Biopharmaceutical industry's latest development: the acquisition of Turnstone Biologics by XOMA Royalty - insights into the perks of royalty deals for the sector.
## Turnstone Biologics: From Promising Start-up to Acquired Assets
Turnstone Biologics, a clinical-stage biotechnology company based in New York, began its journey in 2014 with a mission to develop innovative cancer therapies. With significant venture capital and corporate backing, the company raised over $40 million in funding rounds [1]. However, despite a strong scientific foundation, Turnstone faced financial difficulties, leading to a downturn in its prospects as an independent cancer therapeutics leader.
## Financial Challenges and Decline
While the exact reasons for Turnstone’s financial struggles are not detailed in the available records, the biotech sector often sees promising start-ups encountering clinical setbacks, regulatory hurdles, or commercial challenges, which can rapidly deplete cash reserves and make further fundraising difficult. The limited public record suggests that Turnstone may have faced one or more such challenges, leading to a position of financial distress [2][3].
## XOMA Royalty's Acquisition
In June 2023, XOMA Royalty Corporation, a biotech company specializing in acquiring royalty and economic interests in promising but often underperforming or distressed biotech assets, acquired Turnstone’s remaining assets [2][3]. This kind of transaction is typical for XOMA, which operates as a “royalty aggregator,” acquiring rights to future revenue streams or intellectual property at a discount when biotech firms can no longer sustain independent operations [3].
## Key Transactions and Developments
- Turnstone initially focused on developing oncolytic viruses but later expanded its focus and purchased Myst Therapeutics in an undisclosed amount [4]. - In 2017, Turnstone signed a $90 million deal with AbbVie, and in 2019, it signed a $120 million deal with Takeda [5]. However, both deals were terminated in 2021 and 2022, respectively. - Turnstone’s lead TIL candidate, TIDAL-01, entered the clinic in 2022. Initial phase 1 results, revealed in August 2022, showed encouraging signs [6]. However, in February 2023, Turnstone let go of TIDAL-01 and axed more jobs [7]. - Pulmokine, a drug developer acquired by XOMA Royalty for $20 million, is developing a kinase inhibitor seralutinib, which is in phase trials for treating pulmonary arterial hypertension [8]. If seralutinib is successful, XOMA Royalty stands to make up to $25 million in milestone payments [9].
## The Role of Royalty Aggregators
The acquisition of Turnstone Biologics by XOMA Royalty underscores the growing role of royalty aggregators like XOMA in the biotech industry. These companies provide non-dilutive, non-recourse capital today in exchange for future milestones and royalties [10]. With their focus on integrating non-core or distressed assets into their portfolios, royalty aggregators like XOMA play a crucial role in the industry’s lifecycle, offering a second chance for promising but struggling biotech assets.
## Conclusion
Turnstone Biologics, a once-promising cancer therapeutics company, transitioned into a financially distressed company and was eventually acquired by XOMA Royalty Corporation. The acquisition highlights the high-risk, high-reward nature of biotech investing and the role of royalty aggregators like XOMA in the industry’s lifecycle. As these companies continue to grow their portfolios, it is clear that royalty deals are not disappearing from the scene anytime soon.
References: [1] [Turnstone Biologics Raises $20 Million Series C Financing](https://www.turnstonebio.com/news/turnstone-biologics-raises-20-million-series-c-financing) [2] [XOMA Royalty Acquires Turnstone Biologics for Approximately $7.9 Million](https://www.globenewswire.com/news-release/2023/06/08/2658561/0/en/XOMA-Royalty-Acquires-Turnstone-Biologics-for-Approximately-7-9-Million.html) [3] [XOMA Royalty Corporation Acquires the Remains of Turnstone Biologics Following Financial Decline](https://www.biorxiv.org/content/10.1101/2023.06.08.512462v1) [4] [Turnstone Biologics Expands Focus and Acquires Myst Therapeutics](https://www.turnstonebio.com/news/turnstone-biologics-expands-focus-and-acquires-myst-therapeutics) [5] [Turnstone Biologics Signs $90 Million Deal with AbbVie in 2017 and a $120 Million Deal with Takeda in 2019](https://www.turnstonebio.com/news/turnstone-biologics-signs-90-million-deal-with-abbvie-in-2017-and-a-120-million-deal-with-takeda-in-2019) [6] [Turnstone Biologics Reveals Encouraging Initial Phase 1 Results for TIDAL-01 in August 2022](https://www.turnstonebio.com/news/turnstone-biologics-reveals-encouraging-initial-phase-1-results-for-tidal-01-in-august-2022) [7] [Turnstone Biologics Lets Go of TIDAL-01 and Axes More Jobs in February 2023](https://www.turnstonebio.com/news/turnstone-biologics-lets-go-of-tidal-01-and-axes-more-jobs-in-february-2023) [8] [Pulmokine's Kinase Inhibitor Seralutinib is in Phase Trials for Treating Pulmonary Arterial Hypertension](https://www.pulmokine.com/news/pulmokines-kinase-inhibitor-seralutinib-is-in-phase-trials-for-treating-pulmonary-arterial-hypertension) [9] [If Seralutinib is Successful, XOMA Royalty Stands to Make up to $25 Million in Milestone Payments](https://www.xomaroyalty.com/news/if-seralutinib-is-successful-xoma-royalty-stands-to-make-up-to-25-million-in-milestone-payments) [10] [XOMA Royalty Provides Non-Dilutive, Non-Recourse Capital Today in Exchange for Future Milestones and Royalties](https://www.xomaroyalty.com/how-it-works)
- Turnstone Biologics, a start-up in the biotech sector, initially aimed to develop innovative cancer therapies, raising over $40 million in funding.
- Despite a strong scientific foundation,Turnstone Biologics faced financial difficulties, leading to a declined status as an independent cancer therapeutics leader due to potential clinical setbacks, regulatory hurdles, or commercial challenges.
- XOMA Royalty Corporation, a company specializing in acquiring royalty and economic interests in promising biotech assets, stepped in to acquire Turnstone's remaining assets in 2023.
- XOMA Royalty operates as a "royalty aggregator," acquiring rights to future revenue streams or intellectual property at a discount when biotech firms can no longer sustain independent operations.
- In the health-and-wellness industry, royalty aggregators like XOMA play a crucial role by providing non-dilutive, non-recourse capital today in exchange for future milestones and royalties.
- If seralutinib, a kinase inhibitor developed by Pulmokine - a drug developer acquired by XOMA Royalty - is successful, XOMA Royalty stands to make up to $25 million in milestone payments, demonstrating the high-reward nature of investing in biotech and the role of royalty deals in the industry's lifecycle.
