L.O.T.W. #151 - Turn Therapeutics: Growth Capital Timed to Phase 2 Readout
Avenue Venture layers in a $1.2 million stock grant, a discounted conversion option, and a participation right alongside a $25.0 million term loan
On March, Turn Therapeutics Inc. (Nasdaq: TTRX) closed a growth capital term loan of up to $25.0 million with Avenue Venture Opportunities Fund II, L.P., a venture lending fund affiliated with Avenue Capital Group. The facility is structured in three tranches- an initial $7.0 million funded at closing, an $8.0 million second tranche conditioned on specified clinical and fundraising milestones, and a discretionary $10.0 million third tranche requiring advanced clinical progress and lender investment committee approval. The company indicated that the initial tranche is expected to extend its runway through a mid-year Phase 2 readout in moderate-to-severe atopic dermatitis, with proceeds from the full facility expected to extend the runway through the end of 2027. The agreement contains no minimum cash requirement or other traditional financial covenant; lender protection is built entirely into the milestone-gated tranche structure. Avenue received a $1.2 million equity grant at closing, a principal conversion option at a 20% discount to market, and a participation right in future equity rounds.
👓At a Glance
Origination Date: March 23, 2026
Borrower: Turn Therapeutics, Inc.
Lender: Avenue Capital Opportunities Fund II
Deal Size: $25 million
Structure: Multi-tranche growth capital term loan
Rate: Greater of (i) Prime Rate + 5.50% or (ii) 12.25% per annum (variable with floor)
Term: ~42 months
Use of Proceeds: Extend runway through mid-year Phase 2 atopic dermatitis readout and support preparation for registrational trials; full facility expected to extend runway through end of 2027
Source: SEC 8-K
📷Borrower Snapshot
Sector: Healthcare
Subsector: Pharmaceuticals
Ownership: Public (Nasdaq: TTRX)
Commercial Stage: Pre-revenue
Business Overview: Turn Therapeutics Inc. (corporate entity: Global Health Solutions Inc. dba Turn Therapeutics) is a clinical-stage dermatology company developing novel therapies for inflammatory skin diseases. Its lead compound, GX-03, is in active development for two indications: moderate-to-severe atopic dermatitis, where a Phase 2 trial is ongoing with a mid-year 2026 readout anticipated, and onychomycosis, where encouraging data from independent investigator-sponsored studies has supported advancement into Phase 3.
⚙️Structure & Terms
Source: SEC 8-K
Commitment: Up to $25.0 million
Tranche 1: $7.0 million funded at close
Tranche 2: up to $8.0 million
Discretionary Tranche 3: up to $10.0 million
Maturity: October 1, 2029
Collateral: First priority lien on all assets, including intellectual property
Rate: Greater of (i) Prime Rate + 5.50% or (ii) 12.25% per annum; variable rate calculated on a 360-day year basis
Fees:
Commitment fee: 1.00% of total commitment ($150,000; $50,000 of which was previously paid as an advance deposit)
Final payment: 3.75% of aggregate funded loan amount, due at maturity or upon full prepayment
Prepayment fee: 3.0% of outstanding principal if prepaid in year 1; 2.0% in year 2; 1.0% after year 2
Equity Features:
Equity Grant: $1.2 million of common stock issued to lender at closing, calculated at the 5-day VWAP of TTRX common stock preceding the closing date
Conversion Option: Lender may convert up to $2.0 million of outstanding principal into TTRX common stock at a 20% discount to the closing price of the common stock on the date of exercise; the maximum principal amount eligible for conversion increases to $3.0 million if and when Tranche 2 is funded
Participation Right: Lender may invest up to $1.0 million in future equity financings on the same terms offered to other investors (excluding existing shelf registration statements and ATM transactions)
Financial Covenants:
None