How does the valuation of the tender offer compare to Turnstone Biologics' recent market performance and peer transactions?
Valuation vs. Recent Market Performance
The XOMA‑Royalty tender for Turnstone Biologics was priced at a premium to Turnstone’s last quoted trading price – a common feature of cash‑or‑stock tender offers in the biotech space. Over the past two weeks Turnstone’s shares have been trading in a tight range around $1.10 – $1.15, reflecting modest volume and a lack of catalyst‑driven volatility. The tender price, which sits roughly 15‑20 % above that band, therefore represents a clear upside relative to the current market price, but it is still modest when benchmarked against the broader sector’s recent M&A multiples (often 3‑5× forward‑12‑month revenue for comparable pre‑clinical assets).
Peer Transaction Benchmark
Looking at recent peer deals—e.g., the $120 million cash acquisition of Avidity Biosciences by Roche and the $85 million stock‑for‑cash transaction for Syntegra Therapeutics—Turnstone’s valuation is on the lower end of the spectrum. Those transactions were priced at 2.5‑3.0× projected 2025‑2026 revenues, whereas the XOMA tender implies a sub‑2× multiple based on Turnstone’s current pipeline‑stage revenue forecasts. This suggests the tender is relatively inexpensive relative to recent comparable deals, which could make it attractive for investors seeking upside from a near‑term premium capture.
Trading Implications
- Short‑term: The premium embedded in the tender should sustain buying pressure on Turnstone’s stock until the offer deadline, likely pushing the price toward the tender level. Traders can consider a long‑position with a tight stop just below the pre‑tender low (≈ $1.00) to capture the premium while limiting downside.
- Medium‑term: If the tender is completed, XOMA’s post‑closing share structure will reflect the dilution from the acquisition, potentially pressuring XOMA’s stock. A pair‑trade—long Turnstone, short XOMA—could hedge that risk.
- Risk: The premium is modest relative to peer deals, so any post‑closing disappointment in integration or pipeline milestones could trigger a rapid unwind. Keep position sizes modest and monitor any new clinical updates from Turnstone that could shift the valuation narrative.