Terns Pharmaceuticals Discontinues Obesity Drug TERN-601 After Disappointing Phase II Results

Terns Pharmaceuticals has announced the discontinuation of its oral GLP-1 drug TERN-601 following underwhelming results in a mid-stage clinical trial. The California-based biotech company made the decision after the drug showed both lackluster efficacy and concerning safety signals in its Phase II study for obesity treatment.

Efficacy and Safety Concerns

TERN-601 demonstrated modest weight loss effects in the trial, with placebo-adjusted body weight reductions ranging from 3.6% to 4.6% at 12 weeks, depending on the dosing regimen. The 500 mg dose with normal titration showed the most promising results, achieving a 4.6% weight loss. However, these outcomes were deemed "uncompetitive" by analysts at BMO Capital Markets when compared to other oral agents in development for obesity.

Safety issues further compounded the drug's disappointing performance. Nearly 12% of study participants dropped out due to side effects, while 8.9% required dose modifications. Although most adverse events were gastrointestinal and not classified as severe, the trial revealed a more serious concern: three patients experienced grade 3 elevations in liver enzymes, with two cases consistent with drug-induced liver injury.

Market Impact and Strategic Shift

The news of TERN-601's failure has had an immediate impact on Terns Pharmaceuticals' market position. The company's stock price fell 10% in pre-market trading on Wednesday, dropping to $7.25 from its previous closing price of $8.12.

This setback has forced Terns to recalibrate its strategic focus. The company had previously announced plans to divest its metabolic disease pipeline, including TERN-601, as part of a move away from the obesity space. With TERN-601 now out of the picture, Terns is pivoting to concentrate on TERN-701, its investigational BCR-ABL blocker for chronic myeloid leukemia (CML).

Industry Implications and Future Outlook

The discontinuation of TERN-601 highlights the ongoing challenges in developing safe and effective oral treatments for obesity. Analysts from William Blair noted that the liver toxicity signal was not entirely unexpected, given that TERN-601 shares structural similarities with Pfizer's danuglipron and lotiglipron, both of which were also discontinued due to safety concerns.

As Terns Pharmaceuticals reorients its focus towards oncology with TERN-701, the company is expected to release clinical data for this CML treatment in the current quarter. BMO analysts express optimism about this strategic shift, suggesting that the upcoming data could allow Terns to differentiate itself in the CML market, potentially offering improvements in dosing convenience, safety, and efficacy.