TTRX

Turn Therapeutics Inc. (TTRX) - 10-K Summary

Business Context and Reporting Period

This Annual Report on Form 10-K covers the fiscal year ended December 31, 2025. Turn Therapeutics Inc. is a clinical-stage biotechnology and medical device company developing non-systemic, non-biologic topical immunomodulators for inflammatory skin diseases. The company completed a direct listing on the Nasdaq Global Market on October 8, 2025. Its lead program, GX-03, is in a Phase 2-equivalent clinical trial for moderate-to-severe eczema, with topline results expected in the first half of 2026. The company also holds FDA clearances for medical devices (K183681, K160872, K171191) and has licensed K183681 to Medline.

Key Financial Metrics

Debt and Liquidity: As of December 31, 2025, the company had no long-term debt. However, a subsequent event disclosed a new $25.0 million loan facility with Avenue Venture Opportunities II, L.P., with $7.0 million funded on March 24, 2026. The company has a Share Purchase Agreement with GEM Global Yield LLC allowing for up to $85.0 million in equity financing; $4.07 million was drawn in 2025. Management estimates current cash will fund operations into the third quarter of 2026.

Material Changes vs. Prior Period

• Operating Expenses: Increased by $4.06 million (226%) year-over-year. General and Administrative (G&A) expenses rose from $1.55 million to $5.59 million, driven primarily by $3.06 million in legal and advisory fees related to the direct listing, increased payroll, and higher audit fees.
• Other Income: Total other income increased significantly to $2.66 million in 2025 from $28.7 thousand in 2024. This was primarily due to a $2.57 million non-cash gain from the change in fair value of a derivative liability instrument (warrant) and a $0.38 million gain from a forward contract liability.
• Capital Structure: The company completed a 2-for-1 forward stock split in September 2025. Shares outstanding increased from 26.8 million to 29.4 million.

Guidance, Outlook, and Risks

Outlook: The company expects to incur additional losses for the foreseeable future. It anticipates requiring approximately $60.0 to $65.0 million to complete planned Phase 3 trials for eczema and onychomycosis, plus $1.5 to $2.5 million for its vaccine program. Funding is expected to come from equity/debt markets and the GEM Purchase Agreement.

Going Concern: The financial statements express substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows. Management's ability to continue operations depends on raising additional capital.

Key Risks:

• Clinical Trial Failure: Outcomes of the ongoing GX-03 eczema trial are uncertain; failure could halt development.
• Liquidity: Insufficient capital to fund operations beyond Q3 2026 without new financing.
• Internal Controls: A material weakness in internal controls over financial reporting was identified in 2024 (related to stock-based compensation) and was remediated as of September 30, 2025.
• Intellectual Property: Ongoing derivation proceedings regarding patent rights with Marc Selner.

Investor Verification Checklist

• Cash Runway: Verify the sufficiency of the $5.08 million cash balance against the projected burn rate to reach Q3 2026.
• Debt Covenants: Review the specific milestones required to draw Tranche 2 ($8.0 million) and Tranche 3 ($10.0 million) of the new Avenue Capital loan.
• Clinical Data: Monitor the interim assessment of the GX-03 eczema trial (expected mid-2026) for signals of efficacy and tolerability.
• Dilution: Assess the potential dilution from the GEM Purchase Agreement (up to $85 million) and the conversion option on the Avenue Capital loan.
• Revenue Recognition: Confirm the status of the $1.44 million deferred revenue from the MiMedx agreement and the likelihood of recognition given FDA approval timelines.