On Friday, BofA Securities adjusted its stance on Turnstone Biologics (NASDAQ:TSBX), downgrading the stock from Neutral to Underperform. The firm also revised its price target to $0.40, a decrease from the previous $0.50. The decision follows a review of the third-quarter updates, which highlighted challenging market conditions for cell therapy treatments.
The analyst at BofA Securities cited several factors contributing to the downgrade, including limited availability of bed space at infusion centers, which are critical for administering cell therapy. This constraint, alongside Turnstone Biologics' slower patient enrollment rates, presents significant hurdles for the company's progress.
Turnstone's financial position was also a concern, with doubts about the company's ability to carry out necessary development programs and attract a sufficient number of patients for its studies. Despite the potential of tumor infiltrating lymphocytes (TILs) to be effective beyond the currently approved therapy, these operational challenges could impede Turnstone's ability to capitalize on this opportunity.
The new price objective set by BofA Securities reflects an updated analysis that takes into account Turnstone's third-quarter financial results, financing activities, operating expenses, and a lowered probability of success estimate for uveal melanoma treatment from 25% to 20%. This comprehensive review led to the adjusted expectations for the company's stock performance.
In other recent news, Turnstone Biologics has unveiled its latest preclinical findings on tumor-infiltrating lymphocyte (TIL) selection methods at the Society for Immunotherapy of Cancer 39th Annual Meeting.
The company's research supports the development of its clinical candidate TIDAL-01, a therapy that isolates and expands the most potent neoantigen-reactive TILs from a patient's tumor. Turnstone Biologics also reported significant developments, including a strategic shift towards its lead program, TIDAL-01, and a major workforce reduction, which is expected to extend the company's cash runway until the second quarter of 2026.
The company reported first-quarter earnings for 2024, boasting a cash reserve of $78 million. BofA Securities downgraded Turnstone's stock from Buy to Neutral, while Piper Sandler maintained an Overweight rating on the stock despite reducing its price target.
InvestingPro Insights
The recent downgrade by BofA Securities aligns with several InvestingPro metrics and tips for Turnstone Biologics (NASDAQ:TSBX). The company's financial health appears precarious, with InvestingPro data showing a market cap of just $12.21 million and a negative P/E ratio of -0.16, indicating ongoing losses. This is further supported by an InvestingPro Tip noting that the company is "not profitable over the last twelve months."
The analyst's concerns about Turnstone's ability to fund development programs are reflected in the InvestingPro Tip that the company is "quickly burning through cash." Additionally, the stock's performance has been poor, with InvestingPro data showing a 6-month price total return of -80.87%, corroborating the InvestingPro Tip that the "stock has taken a big hit over the last six months."
Despite these challenges, it's worth noting that Turnstone "holds more cash than debt on its balance sheet," according to another InvestingPro Tip. This could provide some financial flexibility as the company navigates its operational hurdles.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Turnstone Biologics, providing a deeper understanding of the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.