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Instil Bio, Inc. (NASDAQ:TIL) recently traded higher on the back of analyst raising their price target on shares because of how much the PD-1/VEGF bispecific antibody space is heating up. Having said that, it is because this company made a move about a month ago to receive ex-China development and commercial rights to ImmuneOnco’s PD-L1/VEGF bispecific antibody known as IMM2510 [also known as SYN-2510 as well]. Why does this matter, and why should investors be focused on this specific biotech? That’s because this particular space, the one where companies are using dual targeting of PD-L1 & VEGF is achieving success.
I will refer this point to a prior Seeking Alpha article I wrote, “Summit Therapeutics: Positive Data Leads To Targeting Of Other NSCLC Subpopulation.” In this article, I noted that the bispecific antibody ivonescimab from Summit Therapeutics Inc. (SMMT) and China partner Akeso was able to be the first to achieve a clinically meaningful benefit for patients with non-small cell lung cancer. While the eventual goal will be to create some type of clinical product differentiation to fend off competition, I don’t see why either of these companies can’t end up capturing a large chunk of the solid tumor treatment market space. Speaking of competitive advantage, what makes IMM2510 unique is its ability to bind to All VEGF ligands beyond that of VEGF-A.
A second item, which remains to be seen, would be that it deploys superior antibody-dependent cellular cytotoxicity [ADCC] killing compared to other PD-L1/VEGF bispecific antibodies. Not only did it obtain IMM2510 with this licensing, but it also obtained another candidate in its pipeline by the name of IMM27M [SYN-27M], which is an ADCC-enhanced anti-CTLA-4 antibody. Again, the advantage over prior CTLA targeting drugs would be having such an enhanced ADCC killing.
In-Licensing Deal Leads To In-Demand Oncology Product
As I stated above, Instil Bio was able to in-license ex-China development and commercial rights to ImmuneOnco’s proprietary PD-L1/VEGF bispecific antibody known as IMM2510. The deal made by Instil was a pretty good one, that’s because it obtains commercialization rights to all territories outside the Greater China region [China, Taiwan, Macau, and Hong Kong]. Thus, the first downside is that it won’t eventually be able to have any sales made in this territory.
A second downside is that the ability to obtain this bispecific antibody came at a future cost. How so? Well, that’s because it had to pay an upfront milestone payment of $50 million to ImmuneOnco. Eventually, it might have to end up paying it development, regulatory and commercial milestones exceeding $2 billion plus single-digit to low double-digit percentage royalties on global ex-China sales.
The stock has traded higher for several consecutive days now, and it was because of a few factors. One of the factors would be analysts raising their price target on the stock. For instance, an analyst at Baird raised their price target from $32 per share to $180 per share. Then, another analyst from H.C. Wainwright raised their price target on the stock from $25 per share to $40 per share. The truth is that these analysts didn’t raise their price targets randomly, and the stock didn’t trade higher on its own.
It all started with the proof of concept of effectively using a PD-L1/VEGF bispecific antibody to target advanced non-small cell lung cancer patients. This was shown by Summit Therapeutics and Akeso, where their drug ivonescimab was able to achieve a clinically meaningful difference compared to Keytruda in terms of patients with locally advanced or metastatic non-small cell lung cancer [NSCLC]. This can be shown regarding the difference that was obtained based on the primary endpoint of progression-free survival [PFS], which was evaluated over a 2-year period. Consider the following what was achieved for each of these respective clinical candidates:
- Ivonescimab achieved a PFS of 11.4 months.
- Keytruda achieved a PFS of 5.82 months.
This data was achieved with the release of the phase 3 HARMONi-2 study. The truth is that not only was a proof-of-concept for a PD-L1/VEGF bispecific antibody achieved, but it may even be possible to use it to target an earlier line of NSCLC patients [possibly 1st-line patients].
Beyond the scope of only looking at clinical activity established in a phase 3 study, there was already a phase 1 dose-escalation study completed by ImmuneOnco in the targeting of advanced solid tumors. Specifically, it did quite well in being able to target one NSCLC patients who had failed with prior PD-1 therapy. The thing is that not only are these bispecific antibody drugs effective, but they appear to be very safe/tolerable as well. Why is that? Well, consider that in the reported phase 1 dose-escalation study done, the doses tested ranged from 0.007–20.0 mg/kg of IM2510. Plus, no dose-limiting toxicities [DLTs] were observed either. Having said that, this particular phase 1 study is sponsored by [being run by] ImmuneOnco Biopharmaceuticals. Of course, this space is heating up, but in order for Instil Bio to have a competitive edge over others who are also developing such a bispecific fusion antibody, there has to be some improvements and/or enhancements.
Having said that, there might be some differentiating factors that might set IMM2510 apart from the others being developed. The first possible competitive advantage might be in terms of VEGF angiogenesis targeting. That is, this drug can target VEGF ligands beyond that of VEGF-A only. This is one possible way of enhancing the potential efficacy of the drug.
A second competitive advantage would be to have enhanced ADCC. What is this? This is the ability of an effector cell-like activation of a natural killer [NK] cell to use CD16 binding to perform cell lysis or cell cancer death. In the case of IMM2510, along with what I will note below in the next section of IMM27M, they both have much improved ADCC killing compared to first-generation ones.
These might be competitive advantages for IMM2510 to overcome all other PD-L1/VEGF bispecific antibodies in development. Consider that, neither ivonescimab nor BNT327 from BioNTech SE (BNTX) targets multiple VEGF ligands. Matter of fact, they only target VEGF-A. In addition, both of these clinical candidates from these competitors are not infused with enhanced ADCC killing.
Combination Development of In-licensed Products Might Enhance Efficacy
The thing is that while IM2510 works well enough alone as a monotherapy, as evidenced by other PD-L1/VEGF bispecific antibodies, it is possible that they might also be effective when deployed in combination with another clinical candidate. More about the combination prospect below because it is first important to note what the other in-licensed product was that the company obtained as part of the deal made. It obtained a next-generation CTLA-4 antibody known as IMM27M, which in truth also has improved ADCC killing. What does this CTLA-4 do? It is responsible for controlling regulatory T-cells, which, if found in the tumor microenvironment, are bad because they stop immune cells from being able to effectively target a tumor. Thus, the goal of IMM27M is to deplete such regulatory T-cells, but at the same time reduce the toxicity observed with first-generation anti-CTLA-4 drugs. This is where the combination aspect comes into play, which I want to note.
The truth is that IMM2510 might be able to be combined with chemotherapy to help improve efficacy in targeting solid tumors. Even further than that, ImmuneOnco has started combination studies deploying the use of PD-L1/VEGF IMM2510 in combination with CTLA-4 IMM27M to target solid tumors in China in July 2024. It remains to be seen if this combination ends up doing better than IM2510 monotherapy, but this might be another competitive advantage that could be achieved if successful.
Financials
According to the 10-Q SEC Filing, Instil Bio had cash, cash equivalents, marketable securities and long-term investments of $152.6 million as of June 30th, 2024. The reason for the cash on hand is because of the large amount of cash it has raised through its IPO, where it sold an aggregate of 920,000 shares of its common stock to raise net proceeds of $339 million. Since then, one of the main ways it has been raising cash was through the issuance and sale of convertible preferred stock.
The company burns roughly $13.6 million per quarter. This company should have enough cash for an extended period. Why do I believe that? That’s because it states in its most recent earnings report that it believes it has a cash runway, or enough cash on hand to fund its operations, beyond 2026.
Risks To Business
There are several risks for investors to consider before investing in Instil Bio. The first risk would be regarding the development of IMM2510 for the treatment of patients with solid tumors. This program is in early-stage development, matter of fact, it is only in phase 1 testing. On the other hand, Summit’s and Akeso’s ivonescimab is already approved in China for one indication and in phase 3 development for other indications. However, it is possible that IMM2510 could differentiate itself with the ability for more VEGF ligand targeting and increased ADCC killing.
The risk is that there is no assurance that these competitive advantages will be achieved, nor, that they will help the company do a better job at selling its product if approved for marketing.
The second risk would be regarding the development of next-generation anti-CTLA-4 antibody IMM27M for the treatment of patients with advanced solid tumors. The hope is that it not only does its intended function of regulatory T-cell depletion, but it does so with improved safety over first-generation drugs of the same class type. There is no assurance that improved safety will be observed in clinical testing, nor that data to be produced in the future will be enough to warrant further testing in the next round of clinical development.
The third and final risk would be what I noted above, in terms of combination studies. The goal is to combine IMM2510 together with IMM27M for the treatment of patients with solid tumors. There is an ongoing China study which is attempting to see if the combination of a PD-L1/VEGF bispecific antibody and a CTLA-4 antibody will be enough to achieve efficacy of monotherapy bispecific antibodies in development like IMM2510, ivonescimab and/or BNT327.
Conclusion
Instil Bio has been able to trade higher on the back of proof-of-concept of PD-L1/VEGF targeting from a competitor, plus a few analysts raising their price targets. While it is possible, it could trade lower in the near term, I believe that it has a bright future ahead of itself. Especially, since this biotech was able to in-license a PD-L1/VEGF bispecific antibody that might have two competitive advantages over other drugs of the same class.
It remains to be seen if these are achieved, but I believe that these will be the reason to set IMM2510 apart from competing products. Thus, if one is to invest in this name, then it must be for a long-term frame of mind. While it is earlier in terms of clinical testing for this highly wanted oncology product, the mere fact that it could end up becoming best in class, means that Instil Bio, Inc. might be worth looking into.
