Turnstone Biologics Files for IPO to Extend Runway After Losing Partnerships with AbbVie and Takeda

The downturn in biotech IPOs has persisted for more than a year and a half. Newly issued stocks last year plummeted by about 80%, and are expected to fall further in 2023, as investors demand more substantial evidence of progress from startup biotech companies than before.

Economic Slowdown Pressures Privately Held Biotech Startups, Which Rely on Public Markets for Funding and Returns for VC Backers

Turnstone Biologics Focuses on Developing Tumor Infiltrating Lymphocyte (TIL) Therapies for Solid Tumors, While No TIL Therapy Has Yet Been Approved for Market. However, Some Positive Signals Have Emerged in the Field Recently, Including Iovance Biotherapeutics' Announcement That the FDA Has Accepted Its Biologics License Application (BLA) for Lifileucel, a Cell Therapy for Advanced Melanoma Patients, and Granted It Priority Review.

Recently, Turnstone Biologics has submitted a prospectus to the U.S. Securities and Exchange Commission (SEC) for an initial public offering (IPO) on Nasdaq. According to the document filed with the SEC on July 17, if Turnstone's share price is at the midpoint of $13, it will raise approximately $75 million from the sale of 5.8 million shares.

Source: Turnstone Biologics' IPO Prospectus

Turnstone Biologics, Inc. was founded in 2015 and is headquartered in California, USA. It focuses on developing TIL cell therapies for the treatment of solid tumors. Since its establishment, Turnstone has raised $362 million in funding, with major investors including Versant Ventures, OrbiMed, F-Prime Capital, and FACIT, among others.

Turnstone’s initial scientific and technological focus was on developing novel oncolytic virus immunotherapies. As early as 2017, AbbVie announced a global R&D collaboration agreement with Turnstone to obtain exclusive development rights to three of the company's next-generation oncolytic virus immunotherapies; in 2019, Takeda struck a global collaboration deal worth over $1 billion to secure the global exclusive license for its oncolytic virus product RIVAL-01.

By the end of 2020, Turnstone Biologics acquired Myst Therapeutics (founded by Timothy Langer, a biomedical engineer who previously worked at Kite Pharma and designed the marketed CAR-T product Yescarta), gaining an innovative TIL platform and capabilities to expand its cancer immunotherapy portfolio. Due to factors such as strategic adjustments, prior partners AbbVie and Takeda terminated their collaborations with the company in 2021 and 2022, respectively.

As of the end of 2022, Turnstone had approximately $82 million in cash, cash equivalents, and short-term investments. By March 31, 2023, the company's operating funds had decreased to $64 million. However, about $71 million is needed to support operations this year. Clearly, Turnstone’s current funds are insufficient to sustain its operations for the next 12 months, making the need to raise capital urgent. Without sufficient funding, the company may need to cut expenses or scale back planned research projects.

According to the prospectus, Turnstone Biologics is currently pioneering a TIL differentiation approach. Unlike the standard "bulk TIL" methods that have only shown objective responses in clinical trials for limited tumor types, Turnstone is developing the next generation of TIL therapy—“Selected TILs”—by choosing the most effective (able to mediate anti-tumor responses) and tumor-reactive T-cells for potential treatment of most solid tumors.

Turnstone Biologics has initiated two Phase I clinical trials of TIDAL-01 (“Precision TIL” therapy): a multi-site trial for the treatment of breast cancer, colorectal cancer, and uveal melanoma, and a trial for cutaneous and non-cutaneous melanoma conducted in collaboration with the H. Lee Moffitt Cancer Center and Research Institute. The company plans to provide preliminary clinical data updates for both trials by mid-2024.

Notably, the company recently presented the TIDAL-01 preclinical data in a poster at AACR2023. The results showed that: TIL expansion was successfully achieved using tumor fragments and isolated tumors in 31/34 (91%) of tumors. In all samples, when co-cultured with antigen-loaded APCs, upregulation of CD134 and CD137 as well as an increase in IFN-γ were observed. The TIDAL-01 process is capable of enriching CD4 and CD8 reactivity. Selected TILs produced 50 times more IFN-γ, TNF-α, and Granzyme B than control TILs, with degranulation levels at least twice as high.

In addition, Turnstone is actively advancing its preclinical pipeline projects, including TIDAL-02, the next "Selected TIL" project, and the TIDAL-01 combined with viral immunotherapy project.

Turnstone's R&D Pipeline (Source: Turnstone Biologics' Official Website)

The company stated that, with existing cash and planned IPO proceeds, Turnstone will spend approximately $70 to $75 million on the development of two Phase I clinical trials for TIDAL-01. An additional $15 to $20 million is expected to be used to advance the TIDAL-02 program and the IND for the combination therapy of TIDAL-01 with viral immunotherapy.

References:

1#Turnstone Biologics charts $75M IPO for TIL cell therapies in drumroll of biotech IPOs this month (Source: Endpoints News)

2# https://www.sec.gov/Archives/edgar/data/1764974/000119312523187580/d574486ds1a.htm#toc

3#A cell therapy startup looks to an IPO to avert financial peril (Source: Biopharma Dive)

4#Turnstone Biologics to Present Preclinical Data for Selected TIL Therapy at the 2023 American Association for Cancer Research (AACR) Annual Meeting (Source: Turnstone Official Website)

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