The initial public offering on the Nasdaq is a last-ditch effort by the biotech as there is “substantial doubt” as to the company’s “ability to continue as a going concern” without the IPO, according to its SEC filing.
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An initial public offering from Turnstone Biologics may prove a turning point for the struggling biotech company, which is hoping to raise $86 million in a Nasdaq IPO, according to an SEC filing Monday. The announcement is only the eighth biotech IPO this year, and would reportedly be the fifth-largest offering of 2023.
The move comes amid serious concerns for the company’s finances. Turnstone says there is “substantial doubt” among the company’s management and its independent registered public accounting firm as to whether it can stay afloat without the cash infusion of a successful IPO.
At the end of 2022, Turnstone had roughly $82 million in cash, cash-equivalents, and short-term investments, and suffered $30 million in net losses, according to the filing. By March 31, 2023, that operating capital was down to $64 million.
Turnstone is one of many biotech companies formed recently to develop oncolytic viruses that attack cancers. Initial fundraising efforts and partnerships with AbbVie and Takeda to develop oncolytic viruses proved promising. In 2019, Turnstone also adopted tumor-infiltrating lymphocytes (TILs) after purchasing Myst Therapeutics. However, those partnerships ended only months apart in 2021 and 2022, respectively, and Turnstone has shifted its focus to TILs, a type of cell therapy that harness a patient’s own immune cells to target tumors.
The TIL strategy relies on lymphocytes, primarily B and T cells, which are capable of detecting and attacking cancer cells. According to the Monday’s SEC filing, rather than focusing on TILs that “have demonstrated benefit in only limited tumor types,” Turnstone is turning its efforts to so-called selected TILs, which “are designed to extend the clinical benefit of TILs across the majority of solid tumors.”
The company has started two Phase I clinical trials of TIDAL-01, its lead TIL therapy. Two abstracts were accepted for poster presentations at the American Association for Cancer Research (AACR) Annual Meeting earlier this year, detailing preclinical data for TIDAL-01. The company is hoping to raise sufficient funds to support its Phase I work and to integrate viral immunotherapies with its TIL products.
Whether this IPO is successful will be something of a litmus test for the biotech industry. From 2021 to 2022, the biotech market fell by 93%, according to a recent report by Ernst and Young. New biotech companies and those relying on financing “face a capital-constrained operating environment,” the report noted, and many were in an uncertain situation, with less than 30% having more than one year’s cash in hand.
This year has already proven to be a challenging one for the biotech industry. It kicked off with mass layoffs, including former Turnstone partner Takeda who announced plans to lay off over 200 employees.
Connor Lynch is a freelance writer based in Ottawa, Canada. Reach him at lynchjourno@gmail.com.
