A new public company has arrived in Los Angeles County: Westlake Village-based biotech firm Turn Therapeutics Inc.

The company debuted on the Nasdaq exchange on Oct. 8 in a direct listing of stocks, where existing shares are placed into the market. No new shares were created as this was not an initial public offering designed to raise capital.

Rather, taking the company public was a requirement for Turn Therapeutics to receive a $75 million in financing from alternative lender GEM Global Yield, which has offices in New York and Luxembourg.

Turn Therapeutics’ trading started off on a bit of a roller-coaster ride since debuting on the morning of Oct. 8 at $10. The stock closed at $7 a share on the first day of trading and at $9.20 on the second day. But the trend has been down since then, with the share price dropping to $5.10 by the sixth day of trading.

Need for better wound care

Current Chief Executive Brad Burnam started Turn Therapeutics a decade ago as a vehicle to create a wound care ointment with both anti-microbial and anti-inflammatory properties. Burnham, who had a bout of sepsis that required several surgeries, saw a need for this type of wound treatment.

Turn Therapeutics’ first product, now called Hexagen, received its first clearance as a medical device from the U.S. Food and Drug Administration in 2020. Two other FDA clearances followed: one for wound dressings and the other to treat the skin condition known as eczema.

In 2022, the company then executed a licensing agreement with a total value of roughly $70 million with Marietta, Georgia-based MiMedx Group Inc., in which the latter paid Turn Therapeutics a total of $1.45 million upfront. According to Burnam, some milestone payments have come in, but for accounting purposes, recording of those payments on the company’s books has been delayed until a future, larger, milestone payment occurs.

Focus on raising funds

In recent years, Turn Therapeutics has been raising money to fund clinical trials to expand the diseases and conditions that the technology behind Hexagen can treat, including excess skin bacteria that can trigger conditions like eczema and toenail fungus. The company also has completed pre-clinical studies for other non-dermatological applications, including for herpes zoster opthalmicus (“shingles of the eye”) and basal cell carcinoma.

In addition, Turn Therapeutics is pursuing global health initiatives in temperature-stabilized vaccine delivery systems designated for use in underserved areas worldwide. According to Burnam, the first targeted disease is the Ebola virus.

In May of last year, Turn Therapeutics turned to crowdfunding as a tool to raise the needed capital, using a Regulation Crowdfunding exchange. Over an 18-month period, Turn Therapeutics raised approximately $3 million through crowdfunding.

In December, the company signed a financing agreement with GEM Global Yield, which provides Turn Therapeutics with a commitment of up to $75 million for the 36-month period following a public listing of the company’s stock.

Turn Therapeutics agreed that its shareholders would cumulatively place up to 17.8 million shares on the market. The company had a total of just over 28 million shares as of June 30. Once listed, Turn Therapeutics could place shares to GEM Global Yield at intervals and in amounts determined by Turn’s management.

Minimal revenue and operating losses

According to the prospectus issued in advance of the direct listing, Turn Therapeutics took in a mere $227,000 in non-operating revenues from the beginning of 2023 through June 30 of this year. That was set against $5.86 million in operating losses for that same time period.

Burnam noted that the revenue figure would have been higher had it not been for the decision to defer booking the milestone payments from the agreement with MiMedx.

Overall, according to the prospectus, the company has racked up an accumulated deficit of roughly $20.8 million. And that deficit could grow larger in the coming years.

“We anticipate that our expenses and operating losses will increase substantially for the foreseeable future due to the increase in research and development costs for later-stage clinical trials,” the prospectus stated.

Burnam said that the combination of a new licensing deal and the aforementioned large milestone payment should be enough to keep the company operating for at least another year or two.

The prospectus also listed founder and chief executive Burnam’s compensation and ownership stake. For each of the years 2023 and 2024, Burnam received $429,320 in compensation. And as of June 30, Burnam’s ownership stake was just over 16 million shares, or 57% of the total of 28 million shares.