S-1/A: Turn Therapeutics Prepares for Nasdaq Direct Listing

Turn Therapeutics, a biopharmaceutical company focused on dermatology and vaccine delivery, is preparing for a direct listing on Nasdaq, aiming to fund its advanced clinical trials and expand its proprietary PermaFusion technology.

Summary

• Turn Therapeutics is a clinical-stage biopharmaceutical company developing drugs and medical devices using its proprietary PermaFusion platform, which enhances drug performance by enabling stable suspension of polar active pharmaceutical ingredients (APIs) in oil-based carriers without emulsifiers.
• The company's primary development programs target moderate to severe eczema and onychomycosis with its GX-03/Hexagen formula, and it is also developing a thermostable, intranasal Marburg virus vaccine in collaboration with a global nonprofit organization.
• Three FDA 510(k) clearances have been obtained for Hexagen-based medical devices for wound care, dermatitis, and antimicrobial gauze, demonstrating technical proof of concept and therapeutic effects.
• A collagen/Hexagen product (FleX Product) is out-licensed to MiMedx Group, Inc. and is currently pursuing De Novo FDA classification.
• The company reported net losses of $1.57 million for the six months ended June 30, 2025, and $1.77 million for the year ended December 31, 2024, with an accumulated deficit of $20.76 million as of June 30, 2025.
• The financial statements express "substantial doubt about its ability to continue as a going concern" due to insufficient capital to fund its drug development plans.
• The direct listing on Nasdaq is not an underwritten offering, which may lead to higher price volatility and uncertain trading volume.
• Founder and CEO, Bradley Burnam, will control over 50% of the outstanding common stock, making the company a "controlled company" under Nasdaq rules.

Sentiment

Score: 4

Explanation: While the company presents promising preclinical and early clinical data for its dermatology and vaccine programs, along with a validated platform and significant market opportunities, the recurring substantial net losses, accumulated deficit, and explicit "going concern" warning in the financial statements indicate significant financial instability and high execution risk. The direct listing structure also introduces additional market volatility risks.

Positives

• Proprietary PermaFusion platform enhances drug performance, improves bioavailability, and reduces API load, potentially lowering adverse events.
• Multiple FDA 510(k) clearances for Hexagen-based medical devices (K160872, K171191, K183681) validate the platform's safety and efficacy.
• The FDA has provided a regulatory pathway for GX-03, allowing the company to bypass Phase 2 studies and proceed directly to pivotal Phase 3 trials for eczema and onychomycosis.
• Currently conducting a Phase 2-equivalent trial for moderate-to-severe eczema (114-120 patients) with cost savings due to existing 510(k) clearance.
• Clinical highlights for GX-03 in eczema models include a 67% reduction in Investigators Global Assessment (IGA) scores within 7 days and significant inhibition of key cytokines (IL-36, IL-31, IL-4), with no reported adverse events.
• In-vivo data for onychomycosis demonstrates effective nail penetration and elimination of dermatophytes.
• The vaccine delivery platform shows promising results, with 100% recovery of a live VSV-based vaccine vector after 72 hours at room temperature and 100% recovery of the Marburg live vaccine candidate at up to 14 days ambient storage and 28 days refrigerated storage.
• The Marburg vaccine candidate may qualify for FDA expedited programs, including Fast Track designation, Priority Review, and a Tropical Disease Priority Review Voucher, potentially valued at $80 million to $120 million.
• An established real-world tolerability record for Hexagen products, with over 200,000 applications for wound care and dermatology without a single adverse event reported to the FDA.
• Strong intellectual property portfolio with numerous issued patents and pending applications covering composition, manufacturing, and delivery, expected to provide coverage into the 2040s.
• A capital-efficient operating model leverages expert consultants and outsourced manufacturing to minimize fixed overhead.
• The company is strategically positioned to capitalize on market disruption and patent expirations in dermatology and antifungal markets.
• The MiMedx licensing agreement for the FleX Product includes potential milestone payments of up to $69.55 million and mid-single digit royalties on net sales.

Negatives

• The company has incurred significant and recurring net losses, with an accumulated deficit of $20.76 million as of June 30, 2025.
• The consolidated financial statements express "substantial doubt about its ability to continue as a going concern" due to insufficient capital to fund drug development plans.
• Operating expenses increased significantly in the first half of 2025 compared to the first half of 2024, primarily due to legal and advisory fees for the direct listing and increased audit fees.
• No revenue was generated from medical devices in the prior two fiscal years, and there is no current revenue-sharing agreement for a commercialized product.
• The direct listing is not an underwritten initial public offering, which may lead to higher price volatility and uncertain trading volume.
• Most existing shareholders have not entered into contractual lock-up agreements, potentially leading to substantial sales of common stock shortly after listing and an adverse impact on the public price.
• A material weakness was identified in internal control over financial reporting related to stock-based compensation accounting.
• The founder and CEO, Bradley Burnam, will control over 50% of the voting power, making the company a "controlled company" and potentially allowing his interests to differ from other shareholders.
• A derivation proceeding against Marc Selner regarding a patent application for an invention conceived by Bradley Burnam was affirmed against the company, meaning Selner retained the patent application, which could lead to future royalty demands or prevention of Hexagen commercialization.

Risks

• Incurring significant losses for the foreseeable future and may never achieve or maintain profitability, leading to substantial doubt about the ability to continue as a going concern.
• Limited operating history and inherent uncertainties in pharmaceutical and medical device product development and commercialization.
• Failure to obtain or generate necessary capital will prevent product development and likely result in loss of investment.
• Additional funding, if raised, may lead to increased dilution and sales of common stock, adversely impacting the trading price.
• Competition from large, well-established companies and new innovative companies with greater financial resources, expertise, and brand recognition.
• Material weakness in internal control over financial reporting related to stock-based compensation accounting.
• Difficulties in managing anticipated growth due due to expected increase in organization size and need for additional personnel.
• Reliance on third parties for manufacturing and clinical trials, risking delays, non-compliance, or supply issues.
• Business dependent on successful development, regulatory approval, and commercialization of products and candidates.
• Clinical trials and preclinical studies are expensive, time-consuming, difficult to design, and involve uncertain outcomes, with potential for delays or failures.
• Failure to comply with government regulations (e.g., FDA, healthcare fraud and abuse laws) could lead to substantial enforcement actions and penalties.
• Obtaining approval for new devices or drugs is lengthy, expensive, and inherently uncertain, with potential for delays, denials, or limited indications.
• Issued patents covering products could be found invalid or unenforceable if challenged, limiting the ability to prevent competitors.
• Inability to protect trade secret confidentiality would harm business and competitive position.
• Potential claims or legal proceedings alleging infringement, misappropriation, or violation of others' intellectual property rights.
• Noncompliance with government patent agency requirements could reduce or eliminate patent protection.
• Cybersecurity breaches, attacks, or other disruptions could compromise confidential information and expose the company to liability and fines.
• Direct listing differs significantly from an underwritten IPO, potentially leading to higher price volatility and uncertain trading volume.
• Public price of common stock upon Nasdaq listing may have little relation to historical private sales prices.
• An active trading market may not develop or continue to be liquid, and the market price may be volatile.
• Sales of substantial amounts of common stock by the founder, affiliates, or non-affiliates could reduce the stock price.
• As a controlled company, the company may rely on exemptions from Nasdaq corporate governance rules, reducing protections for stockholders.
• Founder's significant ownership provides substantial control, and his interests may differ from other shareholders.
• Amended and restated certificate of incorporation renounces interest in certain corporate opportunities, potentially affecting performance.
• Amended and restated bylaws require exclusive forum in Delaware courts or federal district courts, potentially discouraging lawsuits.
• Inability to maintain Nasdaq listing could impair the ability to raise capital and affect investment value.

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 and will require substantial additional funding to support its continuing drug development and operations. It aims to advance to Phase 3 trials for moderate-to-severe eczema and onychomycosis after current Phase 2-equivalent trials and IND submission, with additional nonclinical and clinical studies planned in parallel. The intranasal Marburg vaccine candidate is expected to undergo a preclinical immunogenicity study by the end of 2025 and may qualify for FDA expedited programs. The company intends to deepen its network of strategic partners, expand indications, and pursue regulatory milestones for broader commercialization, while continuing to license medical device technologies to generate non-dilutive cash flow. General and administrative expenses are expected to increase as a public company, along with a significant rise in equity-based compensation expense after the direct listing. Existing cash and equivalents are projected to fund operations into Q4 2025, but substantial additional capital of $18.0M-$20.0M for dermatology trials and $1.5M-$2.5M for the vaccine program will be needed in 2025-2026.

Management Comments

• "We believe this initiative highlights our platforms versatility and its potential to unlock new therapeutic categories beyond dermatology."
• "We believe these preclinical in-vivo studies suggest meaningful potential in these indications, which we may continue to explore at the conclusion of our lead drug programs. We believe such exploratory results further underscore the potential breadth of opportunity enabled by our platform."
• "Our current business model is to license and/or sell medical device products through commercial partners which allows us to focus our internal efforts on drug development."
• "We maintain a business model that strategically leverages contractors and vendors while employing a comparatively small internal team in order to minimize cash burn rate. We believe this reduces the amount of cash needed for internal operations, reduces waste and results in a larger proportion of available capital that can be spent toward furthering clinical development."
• "We believe such signals, along with PHMBs well-documented antimicrobial and anti-inflammatory properties, which have been validated by scientific literature and in-vivo studies, form a sound scientific basis for cross-indication effectiveness across these two dermatologic conditions."
• "We believe this hybrid model of licensing and internal drug development positions us to grow while minimizing capital risk. Our ability to generate non-dilutive cash flow from commercial device agreements is designed to support our pharmaceutical programs and extend our operational runway."
• "We believe this favorable track record in real-world uses supports higher likelihoods of success for future regulatory submissions and provides a strong foundation for physician and patient confidence as we advance our therapeutic programs."
• "We believe this procurement history provides a relevant benchmark for the potential commercial pathway of our investigational intranasal Marburg virus vaccine, which targets a similarly classified Category A pathogen with high mortality and recognized potential for weaponization."
• "We believe these early findings support our view that the underlying antimicrobial and anti-inflammatory properties of our formulation may have broad therapeutic potential across multiple forms of dermatitis, including atopic, irritant, and contact subtypes."
• "Based upon Dr. Davis findings, we believe that Hexagen may be an effective topical option for polymicrobial nail infections, offering a potential alternative to existing oral or topical antifungal treatments."

Industry Context

The company operates in the rapidly expanding biopharmaceutical and medical device industries, targeting significant unmet needs in advanced wound care, atopic dermatitis (eczema), onychomycosis, and vaccine delivery. The global advanced wound care market is projected to grow from $18.72 billion in 2024 to $30.76 billion by 2034, while the atopic dermatitis market is estimated at $12.0-$18.0 billion, with a strong demand for non-invasive alternatives to high-cost biologics like Dupixent. The onychomycosis market, valued at $3.81 billion in 2024, lacks effective topical treatments and safer alternatives to oral antifungals with systemic risks. The vaccine market, particularly for developing countries, faces cold-chain challenges, which the company's thermostable intranasal vaccine platform aims to address. The U.S. government's historical procurement of biodefense countermeasures, such as Emergent BioSolutions' anthrax vaccine (over $2 billion in contracts), provides a benchmark for the potential commercial pathway of the Marburg vaccine candidate. The company is also positioned to capitalize on patent expirations of incumbent therapies in its target markets.

Comparison to Industry Standards

• For onychomycosis, current topical therapies like Jublia (efinaconazole) have low complete cure rates (often below 20%), while oral antifungals carry systemic risks such as hepatotoxicity. GX-03 aims to differentiate by enhancing delivery through the nail plate without systemic exposure, supported by in-vivo data.
• In eczema treatment, biologics like Dupixent (dupilumab) are effective but high-cost and systemic, with immune modulation risks. Newer biological topicals like JAK inhibitors (Vtama) also have high costs and safety concerns. GX-03 is positioned as a non-steroidal, non-biologic immunotherapy with dual antimicrobial and anti-inflammatory mechanisms, addressing key tolerability concerns.
• For vaccines, current Marburg virus vaccine candidates require deep-frozen storage. Turn Therapeutics' intranasal formulation aims for thermostability, enabling distribution without deep-freeze, which is a significant advantage for remote and underserved regions. The company expects its Marburg vaccine candidate to be eligible for approval under the FDA's Animal Rule pathway, similar to Merck's Ervebo (Ebola Zaire vaccine).
• The potential market for the Marburg vaccine is benchmarked against historical U.S. government procurement contracts for anthrax vaccine (BioThrax by Emergent BioSolutions), which exceeded $2 billion in cumulative contracts, with recent awards over $200 million annually, suggesting potential annual revenues of $100 million to $300 million for successful Category A countermeasures.

Management Changes

Corporate Governance

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 that Selner improperly filed a patent application for an invention conceived by Bradley Burnam. The USPTO and the U.S. Court of Appeals for the Federal Circuit affirmed the USPTO's decision, meaning Selner retained the patent application.
• Should Selner's patent application ultimately issue as a patent, he may attempt to seek royalties or try to prevent the company's development and commercialization of Hexagen and products that contain Hexagen, or otherwise seek damages. The company would vigorously defend its rights against any such action.

Related Party Transactions

• Certain investors in the Regulation A offering granted a voting proxy to the Chief Executive Officer, which will terminate upon the effectiveness of this registration statement.
• The company expects to enter into indemnification agreements with each of its directors and executive officers.
• The company intends to enter into a registration rights agreement with Bradley Burnam, its founder and Chief Executive Officer, granting him rights to request registration of his shares and participate in registered offerings.
• The company will enter into a stockholders agreement with Bradley Burnam and his affiliated entity, BEB Holdings LLC, granting Mr. Burnam certain consent rights over corporate affairs (e.g., mergers, asset sales, equity issuances over $50M, amendments to organizational documents, debt over 20% of assets, capital expenditures over 20% of assets, dividends, poison pills, senior management hiring/compensation) as long as he beneficially owns at least 10% of outstanding common stock.
• The MiMedx Agreement, a licensing and distribution agreement with MiMedx Group, Inc., involves potential milestone payments of up to $69.55 million and mid-single digit royalties on net sales for the FleX Product. The company received a $1.0 million milestone payment and $450.0 thousand from a letter of intent.

Stakeholder Impact

• Shareholders face potential for significant dilution from future capital raises and increased stock price volatility due to the direct listing structure and limited lock-up agreements. The founder's controlling interest and associated consent rights may lead to decisions prioritizing his interests over other shareholders. Reduced corporate governance protections as a 'controlled company' and exclusive forum provisions in bylaws may also impact shareholder rights.
• Employees and management will see new employment agreements for key executives with increased compensation, and a new compensation program for non-employee directors. The company's growth plans will require attracting and retaining additional talent.
• Customers and patients could benefit from new, effective, non-steroidal, non-systemic topical therapies for eczema and onychomycosis, and potentially thermostable, needle-free intranasal vaccines for global health threats. The established real-world tolerability of Hexagen products is a positive for patient confidence.
• Suppliers and creditors face risks due to the company's 'going concern' doubt and reliance on third-party manufacturers and CROs. Concentration of accounts payable with a few vendors could also pose risks.
• Regulatory bodies will continue to oversee the company's compliance with extensive FDA and other government regulations, with potential for enforcement actions if non-compliance occurs.

Next Steps

• File an Investigational New Drug (IND) program to open a Phase 3 study for moderate-to-severe eczema and onychomycosis.
• Advance to Phase 3 trials for moderate-to-severe eczema and onychomycosis.
• Conduct additional nonclinical and clinical studies (PK max-use, healthy volunteer exposure trials) in parallel with Phase 3 trials.
• Conduct a preclinical immunogenicity study of the intranasal Marburg vaccine candidate in a live animal model before the end of 2025.
• Attempt an animal model of the intranasal Marburg candidate to achieve an antibody response.
• Start an additional stability test of the Marburg candidate for ambient and 4C arms out to 90 days.
• Pursue remaining preclinical, clinical, and regulatory steps with the Organization to bring the stabilized intranasal Marburg vaccine to market.
• Conduct GLP toxicology studies and non-human primate challenge studies for the Marburg vaccine.
• If Marburg IND filing is successful, initiate Phase 1 and Phase 2 clinical trials in healthy adult volunteers (300-500 subjects).
• Submit a Biologics License Application (BLA) to the FDA for the Marburg vaccine.
• Secure an exclusive partner to market XEAL (K183681) in the United States and globally.
• Actively identify potential partners for distribution of AtopX (K171191) outside the United States.
• MiMedx is expected to submit FleX Product data for De Novo review by the end of 2025.
• Deepen network of strategic partners, expand indications, and pursue regulatory milestones for broader commercialization.
• Hire additional employees in manufacturing, operations, clinical development, finance, legal, human resources, and other areas.
• Remediate material weakness in internal control over financial reporting.
• Enter into a new employment agreement with Mr. Burnam.
• Adopt a non-employee director compensation program.
• Adopt a code of ethics.
• Enter into indemnification agreements with directors and executive officers.
• Enter into a registration rights agreement with Bradley Burnam.
• Enter into a stockholders agreement with Bradley Burnam and BEB Holdings LLC.
• File one or more registration statements on Form S-8 for stock-based compensation plans.

Key Dates

Recommendation

The company possesses innovative platform technology with promising preclinical and early clinical data in large markets (dermatology, vaccines) and a capital-efficient model. The FDA's willingness to bypass Phase 2 for some indications is a positive. However, the significant and recurring net losses, accumulated deficit, and explicit "going concern" warning in the financial statements present substantial financial risk. The direct listing structure and lack of broad lock-up agreements also introduce considerable market volatility. While there's long-term potential, the immediate financial instability and execution risks warrant a cautious "Hold" stance for seasoned investors, awaiting clearer signs of financial stability and successful progression through pivotal clinical trials and regulatory approvals.

Keywords

Biopharmaceutical, Medical Device, PermaFusion, Eczema, Onychomycosis, Vaccine, Marburg Virus, FDA Clearance, Drug Development, Clinical Trials, Nasdaq Direct Listing, Intellectual Property, PHMB, Dermatology, Wound Care, Thermostable Vaccines, Corporate Governance, Going Concern