership of patents, could result in litigation, loss of rights, or personnel[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk) - Sharing trade secrets with third parties increases the risk of discovery or misappropriation, potentially harming competitive position[300](index=300&type=chunk)[301](index=301&type=chunk) - Limited geographical patent protection and varying intellectual property laws globally may hinder the ability to protect rights worldwide[302](index=302&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - Non-compliance with procedural requirements for patent maintenance can lead to loss of patent rights[309](index=309&type=chunk)[310](index=310&type=chunk) - Trademarks may be infringed or challenged, requiring rebranding or enforcement efforts[311](index=311&type=chunk) - Future collaboration arrangements may not be successful, impacting development and commercialization[312](index=312&type=chunk)[313](index=313&type=chunk) - Intellectual property rights may not cover all competitive threats, such as similar products not covered by claims or independent development of technologies[314](index=314&type=chunk) [Risks Related to Legal and Regulatory Compliance Matters](index=71&type=section&id=Risks%20Related%20to%20Legal%20and%20Regulatory%20Compliance%20Matters) Legal and regulatory compliance risks include stringent healthcare fraud and abuse laws, geopolitical tensions affecting international collaborations, ongoing post-approval oversight, and evolving legislative reforms, all potentially leading to penalties or operational disruptions - Relationships with healthcare providers and payors are subject to federal and state healthcare fraud and abuse laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act), and non-compliance can lead to substantial penalties[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) - The collaboration in China exposes the company to risks from strained U.S.-China trade and political relations, and unpredictable changes in Chinese biopharmaceutical regulations[322](index=322&type=chunk) - Even with regulatory approval, products remain subject to ongoing oversight (manufacturing, labeling, promotion, post-market studies), incurring significant additional expense and potential for approval withdrawal if non-compliance occurs[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk) - Approval in one jurisdiction (U.S. or EU) does not guarantee approval in others, limiting market potential if foreign approvals are not obtained[328](index=328&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk) - Healthcare legislative or regulatory reforms (e.g., ACA, IRA) can negatively impact business by increasing costs, restricting marketing, or reducing reimbursement[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) - FDA regulations and guidance may change, imposing additional requirements, increasing costs, or delaying approvals[339](index=339&type=chunk) [Risks Related to Employee Matters and Managing our Growth](index=76&type=section&id=Risks%20Related%20to%20Employee%20Matters%20and%20Managing%20our%20Growth) Future success depends on retaining key personnel and attracting qualified staff in a competitive environment, while effectively managing growth across clinical development, regulatory affairs, manufacturing, and commercialization, and mitigating risks of employee misconduct - Future success depends on retaining key executives and attracting/retaining qualified scientific, clinical, manufacturing, and sales/marketing personnel, which is challenging due to intense competition[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk) - Failure to adequately manage future growth, particularly in clinical development, regulatory affairs, manufacturing, and commercialization, could disrupt operations and adversely affect financial results[343](index=343&type=chunk) - Employees, contractors, and collaborators may engage in misconduct or improper activities, including non-compliance with regulatory standards, leading to fraudulent conduct, regulatory sanctions, and reputational harm[344](index=344&type=chunk)[345](index=345&type=chunk) [Risks Related to Ownership of our Common Stock and our Status as a Public Company](index=78&type=section&id=Risks%20Related%20to%20Ownership%20of%20our%20Common%20Stock%20and%20our%20Status%20as%20a%20Public%20Company) Risks related to common stock ownership include market volatility, potential class action lawsuits, dilution from stock sales, anti-takeover provisions, concentrated ownership, and the impact of 'emerging growth company' status on investor attractiveness - An active trading market for common stock may not be sustained, making it difficult to sell shares at an attractive price[346](index=346&type=chunk) - The trading price of common stock may be volatile due to various factors, including clinical trial results, regulatory decisions, competition, and general market conditions[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) - Stockholders may initiate class action lawsuits following stock price volatility, incurring substantial costs and diverting management attention[350](index=350&type=chunk) - Sales of a substantial number of shares by existing stockholders could significantly depress the market price[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) - Provisions in corporate charter documents and Delaware law (e.g., staggered board, no written consent, Section 203) may prevent or frustrate attempts to change management or acquire a controlling interest[356](index=356&type=chunk)[357](index=357&type=chunk) - Concentration of common stock ownership among executive officers, directors, and principal stockholders may prevent new investors from influencing significant corporate decisions[358](index=358&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' reduced disclosure and governance requirements may make common stock less attractive to investors[361](index=361&type=chunk)[362](index=362&type=chunk)[363](index=363&type=chunk) - The company has broad discretion over the use of cash and cash equivalents, and ineffective application may compromise growth strategy[364](index=364&type=chunk)[365](index=365&type=chunk) - No cash dividends are anticipated in the foreseeable future; capital appreciation will be the sole source of gains[366](index=366&type=chunk) - Exclusive forum provisions in the certificate of incorporation may limit stockholders' ability to choose a favorable judicial forum for disputes[367](index=367&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk) [General Risk Factors](index=82&type=section&id=General%20Risk%20Factors) General risks include significant public company costs, internal control failures, fluctuating tax rates, NOL limitations, anti-bribery law non-compliance, government agency disruptions, and unfavorable global economic and political conditions - As a public company, the company incurs significant additional legal, accounting, and other costs, and changing laws/regulations increase compliance burdens[371](index=371&type=chunk)[372](index=372&type=chunk)[373](index=373&type=chunk) - Failure to maintain proper and effective internal controls over financial reporting could impair the ability to produce accurate financial statements, leading to stock price decline or sanctions[374](index=374&type=chunk)[375](index=375&type=chunk)[376](index=376&type=chunk)[377](index=377&type=chunk) - The effective tax rate may fluctuate due to new legislation, changes in profitability mix, audits, or accounting changes, potentially leading to tax obligations exceeding accrued amounts[378](index=378&type=chunk)[379](index=379&type=chunk) - A significant portion of net operating loss (NOL) carryforwards may not be utilized due to limitations (e.g., Section 382 ownership changes), increasing future tax obligations[380](index=380&type=chunk) - Business activities are subject to the Foreign Corrupt Practices Act (FCPA) and similar anti-bribery laws; non-compliance could result in fines, sanctions, and reputational damage[381](index=381&type=chunk) - Disruptions at government agencies (FDA, SEC) due to funding shortages or global health concerns could delay product development or commercialization[382](index=382&type=chunk)[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - Unfavorable global economic and political conditions (e.g., military conflicts, inflation, bank failures) could adversely affect business, financial condition, or results of operations[386](index=386&type=chunk) [Item 1B. Unresolved Staff Comments](index=85&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments[387](index=387&type=chunk) [Item 1C. Cybersecurity](index=85&type=section&id=Item%201C.%20Cybersecurity) The company has implemented information security processes to identify, assess, and manage cybersecurity threats to its critical systems and data, with oversight from the Audit Committee [Risk management and strategy](index=86&type=section&id=Risk%20management%20and%20strategy) The company employs information security processes to identify, assess, and manage cybersecurity threats to critical systems and data, utilizing technical, physical, and organizational measures, with risk management integrated into overall enterprise strategy - The company has implemented information security processes to identify, assess, and manage material risks from cybersecurity threats to its critical computer networks, third-party hosted services, communication systems, hardware, software, and critical data[389](index=389&type=chunk) - The IT Department, led by the Global Head of IT, identifies and assesses risks through various methods, including subscribing to threat reports, using automated tools, evaluating reported threats, and intelligence feeds[390](index=390&type=chunk) - Technical, physical, and organizational measures are maintained to mitigate risks, such as an incident response policy, employee training, data encryption, endpoint detection, network security, physical access controls, critical systems monitoring, cybersecurity insurance, and a managed Security Operations Center (SOC)[391](index=391&type=chunk) - Cybersecurity risk management is integrated into the company's overall risk management processes, with senior management and IT reporting to the Audit Committee[392](index=392&type=chunk) - Third-party service providers assist in identifying, assessing, and managing cybersecurity threats, including threat intelligence, managed SOC, and endpoint detection/response[393](index=393&type=chunk) [Governance](index=86&type=section&id=Governance) Cybersecurity governance is overseen by the Audit Committee, with the Global Head of IT and CFO responsible for strategy, budget, and incident response, ensuring management and the committee receive regular reports on threats and mitigation - The board of directors' Audit Committee oversees the company's cybersecurity risk management processes, including mitigation of threats[396](index=396&type=chunk) - The Global Head of IT, with over **20 years** of experience in cybersecurity and IT risk management, along with the CFO, is responsible for personnel, integrating cybersecurity into strategy, and communicating priorities[397](index=397&type=chunk)[398](index=398&type=chunk) - The CFO approves cybersecurity-related budgets, prepares for incidents, approves processes, and reviews security reports[398](index=398&type=chunk) - The cybersecurity incident response policy escalates certain incidents to management, including the Global Head of IT, CFO, and CEO, who work with the incident response team[399](index=399&type=chunk) - The Audit Committee receives reports on cybersecurity incidents and has access to various reports, summaries, or presentations related to cybersecurity threats, risk, and mitigation[400](index=400&type=chunk) [Item 2. Properties](index=87&type=section&id=Item%202.%20Properties) The company owns a 128,097 sq ft manufacturing facility in Tarzana, California, and leases office and laboratory spaces in Dallas, Thousand Oaks, and the UK, with monetization or sublease options under evaluation - Owns a **128,097 sq ft** clinical and commercial manufacturing facility in Tarzana, California, with monetization options (sale or lease) under evaluation[401](index=401&type=chunk)[403](index=403&type=chunk) - Headquarters in Dallas, Texas, consist of **5,055 sq ft** of leased office space (lease expires April 2026)[401](index=401&type=chunk) - Leases **42,240 sq ft** of laboratory and office space in Thousand Oaks, California (lease expires October 2026), with sublease options under evaluation[401](index=401&type=chunk)[403](index=403&type=chunk) - Leased **11,389 sq ft** of laboratory and office space in Manchester, UK (leases terminate April 2024), and **7,728 sq ft** in Alderley Park, UK (leases expire November 2030)[402](index=402&type=chunk) [Item 3. Legal Proceedings](index=87&type=section&id=Item%203.%20Legal%20Proceedings) The company may be involved in legal proceedings in the ordinary course of business but does not expect any current matters to have a material adverse effect on its financial position or results - The company may become involved in legal proceedings arising in the ordinary course of business[404](index=404&type=chunk) - The company does not expect the resolution of these matters to have a material adverse effect on its financial position, results of operations, or cash flows[583](index=583&type=chunk) [Item 4. Mine Safety Disclosures](index=87&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[405](index=405&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=88&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock is listed on Nasdaq under 'TIL', underwent a 1-for-20 reverse stock split in December 2023, has 17 stockholders of record, and has never paid cash dividends, with IPO proceeds fully utilized - Common stock has been listed on the Nasdaq Stock Market under the symbol 'TIL' since March 19, 2021[408](index=408&type=chunk) - A **1-for-20** reverse stock split of outstanding common stock was effected on December 7, 2023[409](index=409&type=chunk) - As of March 19, 2024, there were **17** stockholders of record[410](index=410&type=chunk) - The company has never declared or paid cash dividends and intends to retain all available funds and future earnings to support operations and business growth[411](index=411&type=chunk) - All proceeds from the initial public offering (IPO) have been utilized as of December 31, 2023[413](index=413&type=chunk) - No recent sales of unregistered equity securities or issuer purchases of equity securities[412](index=412&type=chunk)[414](index=414&type=chunk) [Item 6. Reserved](index=88&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - This item is reserved[415](index=415&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=89&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Instil Bio's financial condition and operational results, highlighting significant operating losses, strategic shifts, and liquidity, with key accounting policies discussed [Forward-Looking Statements](index=89&type=section&id=Forward-Looking%20Statements) This discussion contains forward-looking statements regarding strategy, operations, and financial position, which are subject to risks and uncertainties detailed in the 'Risk Factors' section, meaning actual results may differ materially - The discussion contains forward-looking statements regarding strategy, future operations, clinical trials, financial position, revenues, costs, and plans, subject to risks and uncertainties[418](index=418&type=chunk) - Actual results may differ materially from these statements due to various risks, including those detailed in the 'Risk Factors' section[418](index=418&type=chunk) [Overview](index=89&type=section&id=Overview) Instil Bio is a clinical-stage biopharmaceutical company focused on TIL cell therapy, reporting significant net losses and an accumulated deficit, with recent strategic shifts including a China collaboration and closure of UK operations - Instil Bio is a clinical-stage biopharmaceutical company focused on developing novel therapies, with its first program being a tumor infiltrating lymphocyte (TIL) cell therapy for cancer, acquired in 2020[419](index=419&type=chunk) - The company entered a collaboration in December 2023 to develop an autologous FRα CoStAR TIL for potential open-label investigator-initiated trials (IITs) in non-small cell lung cancer (NSCLC) in China[420](index=420&type=chunk) - In January 2024, the company announced plans to close its UK manufacturing and clinical trial operations and ceased the ITIL-306 Phase 1 clinical trial, retaining key personnel for early-stage pipeline development and collaboration support[421](index=421&type=chunk) Net Loss and Accumulated Deficit | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :----- | :---------------------- | :---------------------- | | Net Loss | $(156.1) million | $(223.2) million | | Accumulated Deficit (as of Dec 31, 2023) | $(581.0) million | | Cash and Investments (as of Dec 31, 2023) | Category | Amount (in millions) | | :------- | :------------------- | | Cash and cash equivalents | $9.2 | | Restricted cash | $1.5 | | Marketable securities | $141.2 | | Long-term investments | $23.2 | | **Total** | **$175.0** | [Recent Developments](index=90&type=section&id=Recent%20Developments) Recent developments include a December 2023 China collaboration and a January 2024 restructuring plan to close UK manufacturing and clinical trial operations, discontinuing ITIL-306-202 and reducing the UK workforce by 61% - In December 2023, the company entered a collaboration to develop its Collaboration Product for potential IITs in NSCLC in China[424](index=424&type=chunk) - In January 2024, the Board approved a restructuring plan (2024 Plan) to close UK manufacturing and clinical trial operations, discontinuing the ITIL-306-202 clinical trial[424](index=424&type=chunk) - The 2024 Plan is expected to reduce the UK workforce by approximately **61%**, with completion by the first half of 2024[424](index=424&type=chunk) - Estimated charges for the 2024 Plan are up to **$6.1 million**, covering employee termination costs, severance, and contract termination costs[425](index=425&type=chunk) [Components of Operating Results](index=90&type=section&id=Components%20of%20Operating%20Results) This section details the components of operating results, including research and development, general and administrative, restructuring and impairment charges, interest income/expense, other income/expense, and income tax provision [Research and Development](index=90&type=section&id=Research%20and%20Development) Research and development expenses, a significant portion of operating costs, are presented net of reimbursements and are expected to fluctuate based on clinical development activities, business development, and company size - R&D expenses are a significant portion of operating expenses, primarily consisting of research, development, manufacturing, monitoring services, and personnel-related costs[426](index=426&type=chunk) - R&D expense is presented net of reimbursements from UK government tax and expenditure credits and grants[426](index=426&type=chunk) - Future R&D expenses are expected to change based on clinical development activities for the Collaboration Product or other TIL technologies, business development, and company size[427](index=427&type=chunk) [General and Administrative](index=91&type=section&id=General%20and%20Administrative) General and administrative expenses primarily cover compensation, professional fees, and facility costs, with future expenses expected to change in line with updated strategy, business development, and public company operational costs - G&A expenses primarily include compensation and personnel-related costs for executive, finance, and administrative functions, as well as professional fees, insurance, and facility costs[428](index=428&type=chunk) - Future G&A expenses are expected to change in line with the updated strategy, business development activities, and company size, including costs associated with operating as a public company[429](index=429&type=chunk)[430](index=430&type=chunk) [Restructuring and Impairment Charges](index=91&type=section&id=Restructuring%20and%20Impairment%20Charges) Restructuring and impairment charges include asset impairments, contract terminations, and severance costs, stemming from strategic reprioritization plans to reduce costs and reallocate resources, with additional charges anticipated in 2024 - Restructuring and impairment charges include asset impairment (Tarzana facility), contract terminations, and severance/employee termination costs[431](index=431&type=chunk) - The 2022 and 2023 plans aimed to reduce costs and reallocate resources to focus on CoStAR and next-generation TIL technologies, discontinuing ITIL-168 and transitioning ITIL-306 operations[431](index=431&type=chunk) - Additional restructuring and impairment charges are expected in 2024 due to UK workforce reductions and the 2024 Plan[431](index=431&type=chunk) [Interest Income](index=91&type=section&id=Interest%20Income) Interest income is derived from funds held in cash, cash equivalent accounts, and marketable securities - Interest income is derived from funds held in cash, cash equivalent accounts, and marketable securities[432](index=432&type=chunk) [Interest Expense](index=91&type=section&id=Interest%20Expense) Interest expense consists of interest on the note payable and amortization of loan origination costs - Interest expense consists of interest on the note payable and amortization of loan origination costs[433](index=433&type=chunk) [Other Income (Expense), Net](index=91&type=section&id=Other%20Income%20%28Expense%29%2C%20Net) Other income (expense), net, primarily includes derivative instrument fair value changes, foreign exchange remeasurement gains/losses, and other miscellaneous expenses or income - Other income (expense), net, primarily includes derivative instrument fair value gains/losses, foreign exchange remeasurement gains/losses, and other expenses/income[434](index=434&type=chunk) [Income Tax Provision](index=91&type=section&id=Income%20Tax%20Provision) The company is subject to U.S. and UK income taxes, with effective tax rates varying, and maintains a full valuation allowance against net deferred tax assets due to cumulative net operating losses - The company is subject to income taxes in the U.S. and UK, with effective tax rates varying based on income proportion, R&D tax credits, deferred tax asset/liability valuation, and tax law changes[435](index=435&type=chunk) - A full valuation allowance is maintained against net deferred tax assets for both the U.S. and UK due to cumulative net operating losses (NOLs) and uncertainty of future profitability[436](index=436&type=chunk) [Results of Operations](index=92&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022 [Comparison of the Years Ended December 31, 2023 and 2022](index=92&type=section&id=Comparison%20of%20the%20Years%20Ended%20December%2031%2C%202023%20and%202022) This section presents a consolidated overview of the company's financial performance, detailing operating expenses, net loss, and other income/expense for 2023 compared to 2022 Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | 2023 | 2022 | Change ($) | | :-------------------------------- | :----- | :----- | :--------- | | Research and development | $39,604 | $141,056 | $(101,452) | | General and administrative | $47,553 | $62,235 | $(14,682) | | Restructuring and impairment charges | $72,012 | $23,167 | $48,845 | | Total operating expenses | $159,169 | $226,458 | $(67,289) | | Loss from operations | $(159,169) | $(226,458) | $67,289 | | Interest income | $8,866 | $3,655 | $5,211 | | Interest expense | $(5,209) | $(1,883) | $(3,326) | | Other expense, net | $(575) | $(564) | $(11) | | Loss before income tax benefit | $(156,087) | $(225,250) | $69,163 | | Income tax benefit | $0 | $2,073 | $(2,073) | | Net loss | $(156,087) | $(223,177) | $67,090 | [Research and Development Expenses](index=92&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses decreased by **$101.5 million** in 2023, primarily due to reduced headcount, discontinuation of ITIL-168 activities, and lower facilities costs, with further near-term decreases anticipated Research and Development Expenses (in thousands) | Year | Amount | | :--- | :----- | | 2023 | $39,604 | | 2022 | $141,056 | | **Net Decrease** | **$(101,452)** | - The **$101.5 million** decrease was primarily due to a **$60.4 million** reduction in headcount costs (wages, benefits, stock-based compensation, professional services), a **$25.5 million** decrease in research and clinical development activities (due to ITIL-168 discontinuation), and a **$15.6 million** decrease in facilities, overhead, and depreciation[438](index=438&type=chunk) - Future R&D expenses are anticipated to decrease in the near term due to workforce reductions and a more efficient clinical development strategy[439](index=439&type=chunk) [General and Administrative Expenses](index=93&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by **$14.7 million** in 2023, mainly driven by reductions in headcount and professional service costs, partially offset by other expenses, with further near-term decreases expected General and Administrative Expenses (in thousands) | Year | Amount | | :--- | :----- | | 2023 | $47,553 | | 2022 | $62,235 | | **Net Decrease** | **$(14,682)** | - The **$14.7 million** decrease was mainly driven by a **$13.7 million** reduction in headcount and personnel-related costs (including **$2.0 million** in stock-based compensation) and a **$5.3 million** decrease in consulting and professional service costs[440](index=440&type=chunk) - This was partially offset by a **$4.3 million** increase in insurance, depreciation, and other office expenses[440](index=440&type=chunk) - G&A expenses are expected to decrease in the near term due to workforce reductions and changes in company size[440](index=440&type=chunk) [Restructuring and Impairment Charges](index=93&type=section&id=Restructuring%20and%20Impairment%20Charges) Restructuring and impairment charges increased by **$48.8 million** in 2023, primarily due to significant asset impairments on facilities and leased assets, with additional charges anticipated in 2024 due to ongoing restructuring plans Restructuring and Impairment Charges (in thousands) | Year | Amount | | :--- | :----- | | 2023 | $72,012 | | 2022 | $23,167 | | **Net Increase** | **$48,845** | - The **$48.8 million** increase was primarily due to a **$16.3 million** impairment charge for assets held for sale, a **$41.5 million** impairment on Tarzana manufacturing facilities, and a **$7.7 million** impairment on leased assets[441](index=441&type=chunk) - These increases were partially offset by decreases in contract termination costs (**$0.4 million**), other fixed

Research and development expenses were $2.0 million and $39.6 million for the fourth quarter and full year ended December 31, 2023, respectively, compared to $20.7 million and $141.1 million for the fourth quarter and full year ended December 31, 2022, respectively. Instil Bio Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Corporate Update DALLAS, TX, March 21, 2024 (GLOBE NEWSWIRE) Instil Bio, Inc. ("Instil") (NASDAQ: TIL), a clinical-stage biopharmaceutical company focused on dev ...

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Unaudited consolidated financial statements, including balance sheets, operations, equity, cash flows, and notes, reflect a strategic restructuring for ITIL-306 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Total Assets | $340,272 | $482,128 | | Total Liabilities | $106,248 | $118,523 | | Total Stockholders' Equity | $234,024 | $363,605 | | Cash and Cash Equivalents | $9,133 | $43,716 | | Marketable Securities | $174,315 | $217,204 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $8,492 | $39,660 | $37,621 | $120,334 | | General and administrative | $11,941 | $16,989 | $36,681 | $49,325 | | Restructuring and impairment charges | $46,283 | — | $71,847 | — | | Total operating expenses | $66,716 | $56,649 | $146,149 | $169,659 | | Loss from operations | $(66,716) | $(56,649) | $(146,149) | $(169,659) | | Net loss | $(67,432) | $(56,224) | $(143,162) | $(169,333) | | Net loss per share, basic and diluted | $(0.52) | $(0.43) | $(1.10) | $(1.31) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) | Metric | Balance - Dec 31, 2022 (in thousands) | Balance - Sep 30, 2023 (in thousands) | | :--- | :--- | :--- | | Additional Paid-in Capital | $788,992 | $802,605 | | Accumulated Deficit | $(424,894) | $(568,056) | | Total Stockholders' Equity | $363,605 | $234,024 | - **Stock-based compensation** for the nine months ended September 30, 2023, was **$13,613 thousand**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (9 Months Ended Sep 30) | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(68,648) | $(143,188) | | Net cash provided by investing activities | $27,178 | $81,739 | | Net cash provided by financing activities | $8,082 | $65,684 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(33,388) | $4,235 | | Cash, cash equivalents and restricted cash—end of period | $10,146 | $41,618 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - Instil Bio, Inc. is a clinical-stage biopharmaceutical company focused on developing an innovative cell therapy pipeline of autologous tumor infiltrating lymphocyte (TIL) therapies for the treatment of patients with cancer, with principal operations commencing in Q1 2019[26](index=26&type=chunk) - A restructuring plan was approved in December 2022 and expanded in January 2023, discontinuing the ITIL-168 program and prioritizing ITIL-306, transitioning clinical manufacturing and trial operations to the United Kingdom[27](index=27&type=chunk)[28](index=28&type=chunk)[75](index=75&type=chunk) - The company operates in a single operating segment[32](index=32&type=chunk) | Asset Category (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Land | $31,243 | $31,243 | | Laboratory equipment | $7,936 | $19,050 | | Buildings | $23,198 | $32,778 | | Office and computer equipment | $818 | $4,969 | | Leasehold improvements | $1,365 | $4,340 | | Manufacturing equipment | $1,933 | $8,803 | | Vehicles | — | $64 | | Construction work-in-progress | $79,235 | $104,117 | | Total property, plant and equipment, net | $139,435 | $196,880 | - **Impairment charges** of **$41.5 million** for buildings and construction work-in-progress, and **$4.6 million** for assets held for sale, were recognized in Q3 2023 due to restructuring and strategic prioritization[47](index=47&type=chunk)[48](index=48&type=chunk) | Accrued Liability (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Accrued construction costs | $60 | $12,359 | | Accrued compensation and benefits | $3,294 | $3,273 | | Accrued operational expenses | $1,387 | $2,203 | | Accrued restructuring costs | $3,188 | $5,434 | | Accrued research, development and clinical trial expenses | $1,773 | $3,827 | | Operating lease liabilities, current | $1,796 | $2,381 | | Other current liabilities | $324 | $592 | | Total accrued expenses and other current liabilities | $11,822 | $30,069 | - The outstanding principal amount under the construction loan was **$82.8 million** as of September 30, 2023, with the building substantially complete[62](index=62&type=chunk) - **Total restructuring and impairment charges** for the nine months ended September 30, 2023, amounted to **$71.8 million**, primarily from asset impairments and employee termination benefits[76](index=76&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting significant operating losses, strategic reprioritization of clinical programs to focus on ITIL-306, and the impact of restructuring charges - The company is a clinical-stage biopharmaceutical company focused on developing autologous TIL therapies for cancer, utilizing its CoStAR platform for genetically engineered TILs[83](index=83&type=chunk) - **Net loss** was **$67.4 million** for the three months and **$143.2 million** for the nine months ended September 30, 2023, with an **accumulated deficit** of **$568.1 million**[90](index=90&type=chunk) - **Cash, cash equivalents, restricted cash, and marketable securities** totaled **$184.5 million** as of September 30, 2023, which is believed to be sufficient to fund operating expenses and capital expenditure requirements beyond 2026[90](index=90&type=chunk)[125](index=125&type=chunk)[128](index=128&type=chunk) - **Research and development expenses** decreased by **$31.2 million** (QoQ) and **$82.7 million** (YoY) due to reduced headcount and discontinuation of the ITIL-168 program, but are anticipated to increase as the ITIL-306-202 clinical trial progresses[106](index=106&type=chunk)[114](index=114&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - **Restructuring and impairment charges** totaled **$46.3 million** for the three months and **$71.8 million** for the nine months ended September 30, 2023, primarily due to the impairment of commercial and clinical buildings, assets held for sale, and right-of-use assets, as well as severance payments[109](index=109&type=chunk)[111](index=111&type=chunk)[119](index=119&type=chunk)[

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 001-40215 Instil Bio, Inc. (Exact name of registrant as specified in its charter) Delaware 83-2072195 (I.R.S. Employer Identif ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 001-40215 Instil Bio, Inc. (Exact name of registrant as specified in its charter) Delaware 83-2072195 (State or other jurisdi ...