10-K: Turn Therapeutics Advances Eczema Drug, Reports 2025 Losses

Turn Therapeutics' 2025 annual report details progress in its lead eczema drug program and new partnerships, alongside significant net losses and a going concern warning.

Summary

• Turn Therapeutics is developing non-systemic, non-biologic topical immunomodulators for inflammatory skin diseases, with its lead program, GX-03, targeting moderate-to-severe eczema and onychomycosis.
• GX-03 is currently in a randomized, double-blind, vehicle-controlled clinical study for moderate-to-severe eczema, with topline results expected mid-2026.
• The company reported a net loss of $3.19 million for the year ended December 31, 2025, compared to $1.77 million in 2024, and an accumulated deficit of $22.39 million as of December 31, 2025.
• Auditors expressed substantial doubt about the company's ability to continue as a going concern due to insufficient capital to fund drug development plans.
• A license and supply agreement for the medical device K183681 was recently signed with Medline, and the company continues to explore additional licensing opportunities for device applications.
• Exploratory work is ongoing for a thermostable intranasal vaccine platform, which demonstrated 100% recovery of a live VSV vaccine vector at up to 14 days ambient storage and 28 days refrigerated storage.
• The company secured a Loan and Security Agreement with Avenue Venture Opportunities Fund II, L.P. for up to $25.0 million, with $7.0 million funded on March 24, 2026.
• Turn Therapeutics also has a Share Purchase Agreement with GEM Global Yield LLC SCS and GEM Yield Bahamas Limited for up to $85.0 million in common stock purchases, with $4.07 million received in 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a high-risk, early-stage biotechnology company. While there is promising preclinical data and strategic partnerships, the significant financial losses and explicit going concern warning indicate substantial operational and financial challenges.

Positives

• Preclinical studies for GX-03 demonstrated broad upstream cytokine inhibition (IL-31, IL-36α/γ, IL-4) in inflammatory skin disease models, with significant reductions in Investigators Global Assessment (IGA) scores.
• In-vivo studies for GX-03 in onychomycosis showed nail-plate penetration and significant reduction of fungal burden, a key differentiator from conventional topical therapies.
• The company secured a license and supply agreement with Medline for its K183681 antimicrobial gauze, providing a passive revenue stream and leveraging its medical device portfolio.
• The ongoing eczema clinical trial utilizes an adaptive design with an independent interim assessment committee (IAC) empowered to increase sample size based on positive trending, without increasing primary error.
• The thermostable intranasal vaccine platform achieved a key technical milestone with 100% recovery of a live VSV vaccine vector at ambient and refrigerated temperatures, suggesting potential for needle-free, cold-chain independent delivery.
• The company maintains a capital-efficient operating model by leveraging contractors and vendors, minimizing cash burn and focusing capital on clinical development.
• Turn Therapeutics holds numerous issued patents and pending applications covering composition, manufacturing methods, and delivery mechanisms, expected to provide coverage into the late 2040s.

Negatives

• The company incurred significant net losses of $3.19 million in 2025 and $1.77 million in 2024, with an accumulated deficit of $22.39 million as of December 31, 2025.
• Auditors expressed substantial doubt about the company's ability to continue as a going concern due to insufficient capital to fund its drug development plans.
• The company has a limited operating history and has generated minimal revenues from operations, relying heavily on equity financings and collaboration agreements.
• Future operating expenses are expected to increase substantially due to later-stage clinical trials, requiring significant additional funding.
• The company relies heavily on third parties for manufacturing, preclinical/clinical trials, and commercialization, exposing it to risks if these third parties fail to comply with regulations or meet deadlines.
• The MiMedx agreement's deferred revenue of $1.44 million is due to unpredictable outcomes and timelines of the FDA approval process, delaying revenue recognition.

Risks

• Substantial doubt about the company's ability to continue as a going concern due to significant losses and insufficient capital.
• Failure to obtain or generate necessary capital could lead to delays, reductions, or termination of product development.
• Future financing agreements may lead to increased dilution for existing shareholders and adversely impact stock price.
• Competition from large, well-established companies with greater resources and market recognition.
• Difficulty in managing anticipated growth and attracting/retaining talent as the organization expands.
• Reliance on third parties for manufacturing and clinical trials could lead to delays, increased costs, or failure to obtain regulatory approval.
• Uncertain outcomes, high costs, and time-consuming nature of clinical trials and preclinical studies.
• Failure to comply with government regulations (FDA, healthcare, data privacy) could result in substantial enforcement actions, penalties, or business disruption.
• Lengthy, expensive, and uncertain regulatory approval process for new devices or drugs.
• Issued patents covering products could be found invalid or unenforceable, or the company may face claims of intellectual property infringement from others.
• Inability to protect the confidentiality of trade secrets could harm business and competitive position.
• Cybersecurity breaches or disruptions to information technology systems could compromise confidential information and expose the company to liability.
• Debt financing with Avenue includes covenants that may impede business plan execution and, if breached, could adversely affect financial condition.
• An active trading market for common stock may not develop or remain liquid, and the market price may be volatile.
• Sales of substantial amounts of common stock by founder, affiliates, or non-affiliates could reduce the stock price.
• The company's status as a controlled company (founder owns 52% of voting power) means certain corporate governance requirements may be exempted, and the founder has substantial control over business decisions.
• The company may not be able to maintain its Nasdaq listing, which could impair liquidity and access to capital (e.g., GEM Purchase Agreement).
• Potential substantial dilution to stockholders from future offerings, including sales to GEM under the GEM Purchase Agreement.
• The company's amended and restated certificate of incorporation renounces interest in certain corporate opportunities, potentially allowing directors/officers to pursue competing ventures.

Future Outlook

The company expects to incur additional losses for the foreseeable future due to increased research and development costs for later-stage clinical trials. It anticipates needing approximately $60.0 to $65.0 million to complete planned Phase 3 trials for eczema and onychomycosis, and $1.5 million to $2.5 million for its vaccine program, which it expects to fund through accessing capital markets, including additional equity and/or equity-linked securities. Topline results for the moderate-to-severe eczema clinical study are expected mid-2026. The company plans to advance to Phase 3 trials for eczema and onychomycosis following completion of the current eczema trial and subsequent regulatory interactions.

Management Comments

• Management believes its current business model of licensing and/or selling medical device products through commercial partners, without significant capital commitments, allows it to focus internal efforts on drug development.
• Management believes its capital-efficient operating model, leveraging contractors and a small internal team, reduces cash needed for internal operations and directs more capital to clinical development.
• Management believes the preclinical data and established safety profile of GX-03, along with physician feedback, form a sound scientific basis for cross-indication effectiveness in dermatologic conditions.
• Management believes the company's initial vaccine candidate could be eligible for multi-year procurement contracts from government agencies and public health organizations, anticipating increased uptake of needle-free vaccines.

Industry Context

StockSavvy.ai notes that Turn Therapeutics is strategically positioning its GX-03 formula in large, competitive dermatology markets like eczema ($12-18 billion) and onychomycosis ($3.81 billion), which currently have significant unmet needs. The company aims to differentiate itself by offering non-systemic, non-biologic topical immunomodulators, contrasting with high-cost injectable biologics like Dupixent (dupilumab) for eczema, which face patient adherence issues, and topical JAK inhibitors like Vtama, which carry safety concerns and black-box warnings. For onychomycosis, GX-03's demonstrated nail penetration aims to overcome the limitations of existing topicals like Jublia (efinaconazole) with low complete cure rates (below 20%) and oral antifungals like terbinafine (LAMISIL) associated with systemic risks like hepatotoxicity. The exploratory vaccine platform also targets a growing influenza vaccine market ($8.49 billion) by addressing cold-chain logistics and needle-free administration, potentially appealing to governmental and military agencies for stockpiling and public health organizations for broader distribution.

Comparison to Industry Standards

• GX-03's non-systemic cytokine modulation for inflammatory skin disease aims to provide therapeutic effect without the systemic immunosuppression or high costs associated with injectable biologics like Dupixent (dupilumab) and topical JAK inhibitors like Vtama.
• Current topical therapies for onychomycosis, such as Jublia (efinaconazole), are noted to have low complete cure rates (often below 20%) and limited nail penetration, which GX-03's in-vivo data suggests it can overcome.
• Oral antifungals for onychomycosis, like terbinafine, offer better efficacy but carry systemic risks including hepatotoxicity and require liver monitoring, which GX-03's topical, non-systemic approach seeks to avoid.
• The company's PermaFusion platform for vaccine stabilization aims to address cold-chain logistics and delivery challenges, potentially improving upon traditional vaccine administration methods and expanding access, similar to efforts by other players in the $8.49 billion influenza vaccine market.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently subject to any material legal proceedings.
• The company was involved in a derivation proceeding in 2017 before the U.S. Patent and Trademark Office (USPTO) against Marc Selner, alleging improper filing of a patent application for an invention conceived by Bradley Burnam. The USPTO did not name Mr. Burnam sole inventor or cancel Selner's application, and the U.S. Court of Appeals for the Federal Circuit affirmed the decision. The company intends to file for reexamination of the Selner patent application based on lack of enabling data, disclosures, and expert testimony.

Related Party Transactions

• Voting proxy granted by certain investors to the Chief Executive Officer under Regulation Crowdfunding and Regulation A offerings terminated in connection with the direct listing.
• Indemnification agreements were entered into with each director and executive officer, requiring the company to indemnify them for certain events to the fullest extent permitted by law.
• A registration rights agreement was entered into with Bradley Burnam, granting him the right to request the company register his shares for resale and to participate in certain registered offerings.
• A stockholders agreement was entered into with Bradley Burnam and BEB Holdings LLC, granting the founder consent rights over certain corporate actions as long as he beneficially owns at least 10% of the common stock.
• Legal expenses of $1.5 million were charged by Davis Polk & Wardwell LLP during 2025, where Arthur Golden, a director since September 2025, serves as Senior Counsel.

Stakeholder Impact

• Shareholders face potential dilution from future equity offerings (GEM Purchase Agreement, other financings) and the risk of losing their entire investment due to the company's going concern doubt and early-stage nature.
• Employees and contractors may experience increased workload and responsibilities as the company grows, and their equity incentive awards are subject to vesting conditions and potential clawback policies.
• Customers (commercial partners) benefit from licensing agreements for medical devices, but the success of new drug candidates depends on regulatory approvals and market acceptance.
• Creditors, particularly Avenue Capital, have a security interest in all company assets, and breaches of loan covenants could lead to acceleration of payments.
• Regulatory bodies will continue to scrutinize the company's clinical trials, manufacturing processes, and marketing practices, with non-compliance potentially leading to penalties or product recalls.

Next Steps

• Conduct an interim assessment at approximately 50% trial completion for the GX-03 eczema clinical study.
• Expect topline results for the GX-03 eczema clinical study in mid-2026.
• Submit for Investigational New Drug (IND) approval to commence Phase 3 trials for GX-03 in moderate-to-severe eczema and onychomycosis following completion of the current eczema trial.
• Initiate additional nonclinical and clinical studies (e.g., PK max-use, healthy volunteer exposure trials) in parallel with Phase 3 trials.
• Potentially structure a single registrational trial for onychomycosis as an adaptive Phase 2b/3 study.
• Initiate certain foundational clinical activities for onychomycosis in select ex-U.S. jurisdictions.
• Continue exploratory research and development for the thermostable intranasal vaccine platform.
• Identify and pursue additional licensing opportunities for medical device applications.

Key Dates

Recommendation

Turn Therapeutics presents a high-risk, high-reward profile. While the company has promising preclinical data for its GX-03 programs in eczema and onychomycosis, and has secured initial debt and equity financing, the significant net losses and the auditor's going concern warning indicate substantial financial instability. The long, uncertain, and expensive path to drug approval, coupled with intense competition and reliance on third parties, suggests considerable execution risk. A 'hold' recommendation acknowledges the potential upside from successful clinical development and commercialization, but advises caution given the current financial challenges and inherent risks of an early-stage biotech.

Keywords

Eczema, Onychomycosis, Dermatology, Immunomodulators, Topical treatment, Clinical trials, Biotechnology, Medical devices, FDA approval, Pharmaceutical development, PermaFusion, Vaccine platform, Polyhexanide (PHMB), Nasdaq listing, Going concern, Intellectual property, Capital raise, SEC filing