SCHEDULE: Deep Track Capital Reduces Terns Pharma Stake Below 5%

Deep Track Capital and affiliates have reduced their beneficial ownership in Terns Pharmaceuticals, Inc. to 2.97% of common stock.

Summary

• Deep Track Capital, LP, Deep Track Biotechnology Master Fund, Ltd., and David Kroin collectively reported beneficial ownership of 3,150,000 shares of Terns Pharmaceuticals, Inc. common stock.
• This represents 2.97% of the total class of securities outstanding as of December 31, 2025.
• The reporting persons hold shared voting and dispositive power over all 3,150,000 shares.
• The ownership percentage is calculated based on 106,142,422 shares, which includes 103,761,470 common stock outstanding as of December 11, 2025, and 2,380,952 pre-funded warrants exercisable to common shares.
• The pre-funded warrants are subject to a 4.99% maximum percentage exercise limitation, meaning the holder cannot exercise them if it would result in beneficial ownership exceeding 4.99% of outstanding common stock.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a moderately negative development. The reduction of a significant institutional investor's stake below the 5% threshold often signals a decrease in confidence or a strategic reallocation away from the company.

Positives

• NA

Negatives

• The reduction of Deep Track Capital's beneficial ownership in Terns Pharmaceuticals, Inc. to below the 5% threshold (specifically 2.97%) indicates a decrease in their investment, which can be interpreted as a negative signal by the market regarding the fund's confidence or strategic allocation.

Risks

• A reduction in a significant institutional investor's stake could signal a lack of confidence in the company's future prospects or a shift in investment strategy, potentially leading to negative market sentiment.
• The existence of pre-funded warrants with a 4.99% exercise limitation means that while the current reported ownership is 2.97%, the investor has the potential to increase their stake up to just under 5% without triggering a new 13D filing, which could introduce future dilution or market activity.

Future Outlook

NA

Industry Context

StockSavvy.ai notes that institutional investor movements, particularly reductions in significant stakes, are closely watched in the biotechnology sector. Such changes can sometimes precede shifts in market sentiment or reflect a fund's re-evaluation of a company's pipeline, clinical trial progress, or market potential relative to peers.

Comparison to Industry Standards

• NA

Stakeholder Impact

• Shareholders may interpret the reduction in Deep Track Capital's stake as a bearish signal, potentially leading to downward pressure on the stock price.
• The company's management might face questions regarding the reasons for the institutional investor's reduced position.

Key Dates

Recommendation

The reduction of a significant institutional investor's stake below the 5% threshold is a notable event. While not an outright divestment, it suggests a re-evaluation by a sophisticated investor. A 'hold' recommendation is appropriate as it signals caution and warrants further investigation into the company's fundamentals and recent developments that might have prompted this reduction, rather than an immediate 'sell' without additional context.

Keywords

Terns Pharmaceuticals, Deep Track Capital, Schedule 13G, Beneficial Ownership, Common Stock, Institutional Investment, Biotechnology, Investment Fund, Warrants