Terns Stock Soars on Positive Data From Phase I Study of Obesity Drug

Shares of Terns Pharmaceuticals TERN, a clinical-stage company, soared 16.8% after the company announced positive top-line data from the early-stage single and multiple-ascending dose (SAD and MAD) obesity study. The phase I study evaluated the safety, tolerability, pharmacokinetics and pharmacodynamics of its investigational, oral, small-molecule GLP-1R agonist, TERN-601, dosed once daily in healthy adults with obesity or overweight.

Terns Reports Superior Weight Reduction With TERN-601

Per the data readout from the phase I obesity study, treatment with TERN-601 led to dose-dependent, statistically significant placebo-adjusted mean weight loss across all three doses (240 mg, 500 mg and 740 mg) evaluated in the 28-day MAD study.

The maximum placebo-adjusted mean weight loss of 4.9% was observed at the highest dose of TERN-601 (740 mg), administered once daily. It was also observed that 67% of the patients treated with the candidate, lost 5% or more of their baseline body weight at the 740 mg dosage strength of TERN-601.

Additionally, Terns Pharmaceuticals reported that the candidate was generally safe and overall well-tolerated in the phase I obesity study. Despite fast titration to high doses, no treatment-related dose interruptions, reductions or discontinuations at any dose strength were observed. Treatment-related adverse events were mostly mild to moderate in severity. Importantly, no clinically meaningful changes in liver enzymes, vital signs or electrocardiograms were observed.

Year to date, shares of TERN have jumped 40.5% against the industry's 1.6% decline.

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Based on such encouraging results, TERN believes that TERN-601 has the potential to be a class-leading GLP-1R agonist for weight management. The candidate's distinct properties, like low solubility and high gut permeability, could result in a prolonged duration of efficacy thatmay be advantageous as an oral GLP-1R agonist.

Terns' Future Plans for TERN-601 in Weight Management

Per management, the positive results from the phase I study underscore the potential of TERN-601 to be developed for treating obesity as a monotherapy or in combination with other agents. Terns Pharmaceuticals expects to initiate a phase II study of TERN-601 for the obesity indication in 2025.

The company stated that it has already successfully identified an optimal range of clinically active, well-tolerated doses for phase II development and does not anticipate any new dose range exploration.

Other Players Operating in the Obesity Market

The obesity market is currently dominated by two large drugmakers, Eli Lilly LLY and Novo Nordisk NVO, with their respective obesity drugs Zepbound and Wegovy. Despite having approved drugs in this space, LLY and NVO have been unable to cope with existing demand.

Eli Lilly launched its obesity drug, Zepbound,a dual GIP and GLP-1R agonist in November 2023. Zepbound has seen a strong uptake since its launch. The drug generated revenues of $1.76 billion in the first half of 2024.

On the other hand, Wegovy, a GLP-1 agonist, is NVO's blockbuster chronic weight management injection approved for adults with obesity or overweight. The drug received FDA approval in 2021 and has witnessed stellar performance ever since. In the first half of 2024, Wegovy sales generated DKK 21 billion in revenues.

Amgen AMGN is also developing MariTide (maridebart cafraglutide), a GIPR/GLP-1 receptor for obesity in its pipeline. In May, Amgen stated that it was "very encouraged" by the interim data from the phase II study on MariTide. Top-line 52-week data from the phase II study on MariTide in adults with overweight or obesity is expected in late 2024. AMGN is planning to conduct a comprehensive phase III program on the candidate across obesity, obesity-related conditions and type-II diabetes.

Per research conducted by Goldman Sachs, the obesity market in the United States is expected to reach $130 billion by 2030. This is also evident from the fact that Lilly and Novo Nordisk are investing heavily to optimize their production capacities and have started evaluating multiple other novel obesity candidates.

Zacks Rank

Terns Pharmaceuticals currently carries a Zacks Rank #2 (Buy).

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