10-Q: Terns Pharmaceuticals Reports Third Quarter 2024 Financial Results and Provides Business Update

Terns Pharmaceuticals reported its financial results for the third quarter of 2024, highlighting progress in its clinical programs and a recent capital raise.

Summary

• Terns Pharmaceuticals, a clinical-stage biopharmaceutical company, released its financial results for the quarter ended September 30, 2024.
• The company is focused on developing small-molecule product candidates for oncology and obesity.
• Key programs include TERN-701, an allosteric BCR-ABL inhibitor for chronic myeloid leukemia (CML), TERN-601, an oral GLP-1 receptor agonist for obesity, and TERN-501, a thyroid hormone receptor beta (THR-) agonist.
• A Phase 1 trial of TERN-601 showed statistically significant placebo-adjusted mean weight loss of 4.9% at the highest dose of 740 mg QD.
• The company completed a public offering in September 2024, raising net proceeds of $161.9 million.
• As of September 30, 2024, Terns had cash, cash equivalents, and marketable securities totaling $372.8 million.
• The company believes its current cash resources will fund operations into 2028.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong clinical trial results for TERN-601 and a successful capital raise. However, the company is still in the early stages of development and is incurring significant losses, which tempers the overall sentiment.

Positives

• The Phase 1 trial of TERN-601 demonstrated significant weight loss and was well-tolerated.
• The company successfully raised $161.9 million in a public offering, strengthening its financial position.
• TERN-701 received Orphan Drug Designation, which could provide regulatory benefits.
• The company has sufficient cash to fund operations into 2028.
• Preclinical data supports the potential of TERN-501 in combination with a GLP-1R agonist for obesity.

Negatives

• The company reported a net loss of $21.9 million for the three months ended September 30, 2024, and a net loss of $67.1 million for the nine months ended September 30, 2024.
• The company has not generated any revenue from product sales and does not expect to in the near future.
• The company has decided to limit spend in MASH given the current regulatory and clinical development requirements for the indication.

Risks

• The company is subject to risks associated with clinical trials, regulatory approvals, and commercialization of its product candidates.
• The company may need to raise additional capital in the future to fund its operations.
• The company faces competition from other biopharmaceutical companies developing similar therapies.
• The company's product candidates may not achieve commercial success even if approved.

Future Outlook

The company expects to continue advancing its clinical programs, with interim data from the CARDINAL trial of TERN-701 expected in early December 2024 and a Phase 2 clinical trial for TERN-601 planned to begin in early second quarter of 2025 with initial 12-week data expected in the second half of 2025. The company believes its existing cash will fund operations into 2028.

Management Comments

• The company is prioritizing its discovery efforts towards nominating a GIPR antagonist development candidate based on in-house discoveries.
• The company is focused on advancing multiple drug candidates that have the potential to deliver improved clinical outcomes.
• The company is continuing to evaluate opportunities for TERN-501 in metabolic diseases.

Industry Context

The company is operating in the competitive biopharmaceutical industry, focusing on oncology and obesity, which are areas of significant unmet medical need. The positive results from the TERN-601 trial are notable given the increasing interest in GLP-1 receptor agonists for weight loss. The company's focus on novel mechanisms of action, such as allosteric BCR-ABL inhibition and GIPR modulation, positions it to potentially differentiate itself from competitors.

Comparison to Industry Standards

• The 4.9% placebo-adjusted mean weight loss observed in the TERN-601 Phase 1 trial is competitive with other oral GLP-1 agonists in early-stage development.
• The tolerability profile of TERN-601, with no treatment-related dose interruptions, reductions, or discontinuations, is a positive differentiator compared to some other GLP-1 agonists.
• The company's cash runway into 2028 is relatively strong compared to many other clinical-stage biopharmaceutical companies.
• The company's focus on both oncology and obesity provides diversification, which is a common strategy in the biopharmaceutical industry.
• The company's approach to combining TERN-501 with a GLP-1R agonist is similar to other companies exploring combination therapies for obesity.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders benefit from the successful capital raise and positive clinical trial results.
• Employees may be impacted by the management changes and the company's strategic shift in MASH.
• Patients may benefit from the development of new therapies for oncology and obesity.
• Creditors are likely to view the company's strong cash position favorably.

Next Steps

• The company plans to initiate a Phase 2 clinical trial for TERN-601 in early second quarter of 2025.
• The company expects interim data from the CARDINAL trial of TERN-701 in early December 2024.
• The company will continue to evaluate opportunities for TERN-501 in metabolic diseases.
• The company will continue its discovery efforts for the TERN-800 series of small-molecule GIPR modulators.

Key Dates

Keywords

TERN-601, TERN-701, TERN-501, obesity, CML, clinical trials, biopharmaceutical, GLP-1 receptor agonist, THR-beta agonist, capital raise