Terns Pharma Has 35% Upside According To This Analyst, NASH Asset To Drive Valuation

Mizuho initiated coverage on Terns Pharmaceuticals Inc TERN with a Buying rating and price target of $16, implying a 35% upside.

The analyst says Phase 2 asset TERN-501 for NASH is the company's most de-risked asset (and the company's main driver of valuation).

For '501, the analyst projects $4.1 billion / $2.7 billion in peak year risk-unadjusted / adjusted worldwide end-user sales, assuming a 65% POS.

It also notes that though TERN-601 for obesity is still in preclinical studies, it is Terns' hottest asset (given current investor interest in obesity-related developments).

The analyst highlights that Novo Nordisk A/S's NVO Wegovy and Eli Lilly And Co's LLY Mounjaro are estimated at $13 billion and $18 billion, respectively, in 2031. 

Consensus on TERN is favorable. TERN-701 in phase 1 study for chronic myeloid leukemia is the company's most underappreciated asset. 

For '701, it estimates $1.4 billion / $0.5 billion in peak year risk-unadjusted / adjusted worldwide end-user sales, assuming a 35% POS. 

Despite a crowded CML market, the rapid uptake of Novartis AG's NVS Scemblix (which has the same MOA as '701) gives confidence.

Price Action: TERN shares are up 2.15% at $12.12 on the last check Thursday.