The hot nonalcoholic steatohepatitis (NASH) arena has a new player, Terns Pharmaceuticals, and it has already got three programs from Eli Lilly and a $30 million series A backed by Lilly Asia Ventures.
Announced a week before the EASL liver conference, where you can guarantee NASH will once again be the main focus, Lilly is offloading exclusive global rights to all its current NASH candidates to Terns for further development in NASH and other potential indications. These include a phase 1 FXR agonist dubbed TERN-101, an IND-nearing SSAO inhibitor called TERN-201, and a preclinical candidate against an undisclosed target. Those add on to Terns’ two in-house projects currently in the discovery phase.
Launched just one year ago, through a $30 million series A from Lilly Asia Ventures, Terns, run by Gilead vets, has been keeping a low profile until now. The company does not plan to go after new biological targets, but focuses on designing and developing new small molecules with “global best-in-class potential against existing, well-validated NASH targets,” Weidong Zhong, Ph.D., Terns’ president and CEO, told FierceBiotech on the sidelines of the 9th Annual China Healthcare Investment Conference in Shanghai.
Zhong was previously executive director and global head of antiviral research at Novartis Institutes for BioMedical Research (NIBR) and prior to that, senior director of biology at Gilead, which knows a thing or two about liver disease. He was joined by two other industry veterans in founding Terns: Randy Halcomb, Ph.D., who was once Gilead’s director of medicinal chemistry, and Martijn Fenaux, Ph.D., who also supported hepatitis projects at NIBR and Gilead.
Its pipeline is quite self-explanatory of that strategy. For FXR, Terns will go up against Intercept, which is testing Ocaliva—already on the market for primary biliary cirrhosis—in NASH in phase 3, and Allergan’s AGN-242266 (formerly Akarna’s AKN-083), as well as Gilead’s GS-9674, bought from Phenex. In SSAO, there’s Boehringer Ingelheim, which recently started phase 2 testing of former Pharmaxis asset BI 1467335.
Lilly, on the other hand, is trying to avoid the “pile-on effect” where many companies are working on the same target. “We want to be the first testing novel mechanisms. You should see more Lilly phase 1 trials and proof-of-concept trials on novel mechanisms,” Lilly Research Laboratories’ incoming president, Dan Skovronsky, M.D., Ph.D., recently told Bernstein.
However, divesting those three candidates doesn’t mean the Big Pharma is retreating from the disease all together.
“NASH remains a significant area of strategic emphasis for Lilly, as we continue to evaluate therapeutic options for patients living with diabetes and closely related complications,” a Lilly spokesperson told FierceBiotech.
Aside from the strong belief in its assets’ potential to be best in class, Terns also has a different business strategy that could set it apart: going after the Chinese market first. It plans to focus initial development activities on regulatory approval in China and then explore opportunities in additional global markets, with partners if necessary. That’s why the company stations its drug discovery engine in the Bay Area but its clinical development team in China, where it has local expertise and can be first to market.
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Terns estimates the entire patient population in China for all stages of NASH is 40 million, among them 30% with advanced fibrosis (scarring of the liver due to liver fat), and even with a 10% penetration and a $2,000/year price tag, that’s over a $2 billion market. NASH can come as a result of obesity and Type 2 diabetes, a growing problem in China and globally.
TERN-101 is currently already in phase 1 in Europe, and Zhong expects a bridging study to get it into phase 1 in China in the first half of 2019. TERN-201 will start in-human studies in both China and the U.S. around the same time.
Probably taking a page from his former employer Novartis, Zhong said after an early-stage proof-of-concept clinical study, Terns will investigate combination therapies to identify the best regimens for NASH. Novartis recently paired its lead FXR agonist with Allergan’s cenicriviroc in a phase 2b.
The Terns deal is a poster child of “Lilly China Innovation and Partnerships,” a new business model for China Lilly just unveiled in place of its own Shanghai R&D center shuttered last September. The stress now falls on “partnerships” with local firms and research institutions.
Ruth Gimeno, Ph.D., Lilly’s VP of diabetes research and clinical investigation, said in a release that “The experience of Terns in drug discovery and clinical development for liver disease in China will complement our internal research efforts and will be critical as these potential medicines are further developed in China and around the world.”
Terns also has preclinical candidates in hepatocellular carcinoma, gastric cancer and chronic myeloid leukemia, for which it might seek out partners.