The promises behind Terns’ multi-pronged pipeline

Pharmaceutical Terns (NASDAQ: TERN) is a pharmaceutical company specializing in several treatments for a liver disease called non-alcoholic steatohepatitis, or NASH. Based in Foster City, California, since its founding in 2016, Terns is currently working on three drugs to treat NASH via different mechanisms of action.

And although it is new to the market, having had its IPO last month, there are reasons to keep an eye on this company. From its IPO price of $ 17 per share, the stock has reached over $ 21 at the time of writing. Based on recent developments described in his February investor presentation, there is reason to believe the stock could rise.

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What is NASH?

NASH is a form of fat buildup in the liver that can lead to hepatitis, scarring, or liver cancer if left untreated. According to the National Institute of Diabetes, Digestive and Kidney Diseases, about 3% to 12% of the American population has NASH and the disease is underdiagnosed.

While no drugs are currently approved by the United States Food and Drug Administration (FDA) for the treatment of NASH, clinical trials are ongoing. In fact, NASH is such a serious disease that in October 2019, the FDA granted an expedited designation to TERN-101, which is done to expedite the satisfaction of an unmet medical need. The total potential market for NASH appears hazy but large, with estimates ranging from $ 7 billion to $ 35 billion among experts.


The company’s first NASH drug is currently in Phase 2 trials to treat liver symptoms, including inflammation, steatosis (abnormal fat retention) and fibrosis. While traditional drugs of the kind such as Intercept pharmaceuticalsobeticholic acid, Phenex Pharmaceuticals’ and Gilead Sciences‘Cilofexor, and Pfizer‘sand NovartisTropifexor have caused safety concerns regarding excessive itching, TERN-101 benefits from a modification that limits local effects and maximizes therapeutic benefits.

In phase 1 trials, the results of which were published in February 2020, TERN-101 achieved all three of its goals compared to placebo – with no reported excessive itching. The results of the current Phase 2a trials and other data will be released in the third quarter of 2021.


The second drug in the group, TERN-201, is an inhibitor of vascular adhesion protein-1 (VAP-1). These drugs have already been used in potential treatments for NASH, but they are traditionally known to cause significant interactions with another common drug, monoamine oxidase inhibitors.

TERN-201 is currently in Phase 1 trials, and reductions greater than 20% have been seen in an enzyme that typically indicates persistent liver damage. The data also showed significant reductions in CK-18, a colorectal cancer biomarker. A single dose of TERN-201 can inhibit VAP-1 for at least seven days after administration. Full biomarker data will be available in the second half of 2021.


The last NASH drug in the pipeline, TERN-501, is a beta thyroid hormone receptor agonist currently in a phase 1 trial. Again, similar drugs have been troublesome in the past (in particular, toxic to the heart and stomach), but TERN-501 has had an isopropyl group removed so that only the liver is targeted. This means a much lower risk of toxicity compared to other less selective agents such as Pharmaceutical Madrigal‘Resmetirom. Selectivity is important to maximize treatment results and minimize side effects. Phase 1 data in human subjects is expected by the second half of 2021.

The verdict

With several specially designed drugs targeting the same disease, terns are well positioned to be successful with at least one approach. This is a business in the start-up phase, so the risks remain. But since there is no US FDA approved competition in the field of NASH treatment, health investors with a tolerance for risk should consider taking a small position in this growing pharmaceutical company.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Roberto Frank

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