Terns bows out of MASH race, reverts back to phase 1 with obesity, cancer assets

Terns Pharmaceuticals is bowing to competitive pressure and walking away from a liver disease that has long been without meaningful treatment options—until now.

The biotech will shelve development of its oral thyroid hormone receptor-beta (THR-β) agonist in metabolic dysfunction-associated steatohepatitis (MASH), a disease previously known as nonalcoholic steatohepatitis. The move comes as Madrigal Pharmaceuticals awaits a March decision on its candidate called resmetirom in the disease and blockbuster glucagon-like peptide-1 (GLP-1) therapies start to muscle in on the clinical scene.

CFO Mark Vignola, Ph.D., said the biotech will limit “near-term development spend on TERN-501 in NASH," according to an after market release issued Thursday

“Based on the potential best-in-class efficacy and safety profile shown in the Phase 2a DUET trial, we remain encouraged by the potential of TERN-501 beyond NASH [a.k.a MASH], particularly in obesity, where we believe it could have a meaningful treatment benefit in combination with other therapies,” Vignola said. “We will continue to evaluate the evolving NASH landscape, including any substantive changes to regulatory and development pathways, as we consider future opportunities for TERN-501.”

TERN-501 was the biotech’s most advanced asset. Attention will now turn to two earlier assets, TERN-601 for obesity and TERN-701 in chronic myeloid leukemia (CML), which both just began phase 1 trials.

“Given the cost and effort required to advance that asset, the move doesn't come as a particular surprise to us,” Mizuho analysts wrote in a Friday morning note. “This strategic decision is one that we've been expecting and one that management, at least from our perspective, has been telegraphing for some time now.”

Terns was able to show that TERN-501 reduced liver fat in a phase 2a study last year, but immediately analysts began to wonder where the med would fit into a market that had suddenly become overcrowded. Mizuho said that Terns’ data may even have been best in class. Besides Madrigal, the biotech was up against Viking Therapeutics.

And then GLP-1s suddenly entered the picture, with even Madrigal admitting that combination therapies with resmetirom may be the future.

Mizuho had expected Terns to seek a partner, but with little interest, the company has ultimately decided to discontinue the MASH indication.

“We believe Terns’ decision regarding '501 is also reflective of current overall lack of pharmaceutical industry (and investor) interest not only in NASH, but further, also the THR-beta agonist class of compounds that are in development for NASH,” the firm wrote.

Even though Terns is taking a step back to phase 1 in the clinic with TERN-601 and TERN-701, Mizuho has high expectations for the assets.

TERN-601 is an oral small-molecule GLP-1 receptor agonist under development for obesity, meaning Terns will be tapping into one of the hottest modalities and indications in biopharma right now. Big Pharmas like Eli Lilly and Novo Nordisk—which lead the market currently with an approved GLP-1 each—and other major companies have been snapping up any biotechs in the space that they can get their hands on. Roche most recently entered the picture with the $2.7 billion acquisition of Carmot Therapeutics at the beginning of December 2023. 

Mizuho said that TERN 601 could find “exposure to an obesity market that currently is an area of paramount (if not singular) focus for both industry and investors.”

Terns also has some earlier-stage obesity candidates in the TERN-800 series of molecules, which are glucose-dependent insulinotropic polypeptide receptor (GIPR) modulators. These could be combined with TERN-601 or other GLP-1s to spur even greater weight loss compared to single-agent approaches, Mizuho noted.

Oral obesity meds are the next frontier for the rapidly expanding industry, which has already raked in billions for Lilly and Novo. However, companies such as Pfizer have stumbled in clinical testing so far due to safety concerns.

TERN-701, meanwhile, could find a lucrative market in CML as competitor Scemblix, by Novartis, has been successful with durable revenue seen for all approved drugs in the indication, according to Mizuho.

Early proof-of-concept data for both TERN-701 and TERN-601 are due in the second half of this year, President and Head of R&D Erin Quirk said in a statement.

Another key question for Terns in 2024 will be who leads the company. Mizuho noted the death of CEO Senthil Sundaram in November 2023 after a battle with cancer. The company has since been helmed by Quirk and Vignola.

“We believe Terns—for where it is, given its relatively early stage of development—is in very capable hands,” Mizuho said.