Terns Pharmaceuticals Inc. Stock Soars on Positive Leukemia Trial Data

Terns Pharmaceuticals Inc. experienced a significant surge in its stock price Wednesday, climbing 14% following the release of promising results from an early-stage trial concerning its chronic myeloid leukemia (CML) treatment, TERN-701. The excitement surrounding the trial data has prompted a wave of positive analyst commentary, forecasting further gains for the biopharmaceutical company.

Positive Clinical Data Sparks Analyst Optimism

The data from the trial have impressed analysts at Mizuho, Graig Suvannavejh and Avantika Joshi, who see this as indicative of a potential “best-in-class profile” for TERN-701. Their assessment is based on both efficacy and safety/tolerability, particularly when compared to Novartis’ Scemblix (asciminib), a third-generation allosteric tyrosine kinase inhibitor (TKI) that has quickly become a new standard of care in CML treatment since its approval in 2021.

Mizuho has maintained its “outperform” rating for Terns Pharmaceuticals, equivalent to a buy recommendation. Alongside TERN-701, the company is also developing a weight-loss pill with considerable expectations attached to it. Analysts note that while the excitement over TERN-701 is palpable, the chronic myeloid leukemia market, now estimated at approximately $5 billion, offers a well-established opportunity for Terns.

Market Potential and Future Projections

Even with existing options like Scemblix, there lies a crucial opportunity for Terns to improve on the efficacy, safety, tolerability, and user-friendliness of treatment options for patients in need of lifelong therapies. Mizuho’s analysts are modeling TERN-701 as a second-line CML treatment. They anticipate peak risk-unadjusted sales of $2.5 billion in the U.S. and $1.2 billion in the primary European markets, including France, Germany, Italy, Spain, and the U.K., based on a 50% success probability and a potential U.S. market entry in 2030. Should Terns aim for a first-line label for TERN-701, based on the recent data, this could yield significant upside potential to current estimates.

Analyst Consensus: Encouragement from UBS and Oppenheimer

UBS analysts have echoed similar sentiments, also maintaining a buy rating on Terns. They highlighted the trial’s encouraging data, noting the absence of dose-limiting toxicities and a remarkable major molecular response rate of 50% at three months. This response rate is crucial as it reflects treatment effectiveness in CML cases. Of the 15 patients enrolled in the trial, approximately 88% showed reductions in the abnormal protein BCR-ABL, which is prevalent in most CML instances.

UBS has also pointed out the importance of tolerability in CML treatments, as it significantly influences patient transitions between different therapies. Additionally, the firm maintains a positive outlook on Terns’ obesity drug, which enters an increasingly competitive field but has shown promising 28-day weight loss results comparable to existing options.

Oppenheimer, holding an outperform rating on Terns, shared insights on TERN-701 being an undervalued asset. Analysts led by Jay Olson stressed that the recent data endorses development in earlier-line treatment settings, predicting strengthened long-term major molecular response data by the end of 2025 following dose expansion efforts in early 2025.

Stock Performance and Market Context

Terns’ stock has surged approximately 12% year-to-date, outperforming the SPDR S&P Biotech ETF (XBI), which has seen an 11% rise, and the broader S&P 500 index that has increased by around 27%. With the recent optimism bolstered by strong clinical trial results, analysts believe Terns Pharmaceuticals is still undervalued within an aggressive biotech market landscape.

As Terns Pharmaceuticals continues to innovate and present promising data for its therapies, market sentiment around its stock seems to be on an upward trajectory. With increasing analyst endorsements and a significant potential market opportunity in both oncology and obesity treatment, Terns appears poised for continued growth.