Myst Therapeutics LLC

Turnstone Biologics aims to bring cell therapy to solid tumors, but competition is tight and its cash is running low. An $80 million IPO now gives Turnstone enough money to continue clinical trials that could show whether it can stand apart from the pack. La Jolla, California-based Turnstone on Friday priced its offering of nearly 6.7 million shares at $12 each, which was the low end of the $12 to $14 per share range in the preliminary financial terms it set earlier this week. Shares will trade on the Nasdaq under the stock symbol “TSBX.” Turnstone could further boost its cash haul. Last month, Takeda Pharmaceutical sent the company a non-binding letter expressing interest in purchasing about $8 million worth of shares in conjunction with the IPO, according to the IPO filing. Takeda already has a stake in Turnstone, having participated in the biotech’s Series D financing round in 2021. Takeda and AbbVie were partners to Turnstone in an earlier iteration of the company, which formed in 2014 with a focus on oncolytic virus-based immunotherapies. The partnerships provided the young company with $190 million in financing, according to the filing. But in 2020, Turnstone switched gears to cell therapy with the acquisition of Myst Therapeutics. The Takeda and AbbVie partnerships were terminated. Myst brought Turnstone its research in tumor-infiltrating lymphocytes, or TILs. These cell therapies are made by harvesting TILs from a patient’s tumor and expanding them in a lab. Those cells are then infused into the patient to fight the tumor. Because the cells initially came from a patient’s tumor, they can recognize and penetrate these cancer cells. Those capabilities could make TILs effective against solid tumors, which have been a tougher target for cell therapies overall. There are no FDA-approved TIL cell therapies yet. Companies pursuing TIL therapies include Instil Bio, Iovance Biotherapeutics, Adaptimmune Therapeutics, Achilles Therapeutics, and Lyell Immunopharma. Turnstone says in the filing that much of the early TIL research involves harvesting TILs in bulk, resulting in insufficient numbers of the most potent immune cells able to spark an anti-tumor response. Turnstone’s approach involves selecting for such tumor-reactive T cells, which it calls “Selected TILs.” “We believe our Selected TIL approach sets us apart from others in the industry that are utilizing bulk TILs, including newer bulk TIL approaches that introduce gene edits and culture media additives to enhance TIL quality and function,” Turnstone said in the filing. “We believe that without the optimal starting population of tumor-reactive T cells, further enhancements or modifications to bulk TILs are unlikely to succeed in extending their potential utility beyond the limited tumor types where bulk TILs have already shown objective responses in clinical trials.” Lead Turnstone TIL program TIDAL-01 is currently in a Phase 1b study evaluating the cell therapy in solid tumors where bulk TILs have shown limited to no objective responses. The study is enrolling patients with breast cancer, colorectal cancer, and uveal melanoma. The company presented preclinical data for the therapy during the annual meeting of the American Association for Cancer Research in April. TIDAL-01 is also being evaluated in a separate Phase 1 clinical trial, an investigator-initiated study in collaboration with Moffitt Cancer Center. This trial is enrolling patients with cutaneous melanoma that has failed to respond to earlier lines of therapy. Since its inception in 2015, Turnstone had raised $172 million from stock financings, most recently the 2021 Series D round that raised $80 million. Versant Ventures is Turnstone’s largest shareholder, owning 14.8% of the company after the IPO, followed by OrbiMed’s 12.6% stake, according to the filing. Turnstone reported its cash position as of the end March was just $33.5 million and the IPO filing includes a warning about the company’s ability to continue as a going concern. Following the IPO, Turnstone plans to spend between $70 million and $75 million to support the ongoing Phase 1 studies of TIDAL-01. Both studies are expected to report preliminary data in mid-2024. Another $15 million to $20 million is budgeted for bringing the TIDAL-02 program through the selection of a drug candidate. It will also support plans for bringing the combination of TIDAL-01 and a viral immunotherapy through the submission of an investigational new drug application. Image by the National Cancer Institute

Pictured: Person holding a cell phone in front of computer with stock data/iStock 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.

In biotech, most startups get about 5 years to get their preclinical act in order and jump into human studies before the backers get restive and start looking for the exits. At the 2015-founded Turnstone Biologics, they hit that line. But instead of losing its investors’ interest, it’s been picking up speed and backers. Now, with a lead oncolytic virus in an early-stage study and a second therapy from the TIL side poised for an IND, the team under CEO Sammy Farah has changed the story to clinical development. And they scored an $80 million Series D from a broad syndicate to get this new chapter under way in style. “Turnstone evolved, I think, in a more traditional way than the companies being developed today are,” says Farah. “We raised, before this Series D, 3 venture capital rounds. And they’ve all been pretty modest.” The total was $90 million for the first 3 years, and they added business deals — an alliance with Takeda, which took an equity stake, stands out — for non-dilutive cash. Now he sees Turnstone as more of a momentum story coming out of the relatively slow initial buildup. “I think in many ways this was the traditional model,” agrees Versant’s Jerel Davis, who jumped into the game here with the A round in 2015. “Their A, B and C are what you typically see in the A today. But I think the reality is that the company pivoted.” And the business deals allowed the biotech to wait to advance the more promising programs forward. That pivot was away from oncolytic viruses simply as a cancer vaccine — a “brutally tough” proposition, in Farah’s words, which afflicted others in the field — to a new oncolytic virus tech with more of a cutting-edge approach that could also deliver other therapeutics. The payload includes CTLA-4, FLT3 ligand and IL-12, on top of the viral approach of infecting cancer cells, blowing them up and recruiting immune cells to the tumor. Turnstone looped in the TIL work at the beginning of the year with the acquisition of Myst Therapeutics, which added San Diego to its list of work sites. It didn’t say how much it paid for the company, but it wasn’t likely a big sum — at least not upfront. And now Farah and the team see significant upside not just as a separate, individual approach, but also combined with their oncolytic virus therapy. Farah also believes that they have a better approach to tumor infiltrating lymphocytes, moving away from “bulk TILs” to expanding larger sets of lymphocytes better suited to the task of attacking a tumor. That’s what they have to prove as clinical work launches before the end of this year. There have been some changes in the C-suite. CMO Mike Burgess left for SpringWorks — though he remains on the board — and the company recruited Stewart Abbot from Adicet as CSO. PFM Health Sciences and Point72 led this last round. Additional new investors Eventide Asset Management, Surveyor Capital (a Citadel company), Ridgeback Capital Investments, Takeda Ventures Inc., CaaS Capital, JM Family Enterprises, Inc., Northleaf Capital Partners, 404 Bio and an undisclosed investor were joined by existing investors Versant Ventures, OrbiMed, F-Prime Capital, Sectoral Asset Management, Sixty Degree Capital, Brace Pharma Capital and Teralys Capital.