Turnstone Biologics Explores Strategic Alternatives Amid Discontinuation of Clinical Trials

Turnstone Biologics, a biotechnology company focused on developing new cancer treatments, has announced some major changes to its business strategy. After a comprehensive review, the company’s Board of Directors has decided to discontinue all of its ongoing clinical studies evaluating its lead product candidate, TIDAL-01. Instead, Turnstone is now pursuing “strategic alternatives” to enhance and preserve shareholder value, which may include a merger, sale of assets, licensing deal, or other transactions.

The decision to halt the TIDAL-01 clinical trials comes after the company faced several challenges in recent years. In October 2024, Turnstone announced a strategic prioritization of its pipeline and a 60% workforce reduction to focus resources on its Phase 1 TIDAL-01 program. However, the company has now determined that discontinuing all TIDAL-01 studies is the best path forward.

As part of this strategic shift, Turnstone has reduced its workforce even further and is implementing additional cost-saving measures. As of March 31, 2025, the company has just 8 employees remaining. Turnstone has also engaged a financial advisor to assist in exploring potential strategic alternatives that could include a sale, merger, or other transaction.

Financial Performance Highlights

Turnstone’s financial results for the first quarter of 2025 reflect the impact of its strategic changes. The company reported a net loss of $11.8 million for the three months ended March 31, 2025, an improvement from the $19.6 million net loss in the same period of 2024.

The reduction in net loss was primarily driven by a significant decrease in research and development expenses, which fell from $15.8 million in Q1 2024 to $4.4 million in Q1 2025. This decrease was due to the discontinuation of the TIDAL-01 clinical trials and related activities.

General and administrative expenses remained relatively flat at $4.8 million in Q1 2025 compared to $4.9 million in the prior year period.

Turnstone also reported $2.6 million in other expenses, net, in Q1 2025, compared to $1.1 million in other income, net, in the same period of 2024. This change was largely due to foreign currency remeasurement losses.

The company did not record any federal income tax expense for the first quarters of 2025 and 2024, as it expects to be in a cumulative taxable loss position. Turnstone recorded a small state income tax benefit in both periods.

Restructuring and Nasdaq Compliance

In addition to the strategic shift, Turnstone has also been navigating some operational challenges. In January 2025, the company announced a restructuring that included the discontinuation of all clinical studies and further workforce reductions. This resulted in $1.8 million in restructuring expenses during the first quarter of 2025, primarily related to employee severance and other benefits.

Turnstone has also been working to maintain its listing on the Nasdaq stock exchange. In September 2024, the company received a deficiency notice from Nasdaq due to its stock price falling below the $1.00 minimum bid requirement. To regain compliance, Turnstone has been granted an additional 180-day grace period and plans to implement a reverse stock split.

If Turnstone is unable to regain compliance with the Nasdaq minimum bid price requirement by September 2025, its stock could be delisted and would likely trade on the over-the-counter (OTC) market instead. The company has indicated that it may appeal any delisting decision, but there is no guarantee it would be able to maintain its Nasdaq listing.

Collaboration Agreements and Leases

Turnstone has several collaboration agreements in place, the most significant of which is its alliance with the H. Lee Moffitt Cancer Center and Research Institute. Under this agreement, Moffitt provides Turnstone with access to its research, manufacturing, and clinical capabilities for the development of tumor-infiltrating lymphocyte (TIL) therapies.

The Moffitt alliance agreement requires Turnstone to pay a total of at least $17.5 million over a five-year period, with annual installments of $3.5 million. This agreement remains in place despite the discontinuation of the TIDAL-01 program.

Turnstone also has operating lease agreements for laboratory and office space in San Diego, California and New York, New York. The company recorded $0.4 million in rent expense for the first quarter of 2025. Turnstone has subleased its New York office space, but remains responsible for the lease payments.

Outlook and Risks

With the discontinuation of the TIDAL-01 clinical trials, Turnstone is now focused entirely on exploring strategic alternatives to maximize shareholder value. The company has engaged a financial advisor to assist in this process, which may include a sale, merger, or other transaction.

However, there is no guarantee that Turnstone’s strategic review will result in a successful transaction. If the process does not lead to an agreement that enhances shareholder value, the company’s Board may decide to pursue a dissolution and liquidation instead.

Additionally, Turnstone’s ability to maintain its Nasdaq listing remains uncertain. If the company is unable to regain compliance with the minimum bid price requirement by September 2025, its stock could be delisted, which would likely have a negative impact on shareholder value.

Overall, Turnstone Biologics is at a critical juncture as it navigates the discontinuation of its lead clinical program and explores strategic alternatives to secure the best outcome for its shareholders. The company’s future remains uncertain, and investors should carefully consider the risks and uncertainties outlined in Turnstone’s financial reporting.