Terns Pharma Stock Soars Over 80% on Promising Leukemia Drug Data
Phase 1 trial for TERN-701 shows a 75% response rate at higher doses, positioning it as a strong competitor to Novartis's blockbuster Scemblix.
Shares of Terns Pharmaceuticals (NASDAQ: TERN) have skyrocketed more than 80% over two trading sessions after the company unveiled compelling Phase 1 clinical trial data for its chronic myeloid leukemia (CML) drug, TERN-701. The results, presented at the ASH Annual Meeting, have ignited investor optimism and prompted a wave of bullish analyst upgrades, positioning the small-cap biotech as a formidable contender against established therapies.
The stock surged over 40% on Monday and continued its meteoric rise Tuesday, climbing another 37% to close at $40.23. The rally has propelled the company's market capitalization to over $2.6 billion, a dramatic turnaround for a stock that traded near $2 earlier this year.
At the heart of the excitement is the robust efficacy demonstrated in the Phase 1 CARDINAL trial. Terns reported that TERN-701 achieved a 64% Major Molecular Response (MMR) rate by 24 weeks across all evaluable patients. The response was even more pronounced in patients receiving doses of 320mg or higher, where the MMR rate jumped to 75%, according to the company's press release.
"We are highly encouraged by the unprecedented MMR rates observed in this highly refractory population, including in patients with prior lack of efficacy on asciminib, ponatinib and/or other TKIs," said Emil Kuriakose, M.D., Chief Medical Officer of Terns. This suggests the drug could be effective in patients who have failed other treatments, a significant unmet need in CML therapy.
Crucially, TERN-701 also displayed a favorable safety profile that analysts believe could give it a competitive edge over Novartis's blockbuster CML drug, Scemblix (asciminib). The trial data highlighted a lack of pancreatic toxicity or clinically meaningful hypertension, which are known side effects associated with the Novartis therapy. Terns reported that the most common adverse events were low-grade, with no dose-limiting toxicities observed.
Wall Street has responded with decisive enthusiasm. Analysts at H.C. Wainwright tripled their price target on Terns, raising it to $60 from $20, citing the drug's potential as a "best-in-disease" treatment. Mizuho followed suit, increasing its target to $54, with analysts noting the drug's impressive response rates and superior tolerability could make it a preferred option for CML patients. The current consensus analyst target price stands at $30.44, a figure the stock has already blasted past in this week's trading.
The positive data also provides a clear path forward for the company. Amy Burroughs, CEO of Terns, confirmed that the company has selected 320mg and 500mg daily doses for its recommended Phase 2 trials. "We have now surpassed 85 patients enrolled in the CARDINAL study, which supports our rapid advancement of TERN-701 through dose expansion and into pivotal studies," Burroughs stated.
For investors, the clinical data provides a major de-risking event for Terns' lead asset. The company, which has historically focused on treatments for liver diseases like NASH, has now demonstrated significant potential in the lucrative oncology market. As Terns prepares to advance TERN-701 into later-stage trials, the market will be closely watching for continued strong performance and regulatory updates that could challenge the current standard of care in chronic myeloid leukemia.