SCHEDULE: OrbiMed Reduces Terns Pharma Stake Below 5%
Amendment to Beneficial Ownership Report
OrbiMed Advisors and its affiliates have significantly reduced their holdings in Terns Pharmaceuticals, Inc., ceasing to be beneficial owners of more than 5% of the company's common stock.
Summary
- OrbiMed Advisors LLC and its affiliated entities (OrbiMed Capital GP VII LLC, OrbiMed Asia GP III, L.P., OrbiMed Advisors III Limited, and OrbiMed Genesis GP LLC) have filed an Amendment No. 6 to Schedule 13D.
- The filing indicates that the Reporting Persons' beneficial ownership of Terns Pharmaceuticals, Inc. common stock decreased by more than 1%.
- As a result of recent transactions, the Reporting Persons collectively ceased to be beneficial owners of more than 5% of Terns Pharmaceuticals' outstanding shares as of November 3, 2025.
- This filing serves as an "exit filing" for the Reporting Persons, signifying their reduced stake below the 5% threshold requiring Schedule 13D reporting.
- The beneficial ownership was calculated based on 87,821,048 shares outstanding, including 310,000 warrants.
- Sales occurred on October 16, 2025, at $9.00 per share, and on November 3, 2025, at prices of $15.31 and $13.29 per share, all executed under a 10b5-1 plan.
Sentiment
Score: 4
Explanation: The sentiment is moderately negative. While the sales were pre-planned (10b5-1), a major institutional investor reducing its stake below the 5% threshold typically signals a diminished conviction in the company's near-term prospects or a strategic exit, which can weigh on investor sentiment for Terns Pharmaceuticals.
Positives
- The sales were executed under a 10b5-1 plan, indicating a pre-planned divestment strategy rather than an immediate reaction to negative news.
- Some shares were sold at a higher price point ($15.31) compared to earlier sales ($9.00), potentially indicating favorable market conditions for the seller at the time of the larger divestment.
Negatives
- A significant institutional investor reducing its stake below the 5% threshold could be perceived negatively by the market, potentially signaling a loss of confidence or a shift in investment strategy away from Terns Pharmaceuticals.
- The aggregate beneficial ownership by OrbiMed and its affiliates decreased from 4.8% to below 5%, representing a substantial reduction in their influence and stake.
Risks
- The filing does not detail specific risks related to Terns Pharmaceuticals, Inc.'s operations or financial health. It focuses on the reporting persons' investment activities.
Future Outlook
The Reporting Persons intend to periodically review their investment in Terns Pharmaceuticals, Inc. based on various factors including the Issuer's business, financial condition, market conditions, and other investment opportunities. They may acquire or dispose of additional shares or other securities of the Issuer in the future, depending on their assessment of circumstances.
Management Comments
- OrbiMed Advisors exercises this investment and voting power through a management committee comprised of Carl L. Gordon, Sven H. Borho, and W. Carter Neild, each of whom disclaims beneficial ownership of the Shares held by OPI VII, OAP III, and Genesis.
Industry Context
This filing reflects a specific investment firm's portfolio management decision rather than a broad industry trend. OrbiMed, a prominent healthcare-focused investment firm, regularly adjusts its positions in biotechnology and pharmaceutical companies based on its investment thesis and market conditions. While not indicative of a sector-wide shift, a significant reduction in stake by such an investor can sometimes prompt closer scrutiny of the underlying company's prospects within the biotech industry.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| No new changes, but existing agreement detailed | The Investors' Rights Agreement, dated December 29, 2020, grants certain registration rights to OPI VII, OAP III, and other stockholders. These include Demand Registration Rights (requiring the Issuer to register shares under specific conditions), Piggyback Registration Rights (allowing inclusion of shares in other Issuer registrations), and Form F-3 or S-3 Registration Rights (allowing requests for S-3 registrations). | 2020-12-29 | This agreement provides mechanisms for large shareholders to liquidate their holdings, which is relevant given OrbiMed's recent divestment. It does not represent a new change in corporate governance but rather a pre-existing framework governing shareholder rights. |
Stakeholder Impact
- Shareholders: Existing shareholders might experience downward pressure on the stock price due to the perception of reduced institutional confidence. Future investors might view the reduced institutional ownership as a less attractive signal.
- Company Management: May face questions regarding the reasons for a major investor's reduced stake and its implications for future capital access or strategic direction.
Next Steps
- OrbiMed Advisors and its affiliates will continue to review their investment in Terns Pharmaceuticals, Inc.
- They may acquire additional securities or dispose of remaining holdings in the future based on market conditions and their investment assessment.
- The Reporting Persons undertake to provide full information regarding the number of shares sold at each separate price upon request by the SEC staff or the Issuer.
Key Dates
| Date | Description |
|---|---|
| 2020-12-29 | Date of the Investors' Rights Agreement between OPI VII, OAP III, and other stockholders with Terns Pharmaceuticals, Inc. |
| 2021-01-15 | Date of filing of Issuer's Registration Statement on Form S-1 (SEC 333-252180), which incorporated the Investors' Rights Agreement as Exhibit 10.1. |
| 2021-02-23 | Original Schedule 13D filing date by OrbiMed Advisors LLC and affiliates. |
| 2022-08-18 | Amendment No. 1 to Schedule 13D filed. |
| 2022-12-28 | Amendment No. 2 to Schedule 13D filed. |
| 2023-03-29 | Amendment No. 3 to Schedule 13D filed. |
| 2024-07-18 | Amendment No. 4 to Schedule 13D filed. |
| 2024-09-16 | Amendment No. 5 to Schedule 13D filed. |
| 2025-08-01 | Date of 87,511,048 shares outstanding as reported in Issuer's Quarterly Report on Form 10-Q. |
| 2025-08-05 | Date Issuer's Quarterly Report on Form 10-Q was filed with the SEC. |
| 2025-10-16 | Date of initial share sales by OrbiMed entities (GEN, OAP3, OPI7) at $9.00 per share. |
| 2025-11-03 | Date of significant share sales by OrbiMed entities at $15.31 and $13.29 per share, leading to beneficial ownership falling below 5%. |
| 2025-11-05 | Date of execution of the Joint Filing Agreement and signing of Amendment No. 6 to Schedule 13D. |
Recommendation
holdWhile a significant institutional investor reducing its stake can be a negative signal, the sales were conducted under a 10b5-1 plan, suggesting a pre-determined strategy rather than an immediate reaction to adverse news. The filing itself does not provide new information on Terns Pharmaceuticals' operational performance or future prospects. Therefore, without additional company-specific news or a change in fundamental outlook, a 'hold' recommendation is appropriate, advising investors to monitor future developments from Terns Pharmaceuticals and broader market sentiment.
Keywords
Terns Pharmaceuticals, OrbiMed Advisors, Schedule 13D, Beneficial Ownership, Institutional Investor, Stock Sale, Biotechnology, Pharmaceuticals, Investment Management, Exit Filing
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