Terns Pharmaceuticals Inc (TERN)

Terns Pharmaceuticals Inc.: A Detailed Overview

Company Profile:

• History and Background: Founded in 2016, Terns Pharmaceuticals Inc. (TERN) is a clinical-stage biopharmaceutical company dedicated to developing and commercializing therapies for chronic liver diseases (CLDs) such as non-alcoholic steatohepatitis (NASH), liver fibrosis and cirrhosis.
• Core Business Areas: Terns' focus lies in developing novel drug candidates that target key pathways involved in liver inflammation, fibrosis, and steatosis.
• Leadership Team:
  • President, Chief Executive Officer: Kevin Buchanan, Ph.D.
  • Chief Medical Officer: David E. Portman, MBBS, Ph.D.

Top Products and Market Share:

• Top Products:
  • TERN-101: An LXR/FXR dual agonist currently in a Phase 2 clinical trial for NASH.
  • TERN-201: An oral small molecule in pre-clinical development targeting the NEMO pathway, specifically for NASH and liver fibrosis.
  • TERN-301: A TGR5 agonist in early discovery stage, aimed at treating cholestasis-related liver diseases.
• Market Share:
  • With no approved products yet, TERN's current market share is 0%.
  • However, TERN-101's positive Phase 2a data holds potential to capture a significant portion of the NASH market, estimated at $25 billion by 2030.
• Product Performance:
  • TERN-101 has shown promising results in reducing liver fat and inflammation in NASH patients.
  • Further clinical trials will determine its long-term efficacy and safety.
• Market Reception:
  • The positive initial data for TERN-101 has garnered positive reception from investors and analysts, leading to significant increase in stock price.

Total Addressable Market:

• The global NASH market is expected to reach $25 billion by 2030, with the US market accounting for a significant share.
• The broader CLD market is even larger, with an estimated global market size of over $40 billion by 2030.

Financial Performance:

• TERN is currently pre-revenue as it's in the clinical development stage.
• As of Q3 2023, it reported a net loss of $21.4 million, mainly due to R&D expenses.
• The company has a strong cash position with over $240 million in cash and equivalents as of Q3 2023.

Dividends and Shareholder Returns:

• TERN does not currently pay dividends due to its pre-revenue status and ongoing investments in R&D.
• The company's stock has experienced significant price fluctuations in 2023 with high volatility, offering opportunities for potential capital gains for investors.

Growth Trajectory:

• The success of TERN-101 in further clinical trials will be crucial for driving future growth.
• Positive outcomes could lead to strategic partnerships, licensing deals, and eventual commercialization, boosting revenue and profitability.
• TERN's focus on developing a pipeline of innovative CLD treatments positions the company for long-term growth potential in this high-demand market.

Market Dynamics:

• The CLD market is rapidly growing due to increasing prevalence of NASH and other liver diseases.
• Technological advancements in drug development and personalized medicine offer opportunities for innovative therapies.
• Competition in the market is high, with several large pharmaceutical companies and biotech startups developing NASH treatments.

Competitors:

• Intercept Pharmaceuticals (ICPT): Market leader with Ocaliva approved for NASH. Ocaliva sales have however been disappointing.
• Genfit (GNFT): Phase 3 candidate elafibranor shows promise for NASH.
• Gilead Sciences (GILD): Recently acquired NASH drug candidate ASK-1 from Akarna Therapeutics.
• Madrigal Pharmaceuticals (MDGL): MGL-3196, a TLR4 antagonist, has promising Phase 2 data for NASH.
• Viking Therapeutics (WKNG): Targeting NASH with VK2809, a PPAR agonist.

Competitive Advantages:

• TERN's dual-acting LXR/FXR agonist mechanism in TERN-101 offers potential for superior efficacy compared to single-target competitors.
• The company's strong financial position allows it to pursue clinical development and explore strategic collaborations for further growth.

Challenges:

• Regulatory hurdles and lengthy clinical trial processes pose significant challenges.
• Intense competition from established players and other startups developing NASH therapies requires innovative strategies to differentiate TERN and its products.
• The overall market for NASH drugs is still emerging, with uncertainties about long-term market access and pricing.

Opportunities:

• Positive clinical data for TERN-101 could lead to partnership opportunities and accelerated development.
• Expanding the pipeline with new drug candidates targeting other CLDs can diversify the revenue stream and reduce reliance on one product.
• Potential M&A transactions could significantly enhance market reach and resources.

Recent Acquisitions (2021-2023):

• TERN hasn't completed any major acquisitions in the last 3 years. However, it acquired intellectual property related to LXR and FXR modulators in 2022, further strengthening its development portfolio in CLD treatments.

AI-Based Fundamental Rating:

• Based on current data and using an AI model on a 10-point scale, TERN receives a 7.
• This rating considers several factors:
  • Strong financial position and potential for lucrative partnerships.
  • Promising early clinical data for TERN-101 with potential first-mover advantage in the LXR/FXR dual agonist category.
  • High market potential for NASH treatments and TERN's addressable market share potential.
  • Existing market competition and challenges inherent to early-stage drug development.
• This overall positive rating indicates potential for future growth and shareholder value creation, but continued monitoring and further analysis are crucial for informed investment decisions.

Disclaimer:

This analysis is based on available information as of November 10th, 2023, and does not constitute financial advice. The stock market is dynamic and subject to constant change, so investors should consult financial professionals for tailored investment guidance.

Sources:

• Terns Pharmaceuticals Inc. website
• SEC filings
• Reuters
• Yahoo Finance
• ClinicalTrials.gov
• Allied Market Research: https://www.alliedmarketresearch.com/nash-treatment-market A
• Grand View Research: https://www.grandviewresearch.com/industry-analysis/nonalcoholic-steatohepatitis-treatment-market
• National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK): https://www.niddk.nih.gov/health-information/liver-disease/nonalcoholic-fatty-liver-disease