Executive Summary / Key Takeaways

• Tourmaline Bio ($TRML) is a late-stage clinical biotechnology company focused on developing its lead asset, pacibekitug, a long-acting, subcutaneous IL-6 inhibitor, for high-unmet-need immune and inflammatory diseases, primarily atherosclerotic cardiovascular disease (ASCVD) and thyroid eye disease (TED).
• Pacibekitug's potential best-in-class properties, including high binding affinity, long half-life, and low immunogenicity, aim to enable convenient, infrequent subcutaneous dosing, offering a potential differentiation against existing or pipeline therapies.
• Key near-term catalysts include topline data from the Phase 2 TRANQUILITY trial in ASCVD (Q2 2025) and the pivotal Phase 2b spiriTED trial in TED (H2 2025), which are critical steps toward potential Phase 3 readiness and regulatory submissions.
• The company reported a net loss of \$22.97 million for Q1 2025, reflecting increased R&D spend on clinical trials, and held \$275.30 million in cash, cash equivalents, and investments as of March 31, 2025, providing an expected cash runway into the second half of 2027.

• While facing competition from established players like Amgen (AMGN), Roche (RHHBY), and Regeneron (REGN) with approved products and broader portfolios, TRML's focused strategy and the potential for a differentiated product profile in specific indications represent its core value proposition, contingent on successful clinical execution and future capital raises.

A Focused Approach to Inflammatory Disease

Tourmaline Bio is carving out a niche in the competitive landscape of immune and inflammatory diseases, driven by its lead product candidate, pacibekitug. As a late-stage clinical biotechnology company, TRML's strategy centers on identifying and developing transformative medicines with the potential to significantly improve patient lives in areas of high unmet medical need. This focus is embodied by pacibekitug, a fully human monoclonal antibody designed to selectively bind to interleukin-6 (IL-6), a key cytokine implicated in numerous autoimmune and inflammatory disorders.

The company's journey began with Legacy Tourmaline, formed in 2021, which quickly established its foundation by securing exclusive worldwide rights to pacibekitug from Pfizer Inc. (PFE) in May 2022. This foundational license agreement, involving an upfront payment and equity issuance to Pfizer, provided TRML with its lead asset and set the stage for its development programs. A subsequent license agreement with Lonza in May 2022 further solidified manufacturing and commercialization pathways. The significant step of becoming a publicly traded entity was achieved through a reverse merger with Talaris Therapeutics, Inc., completed in October 2023, which also included a \$75.0 million private placement. This transaction, accounted for as a reverse recapitalization, effectively positioned the former Legacy Tourmaline's business and history at the forefront of the combined entity.

TRML's strategic response to the complex and competitive biotech environment is to leverage the known biology of IL-6 inhibition while seeking to offer a potentially best-in-class product profile. The company is concentrating its initial development efforts on two distinct, yet large, therapeutic areas: cardiovascular inflammation and thyroid eye disease (TED).

Technological Edge: Pacibekitug's Differentiated Profile

At the heart of Tourmaline's investment thesis is pacibekitug's technological differentiation. As a long-acting anti-IL-6 antibody, pacibekitug is designed with specific properties intended to enhance its therapeutic utility. The company highlights its high binding affinity to IL-6, a long half-life, and low observed immunogenicity.

The strategic "so what" for investors lies in the potential tangible benefits these characteristics could confer. A long half-life and high binding affinity could allow for less frequent dosing, potentially enabling a convenient, low volume, infrequently administered, subcutaneous injection. This could represent a significant advantage in patient adherence and overall treatment burden compared to therapies requiring more frequent administration or intravenous infusion. While specific quantitative metrics comparing pacibekitug's half-life or binding affinity directly against competitors are not publicly detailed, the company's emphasis on these properties suggests they are central to its strategy for differentiating pacibekitug's product profile. The potential for low immunogenicity is also critical, as the development of anti-drug antibodies can reduce efficacy or lead to adverse events with other biologic therapies.

The company's R&D efforts are currently focused on advancing pacibekitug through clinical trials in its lead indications and identifying additional opportunities where IL-6 inhibition could offer a therapeutic benefit. This includes evaluating new in-licensing and acquisition opportunities for assets that align with its focus on transformative medicines for immune and inflammatory diseases.

Advancing the Pipeline: Clinical Progress in Key Indications

Tourmaline is actively pursuing its two strategic paths for pacibekitug:

Cardiovascular Inflammation: Recognizing the role of IL-6 in atherosclerotic cardiovascular disease (ASCVD), TRML believes pacibekitug has the potential to transform care by targeting these inflammatory pathways. External Phase 3 trials investigating IL-6 blockade for ASCVD underscore the market's interest in this approach. TRML's program gained significant momentum with alignment from the FDA on its ASCVD clinical development program in January 2024, followed by the IND clearance in March 2024. The Phase 2 TRANQUILITY trial, evaluating pacibekitug in patients with elevated high-sensitivity C-reactive protein (hs-CRP) and chronic kidney disease, commenced in April 2024 and notably completed over-enrollment with 143 participants in December 2024. Topline data from TRANQUILITY are expected in the second quarter of 2025. Positive results from this trial are anticipated to position pacibekitug as Phase 3-ready for ASCVD. Following the TRANQUILITY readout, the company expects to provide further details on its broader cardiovascular inflammation development plan, including a planned Phase 2 proof-of-concept trial in abdominal aortic aneurysm (AAA), which was nominated as a second cardiovascular indication in December 2024.

Thyroid Eye Disease (TED): For TED, an autoimmune disease causing inflammation and disfigurement, TRML's strategy is supported by published clinical observations of the beneficial off-label use of existing IL-6 pathway inhibitors like tocilizumab (Actemra). Despite this evidence, no formal industry-sponsored development program for the IL-6 class in TED has been completed. TRML is addressing this by evaluating pacibekitug in a pivotal Phase 2b trial, known as the spiriTED trial, which was initiated in September 2023 following FDA IND clearance in August 2023. Topline data from the spiriTED trial are expected in the second half of 2025. The initiation of a pivotal Phase 3 trial in first-line TED will be contingent on the results of the spiriTED study.

These upcoming data readouts represent critical near-term catalysts for the company and are central to the investment narrative.

Financial Standing and the Path Forward

As a clinical-stage biotechnology company, Tourmaline Bio has not generated any revenue from product sales since its inception and continues to incur significant operating losses. For the three months ended March 31, 2025, the company reported a net loss of \$22.97 million, an increase from the \$13.31 million net loss for the same period in 2024. This increase was primarily driven by a substantial rise in research and development expenses, which grew by \$8.88 million to \$20.26 million in Q1 2025 compared to \$11.38 million in Q1 2024. This higher R&D spend reflects the increased activity in the TRANQUILITY and spiriTED clinical trials, as well as growth in payroll-related costs due to increased headcount and higher toxicology study expenses. General and administrative expenses saw a slight decrease, from \$6.14 million in Q1 2024 to \$5.97 million in Q1 2025, mainly due to lower consulting and legal fees, partially offset by increased payroll costs. Other income, net, decreased by \$0.90 million, primarily due to lower investment income.

As of March 31, 2025, TRML held \$275.30 million in cash, cash equivalents, and investments. Based on its current operating plan, the company anticipates this capital will be sufficient to fund its operations into the second half of 2027. While this provides a reasonable runway, the company acknowledges that significant additional capital will be required to complete the development and potential commercialization of pacibekitug and any future product candidates. Future financing is expected to come from equity or debt offerings, collaborations, or licensing arrangements. The company has an At-The-Market (ATM) Sales Agreement in place allowing for the sale of up to \$100.0 million in common stock, though no shares had been sold under this program as of the end of Q1 2025. The ability to raise future capital on acceptable terms is a critical factor for the company's continued progress.

Navigating the Competitive Currents

The markets for immune and inflammatory disease therapies are intensely competitive, characterized by rapid technological advancements and the introduction of new products. Tourmaline faces competition from a range of companies, including large pharmaceutical and biotechnology firms with significantly greater financial, technical, and human resources, as well as extensive experience in drug development, regulatory approvals, and commercialization.

In the TED market, Amgen (NASDAQ: AMGN) with its approved anti-IGF-1R antibody, Tepezza (teprotumumab), is a major competitor. While Tepezza is the only FDA-approved treatment, the rationale for pacibekitug in TED is partly based on observations from the off-label use of IL-6R inhibitors like Roche's (OTCQX: RHHBY) Actemra (tocilizumab). Roche also has satralizumab, an anti-IL-6R antibody, in development for TED. The first line of treatment for TED often involves high doses of corticosteroids.

In the broader IL-6/IL-6R inhibitor class, Roche's Actemra and Sanofi (SNY)/Regeneron's (NASDAQ: REGN) Kevzara (sarilumab) are approved therapies for various inflammatory conditions, though not specifically for ASCVD. TRML is aware of other IL-6 blockers being developed for ASCVD. Existing ASCVD treatments include widely used classes such as statins, beta-blockers, ACE inhibitors, ARBs, aspirin, and other anti-platelet agents. For AAA, there is currently no FDA-approved non-interventional pharmacotherapy, although future competition could emerge.

Compared to these competitors, TRML's key differentiator lies in pacibekitug's potential for a long-acting, subcutaneous profile, which could offer a significant convenience advantage. While larger competitors like Amgen (NASDAQ: AMGN), Roche (OTCQX: RHHBY), and Regeneron (NASDAQ: REGN) boast established market access, broad portfolios, and robust profitability (e.g., AMGN's 25% net margin, RHHBY's 13%, REGN's 31% in 2024, compared to TRML's significant net loss), TRML's focused approach allows it to potentially move faster in specific niche areas like long-acting IL-6 inhibition for ASCVD and TED. The success of TRML's strategy hinges on demonstrating a compelling efficacy and safety profile in its ongoing trials that justifies adoption over existing therapies and pipeline candidates, leveraging its technological design to capture market share. The reliance on third-party CDMOs for manufacturing, including single sources for drug substance and drug product located internationally (U.S., Austria, Germany), presents operational risks related to supply chain disruptions, scale-up challenges, and regulatory compliance, which larger competitors with internal manufacturing capabilities may mitigate more effectively.

Risks and Challenges on the Horizon

Investing in a clinical-stage biotechnology company like TRML involves significant risks. The success of the company is highly dependent on the successful clinical development, regulatory approval, and eventual commercialization of pacibekitug. Clinical trials are inherently uncertain and can be delayed, suspended, or terminated due to safety concerns, lack of efficacy, enrollment difficulties, or regulatory hurdles. The upcoming data readouts from TRANQUILITY and spiriTED are binary events; negative or inconclusive results would severely impact the investment thesis.

Reliance on third parties for manufacturing introduces risks related to supply consistency, quality control, and the ability to scale up production for later-stage trials and potential commercialization. The transfer of manufacturing processes to new facilities, as is occurring for bulk drug substance and drug product, carries risks related to comparability and regulatory acceptance.

Competition is intense, and even if approved, pacibekitug may face challenges gaining market acceptance against established therapies and other pipeline candidates. Pricing and reimbursement dynamics, particularly given increasing pressure on drug costs from governments and private payors (including potential impacts from the IRA), could limit commercial potential.

The company's significant accumulated losses and expected future losses necessitate additional capital raises, which may not be available on favorable terms or at all, potentially forcing delays or curtailment of development programs. While material weaknesses in internal controls were remediated, maintaining effective controls as the company grows remains important.

Conclusion

Tourmaline Bio represents a focused opportunity in the immune and inflammatory disease space, centered around the potential of its lead asset, pacibekitug. The company's strategy to develop a differentiated, long-acting subcutaneous IL-6 inhibitor for high-unmet-need indications like ASCVD and TED is compelling, leveraging the known biology of IL-6 while aiming for a best-in-class product profile. The upcoming topline data from the TRANQUILITY and spiriTED trials in Q2 and H2 2025, respectively, are pivotal milestones that will provide crucial insights into pacibekitug's clinical potential and significantly shape the company's trajectory.

While TRML's financial position with \$275.30 million in cash provides runway into the second half of 2027, the capital-intensive nature of drug development means future financing will be required. The competitive landscape is challenging, populated by large, well-resourced companies with approved products. However, if pacibekitug's clinical data demonstrate a compelling efficacy and safety profile, particularly highlighting the benefits of its long-acting, subcutaneous delivery, TRML could carve out a significant position in its target markets. Investors should closely monitor the clinical trial readouts, the company's ability to secure future funding, and its strategic execution in the face of established competition.