Lilly-backed Terns raises $87M for multi-front assault on NASH

Terns Pharmaceuticals has raised $87 million to fund clinical trials of its three lead nonalcoholic steatohepatitis (NASH) candidates. Deerfield Management led the round with assists from investors including Eli Lilly.

Stumbles by Intercept Pharmaceuticals and Genfit have left the NASH race open. Terns, which picked up three assets from Lilly in 2018 and raised an $80 million series B round months later, is aiming to come from behind with a multipronged attack on NASH that positions it to provide monotherapies and combination treatments for the liver disease.

Deerfield has bought into the idea, leading an $87 million series C round that will take Terns past a clutch of clinical milestones. Lilly made a strategic equity investment as part of the series C, and VCs including OrbiMed Advisors, Lilly Asia Ventures, Vivo Capital, Samsara Capital and Suvretta Capital Management also participated. 

The money will enable Terns to deliver top-line data from a phase 2a clinical trial of its liver-directed non-bile acid FXR agonist TERN-101 in the second half of the year. Intercept Pharmaceuticals looked poised to win approval for a FXR drug in NASH last year, only for the FDA to reject the application. 

Terns is positioning TERN-101 as having superior target engagement and tolerability that rival FXR agonists. The positioning is supported by a phase 1 clinical trial in which no patients suffered itching, an adverse event associated with Intercept’s obeticholic acid.

The series C will enable Terns to learn whether the early-phase promise of TERN-101 holds up in a 12-week, randomized, placebo-controlled phase 2a. Terns is working to wrap up the phase 2a while preparing to start studies of its other two lead NASH candidates.

A phase 1b trial of VAP-1 inhibitor TERN-201 is set to start in the first half of the year. Boehringer Ingelheim dumped a VAP-1 inhibitor in 2019 after seeing how it interacted with other drugs. Novo Nordisk entered the field around the same time through a preclinical deal with UBE Industries. Terns is advancing TERN-201 in the belief it is free of off-target effects associated with some other drugs. The phase 1b data, which are due in the first half of 2022, will provide an early test of the claim.

Terns is set to start the phase 1b around the same time as a first-in-human clinical trial of THR-beta agonist TERN-501. A phase 1 trial of the drug is planned for the first half of the year, with data due by the end of 2021. 

Armed with the drugs, Terns thinks it can act on three distinct disease processes seen in NASH patients: steatosis, inflammation and fibrosis. Initially, Terns is testing the drugs as single agents, but it plans to use them in combination, too. Terns shared preclinical data on TERN-101 and TERN-501 in combination last year, generating evidence to support its hypothesis that acting on FXR and THR-beta simultaneously tackles steatosis and fibrosis more effectively than either drug can as a single agent. 

"In an in vivo mouse model of NASH, the combination of the FXR agonist TERN-101 and the THR-β agonist TERN-501 showed a significant reduction in steatosis and significant improvements in fibrosis, serum triglycerides, serum total cholesterol and ALT. We expect to initiate a phase 2a clinical proof-of-concept trial evaluating a combination of TERN-101 and TERN-501 in the first half of 2022," a Terns spokesperson said.