H.C. Wainwright has significantly increased the price target for Instil Bio Inc (NASDAQ: TIL) shares to $120.00, up from the previous $40.00, while maintaining a Buy rating on the stock.
The firm's decision reflects a positive outlook on Instil Bio's cancer treatment, SYN-2510, a PD-L1 x VEGF bispecific, which analysts believe has the potential to succeed in the oncology market.
The optimism surrounding Instil Bio's prospects is partly due to the anticipated performance of its product in treating extensive-stage small cell lung cancer (ES-SCLC), a domain currently dominated by PD-L1 inhibitors.
The firm has incorporated this indication into its financial model, projecting peak unadjusted global sales of $1.3 billion by the year 2040.
Additionally, the firm anticipates that Instil Bio's SYN-2510 will penetrate the non-small cell lung cancer (NSCLC) market, even with a conservative estimate of 2.5% market share in PD-L1 low and EGFR-mutated NSCLC populations.
The projection for peak unadjusted worldwide sales in NSCLC across all subtypes stands at $3.1 billion, which is considered a reasonable estimate by the firm.
In their financial analysis, H.C. Wainwright has also adjusted the discount rate for Instil Bio from 13% to 11%, reflecting a more favorable risk profile for the company's targets. Furthermore, the terminal growth rate has been increased from 2% to 3%, accounting for conservative growth potential in the oncology market beyond ES-SCLC and NSCLC.
The firm's increased confidence in Instil Bio's product pipeline is also demonstrated by the raised probability of approval for both ES-SCLC and NSCLC, now at 25%, up from the previous 10% for NSCLC alone.
In other recent news, Instil revealed a major restructuring plan, intending to close its UK operations by the end of 2024, with estimated costs up to $5.5 million. Furthermore, the company has halted the clinical development of its ITIL-306 program.
Instil Bio has also entered into an exclusive license agreement with ImmuneOnco Biopharmaceuticals to develop and commercialize antibodies targeting PD-L1 and VEGF. This deal could potentially yield up to $2.1 billion for ImmuneOnco based on future milestones.
In terms of governance, R. Kent McGaughy, Jr. and Dr. Gwendolyn Binder were reelected to the company's board of directors, and Deloitte & Touche LLP was ratified as its independent registered public accounting firm for the fiscal year ending December 31, 2024.
Several analyst firms have updated their stance on Instil Bio's stock. Baird significantly raised its price target on the company's shares to $180, maintaining an Outperform rating. H.C. Wainwright also increased its 12-month price target for Instil Bio to $40.00, maintaining a Buy rating. However, Jefferies downgraded its stock rating from Buy to Hold following the halt of the ITIL-306 program.
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