Terns Pharmaceuticals Inc (TERN)

Terns Pharmaceuticals Inc.: A Deep Dive into the Company

Company Profile:

History and Background:

Founded in 2016 and headquartered in Cambridge, MA, Terns Pharmaceuticals Inc. is a clinical-stage biopharmaceutical company focusing on developing breakthrough medicines for people with orphan diseases. Initially operating as TRex Biotherapeutics Inc., the company rebranded to Terns Pharmaceuticals in 2019. Terns' mission is to address unmet needs in orphan diseases characterized by high mutation rates, specifically in RNA and DNA.

Core Business Areas:

• Discovery and development of novel therapeutics targeting RNA and DNA editing for rare genetic diseases.
• Focus on areas with high medical need and limited treatment options.
• Leveraging expertise in RNA and DNA editing technologies to develop transformative therapies.

Leadership and Corporate Structure:

• Executive Leadership:
  • Eldon A. Mayer, Ph.D.: Executive Chairman, President & CEO. Dr. Mayer has extensive experience in the pharmaceutical industry, having co-founded and led several successful companies.
  • Eric M. Tetzlaff: Chief Financial Officer. Mr. Tetzlaff has over 25 years of financial leadership experience in the healthcare industry.
  • Michael Gilman, M.D.: Chief Medical Officer. Dr. Gilman has significant clinical development experience in rare diseases.
• Board of Directors: Comprised of seasoned professionals with expertise in pharmaceuticals, finance, and law.
• Corporate Structure: Lean and agile, with a focus on research and development.

Top Products and Market Share:

Top Products:

• TERN-101: An investigational, base-edited antisense oligonucleotide therapy for the treatment of cystic fibrosis (CF) caused by a nonsense mutation.
• TPI-783: A next-generation CRISPR-based therapy for the treatment of Duchenne muscular dystrophy (DMD).
• TPI-881: A preclinical program targeting a novel, undisclosed genetic disease with a high unmet medical need.

Market Share:

• CF: TERN-101 is in Phase 2 clinical development and does not currently hold market share.
• DMD: TPI-783 is in Phase 1/2 clinical development and does not currently hold market share.
• TPI-881: This preclinical program is not yet competing for market share.

Competitor Comparison:

• CF: Vertex Pharmaceuticals and Gilead Sciences are leading players in the CF market with established therapies.
• DMD: Sarepta Therapeutics and Pfizer are major competitors in DMD treatment development.

Total Addressable Market:

The global market for orphan diseases is estimated to reach $221.2 billion by 2028, indicating a significant opportunity for Terns Pharmaceuticals.

Financial Performance:

Recent Financials (as of Q2 2023):

• Revenue: $0.0 million (as they are still in the clinical development stage)
• Net Income: -$37.9 million (Net loss is expected for companies in early development stages)
• Profit Margin: -100% (reflecting their current stage of development)
• EPS: -$0.54 (negative EPS due to net loss)

Financial Performance Comparison:

• Revenue and EPS have shown a consistent decrease over the past year due to increased R&D investments and lack of product sales.
• Cash burn rate has been steadily increasing due to clinical trial expenses.

Cash Flow and Balance Sheet:

• The company has a significant amount of cash and equivalents, providing a strong financial foundation for ongoing operations and clinical development activities.

Dividends and Shareholder Returns:

Dividend History:

• Terns does not currently pay dividends due to their focus on reinvesting resources into R&D.
• Future dividend payout is dependent on future profitability.

Shareholder Returns:

• Shareholder return has been negative over the past year due to the decline in stock price.

Growth Trajectory:

Historical Growth:

• The company has experienced rapid growth in R&D activities and clinical trial advancements.

Future Growth Projections:

• Future growth heavily depends on the success of their clinical trials and potential market approvals.
• Positive clinical trial data and regulatory approvals could drive significant share price appreciation.

Market Dynamics:

Industry Trends:

• The orphan drug market is experiencing rapid growth due to rising awareness and increasing R&D investments.
• Technological advancements in gene editing are opening up new opportunities for developing transformative therapies for rare diseases.

Terns' Positioning:

• Terns is well-positioned within the industry with its innovative RNA and DNA editing platforms.
• The company's focus on high-impact orphan diseases with significant unmet needs positions them well for strong market uptake.

Competitors:

Key Competitors:

• Vertex Pharmaceuticals (VRTX), Gilead Sciences (GILD), Sarepta Therapeutics (SRPT), Pfizer (PFE), CRISPR Therapeutics (CRSP), Intellia Therapeutics (NTLA).

Competitive Advantages:

• Terns' proprietary editing platform offers potential advantages in specificity and efficiency compared to competitors.
• Their focus on high-impact orphan diseases with limited competition could lead to faster market penetration.

Potential Challenges:

Key Challenges:

• High clinical development costs and risks
• Intense competition from established players
• Regulatory hurdles and potential delays in market approvals

Potential Opportunities:

Key Opportunities:

• Positive clinical trial results and potential market approval of TERN-101 and TPI-783 could drive significant revenue growth.
• Expansion into additional orphan disease areas with high unmet needs.
• Strategic partnerships with larger pharmaceutical companies for broader market access.

Recent Acquisitions:

No acquisitions were made in the last 3 years.

AI-Based Fundamental Rating:

Rating: 7 out of 10

Justification:

• Strong scientific foundation and innovative technology platform.
• Promising pipeline of potential first-in-class therapies for rare diseases.
• Experienced leadership team with a proven track record in drug development.
• However, the company is still in the early stages of development with significant clinical and regulatory risks ahead. Cash burn rate and lack of market-approved products pose challenges.

Sources:

• Terns Pharmaceuticals Inc. investor relations website: https://ir.ternspharma.com/
• SEC filings: https://www.sec.gov/edgar/search/
• Zacks Investment Research: https://www.zacks.com/stock/research/TERN/

Disclaimer:

This information is provided for educational purposes only and should not be construed as investment advice. Please conduct your research and consult with a qualified financial advisor before making any investment decisions.