Turnstone Biologics Reports $5.5M Net Loss, Plans Merger with XOMA Royalty Corporation

Turnstone Biologics Corp. reported significant financial changes in its latest 10-Q filing for the quarter ending June 30, 2025. The company recorded a net loss of $5.5 million for the quarter, a notable decrease from a loss of $21.3 million in the same period last year, reflecting a reduction of approximately 74%. For the first half of 2025, Turnstone's net loss was $17.3 million, down from $40.9 million in the first half of 2024, indicating a 58% improvement. The decrease in losses is attributed to the cessation of clinical development activities and a strategic shift towards a merger agreement with XOMA Royalty Corporation.

Total operating expenses for the second quarter of 2025 were $5.6 million, a significant drop from $22.1 million in the prior year, primarily due to a drastic reduction in research and development expenses, which fell from $17.7 million to $0.2 million. This reduction is a direct result of the company's decision to discontinue all clinical studies and focus on the merger. General and administrative expenses increased by 25.6% to $5.4 million, driven by costs associated with the merger process and employee restructuring.

In terms of liquidity, Turnstone reported cash and cash equivalents of $16.7 million as of June 30, 2025, down from $28.9 million at the end of 2024. The company utilized $11.4 million in operating activities during the first half of 2025, a decrease from $33.4 million in the same period of 2024. The company’s cash flow from investing activities provided $1.0 million, primarily from the sale of property and equipment, contrasting sharply with the previous year’s $33.0 million, which was largely due to the maturity of short-term investments.

Strategically, Turnstone entered into a merger agreement with XOMA on June 26, 2025, which includes a cash tender offer for its outstanding shares at $0.34 per share, plus contingent value rights. This merger is expected to close in the third quarter of 2025, although there are no guarantees regarding its completion or the potential for increased shareholder value. The company has also announced a reduction in workforce, with only three employees remaining as of the end of June, as it implements cost-containment measures in anticipation of the merger.

Looking ahead, Turnstone's management has indicated that if the merger does not proceed, the company may pursue dissolution and liquidation. The company is currently under scrutiny from Nasdaq for not meeting the minimum bid price requirement, which could lead to delisting if compliance is not achieved by September 22, 2025. The ongoing strategic decisions and financial performance will be critical as Turnstone navigates this transitional phase.