Instil Bio, Inc.

Previous wording

Since inception, we have had significant operating losses. Our net loss was $4.2 million for the three months ended March 31, 2026. As of March 31, 2026, we had an accumulated deficit of$730.7 million. As of March 31, 2026, we had cash, cash equivalents, restricted cash and marketable securities of approximately $74.7 million, which consists of $5.0 million in cash and cash equivalents, $0.1 million in restricted cash and $69.5 million in marketable securities. We expect to continue to incur net losses for the foreseeable future.

Current wording

Since inception, we have had significant operating losses. Our net loss was $4.3 million for the three months ended June 30, 2026 and $8.5 million for the six months ended June 30, 2026. As of June 30, 2026, we had an accumulated deficit of $735.0 million. As of June 30, 2026, we had cash, cash equivalents, restricted cash, and marketable securities of $69.9 million, which consists of $5.5 million in cash and cash equivalents, $0.3 million in restricted cash, and $64.1 million in marketable securities. We expect to continue to incur net losses for the foreseeable future.

Previous wording

The process of conducting the necessary clinical research to obtain regulatory approval from the U.S. Food and Drug Administration, or FDA, Medicines and Healthcare Products Regulatory Agency, or MHRA, European Medicines Agency, or EMA, and comparable foreign authorities is costly and time-consuming and the successful development of product candidates is highly uncertain. The risks and uncertainties associated with our research and development projects are discussed more fully in the section of this Quarterly Report titled “Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when or to what extent we will generate revenues from the commercialization and sale of any product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any product candidates.

Current wording

The process of conducting the necessary clinical research to obtain regulatory approval from the U.S. Food and Drug Administration, or FDA, Medicines and Healthcare Products Regulatory Agency, or MHRA, European Medicines Agency, or EMA, and comparable foreign authorities is costly and time consuming and the successful development of product candidates is highly uncertain. The risks and uncertainties associated with our research and development projects are discussed more fully in the section of this Quarterly Report titled “Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any product candidates.

Previous wording

Restructuring and impairment charges for the three months ended March 31, 2026 consisted of employee termination costs. Restructuring and impairment charges for the three months ended March 31, 2025 consisted primarily of an impairment loss recognized on long-lived assets held for sale in connection with listing our Tarzana facility for sale in March 2025, partially offset by a settlement gain on terminated contracts.

Current wording

Restructuring and impairment charges, net for the three months ended June 30, 2026 consisted primarily of an impairment loss recognized upon reclassifying the Tarzana facility to held and used, partially offset by a reversal of previously recognized cost to sell. Restructuring and impairment charges, net for the three months ended June 30, 2025 consisted primarily of contract terminations costs.

Previous wording

As a result of the Plan, the 2025 Tarzana Charges and the 2026 Employee Terminations, we incurred restructuring and impairment charges of $1.0 million and $16.1 million during the three months ended March 31, 2026 and 2025, respectively.

Current wording

As a result of the 2026 Employee Terminations and the 2026 Tarzana Charges we incurred restructuring and impairment charges, net of $0.2 million and $1.2 million during the three and six months ended June 30, 2026, respectively.

Previous wording

•$3.6 million decrease in costs related to research and clinical development activities primarily due to discontinuing development of AXN-2510; and

Current wording

•$5.0 million decrease in costs related to research and clinical development activities primarily due to discontinuing development of AXN-2510;

Previous wording

•$1.1 million decrease in employee-related costs from reduced headcount, consisting primarily of a $0.6 million decrease in stock-based compensation expense and a decrease in bonus and severance payments of $0.5 million.

Current wording

•$0.6 million decrease in employee-related costs from reduced headcount, consisting primarily of a $0.5 million decrease in wages and benefits, $0.1 million decrease in stock-based compensation expense.

Previous wording

•$0.5 million decrease in interest income related to our investments; and

Current wording

•$0.4 million decrease in interest income related to our investments; and

Previous wording

•$2.3 million decrease in employee-related costs from reduced headcount, consisting primarily of a $1.9 million decrease in stock-based compensation expense and a $0.4 million decrease in bonus and other employee-related expenses;

Current wording

•$1.8 million decrease in costs from reduced headcount, consisting primarily of a $1.0 million decrease in wages and benefits, a $0.7 million decrease in stock-based compensation expense, and a $0.1 million decrease for other employee-related expenses in relation to our research and development personnel; and

Previous wording

•$0.8 million decrease in consulting and professional services costs; and

Current wording

•$0.8 million decrease in consulting and professional services costs.

Previous wording

•$1.0 million increase in severance payments; and

Current wording

•$1.0 million increase in severance payments and benefits continuation costs.

Previous wording

Interest Income, Interest Expense, Other Rental Income, Gain on Contract Termination, and Other (Expense) Income, Net

Current wording

Interest Income, Interest Expense, Other Rental Income, Gain on Contract Termination, and Other Income (Expense), Net

Previous wording

Interest income, interest expense, other rental income, gain on contract termination and other (expense) income, net were $2.8 million and $2.4 million of income for the three months ended March 31, 2026 and 2025, respectively. The net increase of approximately $0.4 million was primarily due to:

Current wording

Interest income, interest expense, other rental income, gain on contract termination and other income (expense), net were $4.1 million and $4.4 million of income for the six months ended June 30, 2026 and 2025, respectively. The net decrease of $0.3 million was primarily due to:

Previous wording

•$0.3 million increase in foreign currency transaction losses.

Current wording

•$0.6 million increase in foreign currency transaction losses; and

Previous wording

Pharmaceuticals LP, or Tenant. The initial base rent under the lease to Tenant was approximately $0.6 million per month (approximately $7.5 million annually) and the base rent escalates by 3% per annum. On December 20, 2024, or the Closing Date, Complex Therapeutics LLC entered into a Term Loan Agreement and related loan documents with Midland National Life Insurance Company, or Midland, pursuant to which Midland loaned Complex Therapeutics LLC a term loan in the principal amount of $85.6 million, or the 2024 Loan, to refinance the Construction Loans secured by the Tarzana facility. Substantially all of the 2024 Loan proceeds were used to repay in full the Construction Loans.

Current wording

In June 2022, our wholly owned subsidiaries, Complex Therapeutics Mezzanine LLC and Complex Therapeutics LLC, entered into a mortgage construction loan and mezzanine construction loan, or together, the Construction Loans, secured by Complex Therapeutics LLC’s Tarzana, California land and building. Construction of the Tarzana facility was subsequently completed and in 2024 the facility was leased to AstraZeneca Pharmaceuticals LP, or Tenant. The initial base rent under the lease to Tenant was approximately $0.4 million per month (approximately $7.5 million annually) and the base rent escalates by 3% per annum. On December 20, 2024, or the Closing Date, Complex Therapeutics LLC entered into a Term Loan Agreement and related loan documents with Midland National Life Insurance Company, or Midland, pursuant to which Midland loaned Complex Therapeutics LLC a term loan in the principal amount of $85.6 million, or the 2024 Loan, to refinance the Construction Loans secured by the Tarzana facility. Substantially all of the 2024 Loan proceeds were used to repay in full the Construction Loans.

Previous wording

As of March 31, 2026, we had sold an aggregate of 185,837 shares of our common stock under the ATM Program for net proceeds of $6.6 million after deducting commissions and expenses of approximately $0.3 million. The remaining availability under the ATM Program as of March 31, 2026 was approximately $93.1 million.

Current wording

As of June 30, 2026, we have sold an aggregate of 185,837 shares of our common stock under the ATM Program for net proceeds of $6.6 million after deducting commissions and expenses of approximately $0.3 million. The remaining availability under the ATM Program as of June 30, 2026 was approximately $93.1 million.

Previous wording

As of March 31, 2026, we had cash, cash equivalents, restricted cash and marketable securities of approximately $74.7 million, which consisted of $5.0 million in cash and cash equivalents, $0.1 million in restricted cash and $69.5 million in marketable securities. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.

Current wording

As of June 30, 2026, we had cash, cash equivalents, restricted cash, and marketable securities of $69.9 million, which consisted of $5.5 million in cash and cash equivalents, $0.3 million in restricted cash, and $64.1 million in marketable securities. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.

Previous wording

In December 2024, Complex Therapeutics LLC entered into the 2024 Loan to refinance the Construction Loans secured by the Tarzana facility. As of March 31, 2026, the outstanding principal amount under the 2024 Loan was $85.6 million and unamortized debt issuance costs were $0.6 million. The 2024 Loan bears interest at a fixed rate of 6.35% per annum, with interest-only payments during the term of the 2024 Loan and the principal balance due in full at maturity. The 2024 Loan may be prepaid in whole but not in part. There is no prepayment fee due if the 2024 Loan is prepaid after the 12-month anniversary of the Closing Date. The 2024 Loan has a term of two years with a one-year extension option. The extension option is subject to certain conditions being met, including: (a) no potential default or event of default, (b) payment of a 0.35% extension fee and the costs and expenses of Midland incurred in connection with the extension, (c) replenishing of all reserve funds as reasonably determined by Midland, and (d) compliance with minimum debt yield and debt service coverage ratio requirements. We expect Complex Therapeutics LLC to meet all requirements necessary to exercise the extension to extend the maturity by one year to January 2028, and we expect that written notice to extend the loan will be provided as early as the 2024 Loan permits, which is no sooner than one hundred twenty days from its maturity date and no later than thirty days before its maturity date.

Current wording

In December 2024, Complex Therapeutics LLC entered into the 2024 Loan to refinance the Construction Loans secured by the Tarzana facility. As of June 30, 2026, the outstanding principal amount under the 2024 Loan was $85.6 million and unamortized debt issuance costs were $0.4 million. The 2024 Loan bears interest at a fixed rate of 6.35% per annum, with interest-only payments during the term of the 2024 Loan and the principal balance due in full at maturity. The 2024 Loan may be prepaid in whole but not in part. There is no prepayment fee due if the 2024 Loan is prepaid after the 12-month anniversary of the Closing Date. The 2024 Loan has a term of two years with a one-year extension option. The extension option is subject to certain conditions being met, including: (a) no potential default or event of default, (b) payment of a 0.35% extension fee and the costs and expenses of Midland incurred in connection with the extension, (c) replenishing of all reserve funds as reasonably determined by Midland, and (d) compliance with minimum debt yield and debt service coverage ratio requirements. We expect Complex Therapeutics LLC to meet all requirements necessary to exercise the extension to extend the maturity by one year to January 2028, and we expect that written notice to extend the loan will be provided as early as the 2024 Loan permits, which is no sooner than one hundred twenty days from its maturity date and no later than thirty days before its maturity date.

Previous wording

Until we can generate substantial revenue from sales of a product candidate, if that occurs, we plan to fund our operations through equity offerings, debt financings, leasing income, or other capital sources. This may include strategic collaborations or other arrangements with third parties. Additional funds may not be available to us on acceptable terms or at all. If we raise additional funds by issuing equity or convertible debt securities, our stockholders will suffer dilution, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities receive any distribution of our corporate assets. If we raise funds through collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to technologies, future revenue streams, product candidates or research programs or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our ability to raise additional funds may be adversely impacted by worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from, among other things, heightened inflation, fluctuations in interest rates, military conflicts, including in Ukraine and the Middle East, tariffs and recent and potential trade wars. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. See“Risk Factors.”

Current wording

Until we can generate substantial revenue from sales of a product candidate, if that occurs, we plan to fund our operations through equity offerings, debt financings, leasing income, or other capital sources. This may include strategic collaborations or other arrangements with third parties. Additional funds may not be available to us on acceptable terms or at all. If we raise additional funds by issuing equity or convertible debt securities, our stockholders will suffer dilution, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities receive any distribution of our corporate assets. If we raise funds through collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to technologies, future revenue streams, product candidates or research programs or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. Our ability to raise additional funds may be adversely impacted by worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from, among other things, heightened inflation, fluctuations in interest rates, military conflicts, including in Ukraine and the Middle East, tariffs and recent and potential trade wars. If we fail to obtain necessary capital when needed on acceptable terms, or at all, it could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. See“Risk Factors” in Part II, Item 1Aof this Quarterly Report on Form 10-Q and “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Cash used in operating activities for the three months ended March 31, 2025 was $4.2 million, which consisted of the net loss of $28.2 million, partially offset by a $3.6 million net change to our net operating assets and liabilities and $20.4 million in non-cash charges and other adjustments to reconcile net loss to net cash used in operating activities. The net change in our operating assets and liabilities was primarily due to an increase of $6.5 million in prepaid expenses and other current assets, an increase of $1.3 million in accrued rent receivable and other long-term assets, a decrease of $0.2 million in operating lease liabilities, a decrease of $0.4 million in accounts payable, and a decrease of $1.0 million in accrued restructuring liabilities, accrued expenses and other current liabilities. The non-cash charges primarily consisted of stock-based compensation expense of $3.5 million, depreciation expense of $0.5 million, impairment of property, plant and equipment of $16.6 million, and non-cash interest expense of $0.2 million, offset by accretion on invested securities of $0.2 million and change in foreign exchange remeasurement of $0.2 million.

Current wording

Cash used in operating activities for the six months ended June 30, 2026 was $6.0 million, which consisted of the net loss of $8.5 million, $0.8 million net change to our net operating assets and liabilities, and $3.3 million in non-cash charges and other adjustments to reconcile net loss to net cash used in operating activities. The non-cash charges primarily consisted of impairment of property, plant and equipment and estimated cost to sell, net of $0.2 million, stock-based compensation expense of $2.0 million, non-cash interest expense of $0.4 million, accretion on invested securities of $0.3 million, depreciation expense of $0.3 million, non-cash lease expense of $0.1 million, and foreign exchange remeasurement of $0.1 million. The net change in our operating assets and liabilities was primarily due to a decrease of approximately $1.6 million in accrued expenses and other current liabilities, an increase of $0.6 million in accrued rent receivable, and an increase of $0.2 million in operating lease liabilities, partially offset by a decrease of $1.4 million in prepaid expenses and other current assets and a decrease of $0.2 million in other long-term assets.

Previous wording

Cash used in operating activities for the three months ended March 31, 2026 was $1.3 million, which consisted of the net loss of $4.2 million, partially offset by a $1.3 million net change to our net operating assets and liabilities and $1.6 million in non-cash charges and other adjustments to reconcile net loss to net cash used in operating activities. The net change in our operating assets and liabilities was primarily due to a decrease of $1.5 million in prepaid expenses and other current assets, a decrease of $0.1 million in other long-term assets, and an increase of $0.1 million in accrued expenses and other current liabilities, partially offset by an increase of $0.3 million in accrued rent receivable and a decrease of $0.1 million in operating lease liabilities. The non-cash charges primarily consisted of stock-based compensation expense of $1.0 million, non-cash interest expense of $0.2 million, accretion on invested securities of $0.2 million and change in foreign exchange remeasurement of $0.1 million.

Current wording

Cash used in operating activities for the six months ended June 30, 2025 was $19.0 million, which consisted of the net loss of $49.6 million and a $1.4 million net change to our net operating assets and liabilities, partially offset by $32.0 million in non-cash charges and other adjustments to reconcile net loss to net cash used in operating activities. The non-cash charges primarily consisted of impairment of property, plant and equipment and estimated cost to sell, net of $16.6 million, in-process research and development expenses of $10.0 million, stock-based compensation expense of $5.3 million, depreciation expense of $0.5 million, and non-cash interest expense of $0.4 million, partially offset by a change in foreign exchange remeasurement of $0.6 million and accretion on invested securities of $0.2 million. The net change in our operating assets and liabilities was primarily due to an decrease of $3.2 million in accrued expenses and other current liabilities, an increase of $2.7 million in accrued rent receivable, an decrease of $1.5 million in operating lease liabilities, and a decrease of $0.1 million in accounts payable, partially offset by a decrease of $5.8 million in prepaid expenses and other current assets and a decrease of $0.3 million in other long-term assets.

Previous wording

Cash used in investing activities for the three months ended March 31, 2026 was $0.3 million, consisting of $0.3 million related to purchases of marketable securities.

Current wording

Cash provided by investing activities for the six months ended June 30, 2026 was $5.0 million, consisting of $5.0 million of cash provided by marketable securities investments.

Previous wording

Cash provided by investing activities for the three months ended March 31, 2025 was $9.6 million, consisting of $9.2 million related to redemptions from marketable securities and $0.4 million of cash received from the sale of assets classified as held for sale.

Current wording

Cash provided by investing activities for the six months ended June 30, 2025 was $9.2 million, consisting primarily of $8.8 million of cash provided by marketable securities investments and $0.4 million of cash received from the sale of held for sale assets in the UK.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2026 was nil.

Current wording

Cash provided by financing activities for the six months ended June 30, 2026 was nil.

Previous wording

Cash provided by financing activities for the three months ended March 31, 2025 was $0.2 million, which was related to proceeds from the exercise of stock options of $0.4 million, offset by loan agreement closing costs of $0.2 million.

Current wording

Cash provided by financing activities for the six months ended June 30, 2025 was $6.9 million, and primarily consisted of net proceeds from our ATM Program of $6.6 million and net proceeds from the exercise of stock options of $0.5 million, partially offset by loan agreement closing costs of $0.2 million.

Previous wording

This management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

This management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.