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United States securities and exchange commission logo
June 22, 2023
Sammy Farah, M.B.A., Ph.D.
President and Chief Executive Officer
Turnstone Biologics Corp.
9310 Athena Circle, Suite 300
La Jolla, California 92037
Re: Turnstone Biologics
Corp.
Registration
Statement on Form S-1
Filed June 12, 2023
File No. 333-272600
Dear Sammy Farah:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Correspondence dated June 21, 2023
Common Stock Valuation and Stock Issuance, page 9
1. You state that you
issued 732,600 shares of common stock on February 27, 2023 to
Moffitt pursuant to the
Alliance Agreement, which is treated as a performance-based stock
award for accounting
purposes. You state on page F-63 of the Form S-1 the issuance of
shares in the three
months ended March 31, 2023 related to the achievement of a
milestone for the start
of the Phase 1 trial. Please address the following:
Tell us why the
issuance of common stock in connection with the achievement of
milestones for the
Alliance Agreement is considered a performance-based stock
award instead of
research and development expense as incurred. In this regard, please
address all
issuances of common stock relating to the Alliance Agreement, including
the 732,600 common
shares issued on February 27, 2023.
Sammy Farah, M.B.A., Ph.D.
FirstName LastNameSammy
Turnstone Biologics Corp. Farah, M.B.A., Ph.D.
Comapany
June NameTurnstone Biologics Corp.
22, 2023
June 22,
Page 2 2023 Page 2
FirstName LastName
Clarify what fair value was assigned to the shares issued on
February 27, 2023 and
why there is no amount in the Statement of Stockholders' Equity
on page F-42 of the
Form S-1.
Address the reason for the difference between the fair value of
the stock issued and
the estimated offering price.
Registration Statement on Form S-1 filed June 12, 2023
Prospectus Summary, page 1
2. You state on page 1 and throughout that TILs are a "clinically
validated technology for
treating solid tumors." Please revise the Summary and Business section
to describe what
you mean by "clinically validated" and the basis for that claim. In
this regard, we note
your disclosure on page 45 that TIL therapy is an emerging field with
no approved TIL
therapies.
3. We note your response to prior comment 3, which we reissue in part. In
the Summary and
Business sections where you describe third party clinical trial
results that you believe
support the potential of your Selected TIL approach, please further
revise your
definition of terms such as "progression-free survival" and "complete
response rate" to
clarify, if true, that such terms do not indicate that the patient was
cured of the condition,
or advise.
4. We note that your revisions in response to prior comment 3 defined the
Company's use of
terms "clinical benefit" and "clinically meaningful." Notwithstanding,
in the Prospectus
Summary and Business sections, please revise your disclosure to remove
conclusory
references as to "clinical benefit" to avoid any suggestion that TIL
products generally, or
your TIL product candidates specifically, have demonstrated or are
likely to demonstrate
safety or efficacy. Findings of safety and efficacy are solely within
the authority of the
FDA. In this regard, we note your disclosure on page 41 stating that
"the FDA considers a
clinical benefit to be a positive therapeutic effect that is
clinically meaningful in the
context of a given disease[.]" You may present clinical trial end
points and objective data
resulting from trials without concluding benefit or efficacy.
Additionally, please balance references to "clinical benefit" in the
context of the
Company's mission or belief in the potential of its product candidates
by
highlighting disclosure regarding the early stage of the Company's
product development
and the lack of FDA approval for any TIL product to date, including
your product
candidates. Clarify, if true, that the Company's beliefs regarding its
product candidates are
not yet supported by statistically significant trial results, and that
your current and any
future product candidates will require additional preclinical or
clinical development,
regulatory review and approval in one or more jurisdictions.
5. We note your response to prior comment 8, which we reissue in part.
Where appropriate,
please revise your disclosure to briefly describe the nature of an
investigator-sponsored
Sammy Farah, M.B.A., Ph.D.
FirstName LastNameSammy
Turnstone Biologics Corp. Farah, M.B.A., Ph.D.
Comapany
June NameTurnstone Biologics Corp.
22, 2023
June 22,
Page 3 2023 Page 3
FirstName LastName
study, explain how such a study differs from a clinical trial
sponsored by your company,
and summarize your role/responsibility, if any, in the trial (e.g.,
financial funding).
Our Strategy, page 6
6. We note your response to prior comment 11, which we reissue in part.
On page 6 and
elsewhere throughout, you state that you are pursuing a clinical
development strategy for
TIDAL-01 designed to support moving into pivotal trials. Please
further revise your
disclosure to clarify that you are in very early stages of development
as you have on page
19 and state the factors that will determine whether your TIDAL-01
trials are sufficient to
move into pivotal trials and who will make such determination.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Components of Our Results of Operations
Collaboration Revenue, page 104
7. We note your response to prior comment 17, which we reissue in part.
You disclose on
page 105 that each of the AbbVie Agreement and Takeda Agreement were
terminated by
the counterparty pursuant to their terms. Please further revise your
disclosure to briefly
explain, to the extent known, why each counterparty chose to terminate
its agreement with
the Company in accordance with its termination for convenience rights.
8. We note your disclosure regarding the collaboration agreement with
Takeda. We also
note your disclosure on page F-26 stating that Takeda has "equity
purchase commitments
of up to $20.0 million." Please revise your disclosure here, and
elsewhere as appropriate,
to disclose the details of Takeda's equity purchase commitment.
Business
Clinical Evidence Supporting Viral Immunotherapy Combination, page 147
9. We note your response to prior comment 25. Please further revise your
description of the
serious adverse events in your prior clinical trial to describe and/or
define the following
terms: "pyrexia," "sinus tachycardia," "antidiuretic hormone
secretion," "ascites,"
"colitis," "cholecystitis," "enterocolitis," "hyponatraemia,"
"hypoaesthesia,"
"monoparesis," and haemorrhagic shock."
Notes to the Financial Statements for the Fiscal Year Ended December 31, 2022
7. Asset Acquisition, page F-28
10. If the Myst acquisition is appropriately accounted for as an asset
acquisition, the
contingent milestone payments should first be assessed under ASC 815.
If ASC 815 is not
applicable, the contingent payments should typically be accounted for
under ASC 450-20-
25-2 unless they are required to be accounted for under other US GAAP.
With regard to
the second and third milestones, if you continue to believe ASC 480 is
appropriate, please
address the following:
Clarify why the payments meet the scope criteria in ASC 480.
Please tell us why you
Sammy Farah, M.B.A., Ph.D.
Turnstone Biologics Corp.
June 22, 2023
Page 4
believe the individual milestones are freestanding financial
instruments. Refer to
ASC 480-10-15-3 and the definition of freestanding financial
instrument in ASC 480-
20. Tell us the basis for your statement on page F-29 that the
milestones are not
contingent on one another, and do not need to be achieved in any
specific order.
Since the payments may be made in cash or shares at your option,
provide us a
thorough analysis as to why you believe ASC 480 is applicable. Cite
the specific
paragraphs within ASC 480 you have used to account for the
contingent payments in
the asset acquisition.
Notes to the Financial Statements for the Three Months Ended March 31, 2023
6. Agreements
Takeda Pharmaceutical Company Limited
Termination of Discovery Program, page F-59
11. You state that the Takeda Agreement is being terminated effective as of
July 6, 2023 and
that you ceased all work under the Takeda Agreement as of March 31, 2023.
You
concluded there are no remaining estimated services associated with the
obligations under
the Takeda Agreement. Please tell us why you believe there are no further
performance
obligations under the agreement such that revenue recognition of the
remaining Deferred
Revenue as of March 31, 2023 is appropriate. Provide us the applicable
paragraphs in the
agreement, including the termination clauses, and tell us why you have
met the
performance obligations prior to the effective date of the termination
pursuant to the
agreement.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Christine Torney at 202-551-3652 or Mary Mast at
202-551-3613 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Lauren Hamill at 303-844-1008 or Joshua Gorsky at 202-551-7836 with any
other
questions.
Sincerely,
FirstName LastNameSammy Farah, M.B.A., Ph.D.
Comapany NameTurnstone Biologics Corp. Division of
Corporation Finance
Office of Life
Sciences
June 22, 2023 Page 4
cc:
FirstName Ryan Sansom
LastName