Turnstone Biologics Corp. (NASDAQ:TSBX) is a clinical-stage biotechnology company that is revolutionizing the way solid tumors are treated. With a focus on developing a differentiated approach to tumor-infiltrating lymphocyte (TIL) therapy, Turnstone is poised to make a significant impact in the oncology space.
Business Overview and History
Turnstone Biologics was founded in 2014 with the goal of harnessing the power of the immune system to combat solid tumors. The company's innovative approach centers around the selective expansion of the most potent and tumor-reactive T cells, known as Selected TILs. This technology sets Turnstone apart from traditional TIL therapies, which often struggle to demonstrate consistent clinical benefits in a broader range of solid tumor indications.
In its early years, Turnstone focused on organizing and staffing the company, as well as initiating business planning and research and development activities for its Selected TIL programs. The company's funding journey began with a Series A preferred stock issuance in 2015 and 2016, raising a total of $20.4 million. This initial capital injection allowed Turnstone to kickstart its operations and begin laying the groundwork for its innovative approach to cancer treatment.
Building on this momentum, Turnstone secured additional funding through Series B-1 and B-2 preferred stock issuances in 2016 and 2018, raising an impressive $41.2 million. This influx of capital enabled the company to accelerate its research and development efforts, conduct preclinical studies, and initiate its first clinical trials.
A significant milestone in Turnstone's history came in 2019 when the company entered into a discovery, collaboration, and license agreement with Takeda Pharmaceutical Company Limited. This partnership, valued at up to $440 million, provided Turnstone with an upfront payment of $80 million and the potential for additional milestone and royalty payments. However, the collaboration was short-lived, with Takeda terminating the agreement in 2022.
Despite this setback, Turnstone has remained steadfast in its mission to develop innovative TIL therapies. The company has continued to advance its pipeline, with its lead product candidate, TIDAL-01, progressing through three ongoing Phase 1 clinical trials for the treatment of colorectal cancer, head and neck cancer, and uveal melanoma. In August 2024, Turnstone reported positive initial data from the TIDAL-01 trial in metastatic colorectal cancer, showcasing a 25% overall response rate and a 50% disease control rate in the first four evaluable patients.
Financial Snapshot
Turnstone Biologics has funded its operations primarily through the issuance of convertible preferred stock, raising a total of $172 million since its inception. The company's most recent financing activity was its initial public offering (IPO) in July 2023, which generated $80 million in gross proceeds.
As of September 30, 2024, Turnstone had $45.3 million in cash, cash equivalents, and short-term investments, providing a runway into the third quarter of 2025. The company reported a net loss of $58 million and $38.8 million for the nine months ended September 30, 2024, and 2023, respectively. Turnstone's research and development expenses accounted for the majority of its operating expenses, reflecting the company's focus on advancing its pipeline.
For the fiscal year 2023, Turnstone reported annual revenue of $19.31 million, an annual net loss of $55.20 million, annual operating cash flow of -$66.15 million, and annual free cash flow of -$67.40 million. In the most recent quarter (Q3 2024), the company reported no revenue and a net loss of $17.03 million. The decrease in net income compared to the previous year was primarily due to continued investment in research and development for the company's lead product candidate, TIDAL-1.00.
Liquidity
As of September 30, 2024, Turnstone Biologics had $45.3 million in cash, cash equivalents, and short-term investments. This financial position provides the company with a runway into the third quarter of 2025, allowing it to continue advancing its clinical programs and operations. The company's recent strategic restructuring, announced in October 2024, is expected to further extend its cash runway into the second quarter of 2026, enhancing its financial stability in the face of current market uncertainties.
Turnstone's debt-to-equity ratio stands at 0.04, indicating a low level of debt relative to equity. The company also maintains a $20 million revolving credit facility with Banc of California, which remains undrawn as of September 30, 2024. Both the current ratio and quick ratio are 3.75, suggesting strong short-term liquidity.
Navigating Challenges and Pivoting Strategies
In October 2024, Turnstone announced a strategic restructuring, including a 60% reduction in its workforce and changes to its leadership team. This move was aimed at streamlining operations and refocusing the company's resources on the continued advancement of its lead TIDAL-01 program. The restructuring is expected to extend Turnstone's cash runway into the second quarter of 2026, positioning the company to navigate the current macroeconomic and geopolitical uncertainties more effectively.
Despite these challenges, Turnstone remains committed to its mission of developing innovative therapies for solid tumors. The company has strengthened its Scientific Advisory Board with the appointment of renowned cancer immunotherapy expert, Dr. Jeffrey S. Weber, further bolstering its scientific capabilities.
Product Segments and Development Pipeline
Turnstone's primary focus is on its Selected TIL Programs, with TIDAL-1.00 as the lead product candidate. TIDAL-1.00 is currently being evaluated in three ongoing Phase 1 clinical trials for colorectal cancer, head and neck cancer, and uveal melanoma. The company's Selected TIL approach aims to overcome the limitations of bulk TIL therapies by selecting and expanding the most potent tumor-reactive T cells. This proprietary process is designed to deliver at least 10^9 cells with greater than 70% functional and potent tumor-reactive T cells, potentially leading to improved clinical responses compared to standard bulk TIL products.
In addition to its internal programs, Turnstone has entered into strategic collaborations to enhance its development capabilities. A key partnership is with Moffitt Cancer Center, which provides Turnstone with priority access to Moffitt's scientific research, manufacturing, and clinical capabilities. This collaboration includes dedicated cGMP manufacturing capacity at Moffitt's on-site facility for TIDAL-1.00 production. Turnstone has committed to paying Moffitt at least $17.5 million over 5 years to fund research, development, and manufacturing activities.
Competitive Landscape and Future Prospects
Turnstone Biologics operates in the highly competitive and rapidly evolving field of oncology, with companies such as Iovance Biotherapeutics, Achilles Therapeutics, and Instil Bio developing their own TIL-based therapies. However, Turnstone's unique approach to TIL selection and expansion sets it apart, potentially offering a more robust and versatile treatment option for a broader range of solid tumor indications.
The biotechnology industry, particularly the cell therapy segment focused on solid tumors, is expected to grow at a compound annual growth rate of approximately 20-25% over the next 5 years. This growth is driven by the potential of novel approaches like Turnstone's Selected TIL therapy, positioning the company to capitalize on this expanding market opportunity.
As Turnstone continues to advance its TIDAL-01 program and refines its manufacturing processes, the company's ability to showcase consistent and positive clinical data will be crucial in establishing its position in the market. The upcoming data readouts from the TIDAL-01 trials, expected in the first half of 2025, will be a critical milestone for the company.
Furthermore, Turnstone's strategic collaborations and partnerships, such as its alliance with Moffitt Cancer Center, provide access to specialized expertise and resources, strengthening the company's overall capabilities and increasing its chances of success.
Conclusion
Turnstone Biologics is navigating the complex landscape of solid tumor treatment with a differentiated approach to TIL therapy. The company's focus on Selected TILs, its positive initial clinical data, and its strategic restructuring efforts position it for potential success in the highly competitive oncology market. As Turnstone continues to advance its pipeline and optimize its manufacturing processes, investors will be closely watching the company's progress and its ability to translate its innovative technology into tangible benefits for patients.
However, it's important to note that Turnstone faces significant financial challenges. The company has reported substantial doubt about its ability to continue as a going concern for the next 12 months and will need to raise additional capital to fund its operations and clinical development activities. The success of future financing efforts and the clinical outcomes of TIDAL-1.00 will be critical in determining Turnstone's long-term viability and potential for market success.