8-K: Terns Pharma Halts Obesity Drug TERN-601 After Phase 2

Terns Pharmaceuticals announced disappointing topline 12-week Phase 2 results for its oral GLP-1 receptor agonist TERN-601, leading to the discontinuation of its obesity program.

Summary

• Terns Pharmaceuticals reported topline 12-week results from its Phase 2 FALCON trial of TERN-601, an oral GLP-1 receptor agonist, for obesity.
• The trial showed statistically significant placebo-adjusted weight loss, with a maximum of 4.6% at the 500 mg dose.
• Treatment discontinuation due to adverse events (AEs) was 11.9%, with 8.2% requiring dose modification, primarily due to mild to moderate gastrointestinal (GI) issues like nausea (56%) and vomiting (26.9%).
• Three participants experienced asymptomatic, reversible grade 3 liver enzyme elevations during post-treatment follow-up, with two cases deemed drug-related (DILI), one supported by liver biopsy.
• The company concluded that TERN-601 did not meet the high threshold for a differentiated oral GLP-1RA therapy in terms of safety, tolerability, and efficacy, and will not advance its development.
• Terns Pharmaceuticals will cease further investment in metabolic disease assets and will instead focus its resources on advancing its TERN-701 program for chronic myeloid leukemia (CML), with new clinical data expected this quarter.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the complete discontinuation of a significant pipeline program (TERN-601) following disappointing Phase 2 results, particularly the unexpected safety signal of drug-induced liver injury. This represents a major setback for the company's metabolic disease strategy.

Positives

• TERN-601 demonstrated statistically significant placebo-adjusted weight loss of up to 4.6% at 12 weeks in doses greater than 500 mg.
• Gastrointestinal adverse events were generally mild or moderate and appeared to be dose-related, with no severe GI AEs reported.

Negatives

• The 12-week Phase 2 results for TERN-601 did not meet the company's threshold for a truly differentiated oral GLP-1RA therapy, leading to the discontinuation of the program.
• Unexpected asymptomatic, reversible grade 3 liver enzyme elevations occurred in three participants during post-treatment follow-up, with two cases confirmed as drug-related liver injury (DILI).
• Treatment discontinuation due to adverse events was 11.9%, indicating tolerability challenges.
• The results from the Phase 2 outpatient trial did not translate favorably from the previous Phase 1 inpatient 28-day trial.

Risks

• Drug-induced liver injury (DILI) is a significant safety concern identified in the Phase 2 trial, which could impact future drug development in similar classes.
• The discontinuation of TERN-601 increases pipeline concentration risk, as the company now heavily relies on the success of its TERN-701 program.
• Clinical trial failures, as demonstrated by TERN-601, are inherent risks in biopharmaceutical development and can lead to significant financial and strategic setbacks.

Future Outlook

Terns Pharmaceuticals will not further advance the development of TERN-601 and plans to cease further investment in metabolic disease assets. The company will focus its full capabilities on advancing its TERN-701 program for chronic myeloid leukemia (CML), with new clinical data from the Phase 1 CARDINAL trial expected this quarter.

Management Comments

• Amy Burroughs, CEO: "The threshold for a truly differentiated oral GLP-1RA therapy – one that delivers safety, tolerability and efficacy – is high. The Phase 2 topline 12-week results for TERN-601 did not meet this threshold and likely preclude further development."
• Amy Burroughs, CEO: "As we’ve previously communicated, we do not plan to further invest in metabolic disease. Our team remains energized and focused on advancing our potentially best-in-class TERN-701 program in chronic myeloid leukemia (CML) with our full capabilities. We look forward to announcing new data from our Phase 1 CARDINAL trial of TERN-701 for CML this quarter."
• Emil Kuriakose, M.D., CMO: "The results of our previous Phase 1 inpatient 28-day trial did not translate to those we observed in this 12-week trial, which was conducted in an outpatient multi-center setting."
• Emil Kuriakose, M.D., CMO: "The post-treatment reversible grade 3 liver enzyme elevations were unexpected based on the lack of similar signals in preclinical and Phase 1 studies."

Industry Context

The GLP-1 receptor agonist market for obesity is highly competitive and rapidly evolving, with established injectable therapies and emerging oral options setting a high bar for efficacy, safety, and tolerability. TERN-601's failure to meet the 'high threshold' for differentiation, particularly due to the unexpected liver safety signal, highlights the challenges of entering this crowded and demanding therapeutic area. The decision to exit metabolic disease reflects the intense competition and the significant investment required to develop a competitive product.

Comparison to Industry Standards

• The company explicitly stated that TERN-601 did not meet the 'high threshold for a truly differentiated oral GLP-1RA therapy' in terms of safety, tolerability, and efficacy, implying it falls short of competitive standards.
• Established GLP-1RAs like Novo Nordisk's Wegovy (semaglutide) and Eli Lilly's Zepbound (tirzepatide) have demonstrated higher weight loss percentages (e.g., ~15-20% at 68-72 weeks) and generally manageable safety profiles, making TERN-601's 4.6% weight loss at 12 weeks less competitive.
• The occurrence of drug-induced liver injury (DILI) is a significant safety concern that differentiates TERN-601 negatively from leading GLP-1RAs, which have not shown similar signals in their extensive clinical development.

Stakeholder Impact

• Shareholders: Likely negative impact on share price due to the failure of a key pipeline asset and the discontinuation of an entire therapeutic area (metabolic disease).
• Employees: Potential restructuring or reallocation of resources for teams previously focused on metabolic disease.
• Patients: Loss of a potential new oral treatment option for obesity, though the safety concerns would have been a barrier to market.
• Investment Community: Reassessment of the company's pipeline value and strategic direction, with increased focus on the TERN-701 program.

Next Steps

• Publish detailed results from the Phase 2 trial of TERN-601 in the future.
• Announce new data from the Phase 1 CARDINAL trial of TERN-701 for chronic myeloid leukemia this quarter.

Key Dates

Recommendation

The discontinuation of TERN-601, a significant pipeline asset, due to safety concerns (DILI) and failure to meet competitive efficacy/differentiation thresholds represents a major setback. This event significantly diminishes the company's near-term growth prospects in a high-value market. While the company is refocusing on TERN-701, the immediate impact on valuation is negative, warranting a 'sell' recommendation for investors holding the stock based on the obesity program's potential.

Keywords

Terns Pharmaceuticals, TERN-601, GLP-1 receptor agonist, obesity, weight loss, Phase 2 trial, clinical data, drug development, biopharmaceutical, liver enzyme elevation, DILI, TERN-701, chronic myeloid leukemia, CML