Terns Pharmaceuticals: A Promising Pipeline Targeting Serious Diseases

Published on September 24, 2024 | Ticker: TERN

Terns Pharmaceuticals, Inc. (NASDAQ: TERN) is a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases, including oncology and obesity. The company's pipeline includes three clinical-stage development programs: an allosteric BCR-ABL inhibitor, a small-molecule GLP-1 receptor agonist, and a THR-β agonist, as well as a preclinical GIPR modulator program.

Business Overview

TERN-701

Terns' lead product candidate, TERN-701, is a proprietary, oral, potent, allosteric BCR-ABL inhibitor being developed for the treatment of chronic myeloid leukemia (CML). Allosteric BCR-ABL inhibitors are a novel class of therapy for CML that have demonstrated superior efficacy and safety compared to traditional active-site tyrosine kinase inhibitors (TKIs). In a recent Phase 1 healthy volunteer study, TERN-701 showed a favorable pharmacokinetic profile, with no clinically significant difference in exposure between fed and fasted dosing. This ability to dose without regard to food represents a key potential differentiator within the allosteric BCR-ABL inhibitor class. The company's global Phase 1 trial, the CARDINAL trial, is ongoing and is expected to include sites from the United States, Europe, and other countries. Terns expects to report interim data from initial cohorts in the CARDINAL trial during the second half of 2024.

TERN-601

TERN-601 is Terns' small-molecule GLP-1 receptor agonist program intended for the treatment of obesity and other metabolic diseases. The company initiated a first-in-human, Phase 1 trial of TERN-601 for obesity in the fourth quarter of 2023, and the multiple ascending dose (MAD) portion of the study is currently underway. Preliminary safety findings from the ongoing, blinded Phase 1 study have been unremarkable to date, with no observations of liver enzyme elevations, drug-induced liver injury, or discontinuations due to treatment-related adverse events. Terns expects to report top-line 28-day weight loss data from the Phase 1 study in the second half of 2024.

TERN-501

TERN-501 is Terns' thyroid hormone receptor beta (THR-β) agonist for the treatment of metabolic dysfunction-associated steatohepatitis (MASH). The company announced positive top-line data from the Phase 2a DUET trial for TERN-501 in August 2023. However, Terns has decided to limit further investment in MASH due to the current regulatory and clinical development requirements for the indication. The company continues to evaluate opportunities for TERN-501 in other metabolic diseases.

TERN-800 Series

Terns' discovery efforts are also focused on the TERN-800 series of small-molecule glucose-dependent insulinotropic polypeptide receptor (GIPR) modulators for obesity, which the company believes have the potential for combination with a GLP-1 receptor agonist, such as TERN-601.

Financials

In terms of financials, Terns reported an annual net loss of $90.21 million and no revenue for the fiscal year ended December 31, 2023. The company's annual operating cash flow and free cash flow were negative $67.73 million and $67.79 million, respectively, during the same period. As of March 31, 2024, Terns had cash, cash equivalents, and marketable securities of $240.7 million, which the company believes will be sufficient to fund its planned operating expenses and capital expenditure requirements into 2026, including key clinical data readouts from its lead programs.

For the three months ended March 31, 2024, Terns reported a net loss of $22.4 million and no revenue. The company's research and development expenses for the quarter were $18.6 million, up from $17.1 million in the same period of the prior year, primarily due to a $2.6 million increase in personnel-related expenses. General and administrative expenses for the quarter were $6.9 million, down from $7.1 million in the same period of the prior year, primarily due to a $0.2 million decrease in expenses related to insurance costs.

Outlook

Terns' current cash position and ongoing clinical development activities suggest the company is well-positioned to continue advancing its pipeline and delivering on its strategic priorities. The potential success of its lead programs, TERN-701 in CML and TERN-601 in obesity, could be transformative for the company and provide significant value to shareholders.

Risks and Challenges

However, Terns is not without its risks. As a clinical-stage biopharmaceutical company, the company faces the inherent risks associated with drug development, including the potential for clinical trial failures, regulatory hurdles, and competition from other therapies. Additionally, Terns' reliance on external partnerships and collaborations for the development and commercialization of its product candidates introduces additional risks and uncertainties.

Conclusion

Despite these challenges, Terns' diverse pipeline, experienced management team, and strong financial position make the company an intriguing investment opportunity for those willing to take on the risks associated with a clinical-stage biotech. As the company continues to execute on its strategic priorities and deliver on key milestones, investors will be closely watching for updates on the progress of Terns' lead programs and the potential value they could unlock.

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