Terns Pharmaceuticals Halts Obesity Program as Phase 2 Results Disappoint

Terns Pharmaceuticals has announced the discontinuation of its oral GLP-1 obesity candidate, TERN-601, following disappointing results from a phase 2 clinical trial. The decision marks a significant setback for the company's metabolic disease portfolio and highlights the intensifying competition in the oral GLP-1 market.

Phase 2 Trial Results Fall Short of Expectations

The phase 2 study of TERN-601 revealed underwhelming efficacy and safety data, prompting Terns to shelve the program. Across four treatment regimens, the trial demonstrated a maximum placebo-adjusted weight loss of 4.6% at Week 12, falling short of the company's internal target of at least 6% weight loss. This result pales in comparison to competing oral GLP-1 candidates, such as Eli Lilly's orforglipron, which has shown more substantial weight reduction in its phase 2 studies.

Scott Harris, Chief Development Officer at Terns, had previously expressed hopes for weight loss in the 5% to 7% range. However, analysts from TD Cowen and BMO Capital Markets noted that the observed efficacy appears less competitive compared to other oral agents in development.

Safety Concerns and Tolerability Issues

Compounding the efficacy shortfall, TERN-601 also failed to demonstrate the superior tolerability profile that Terns had hoped would differentiate it from competitors. In the cohort with the highest weight loss, 64.7% of participants reported nausea, and 38.2% experienced vomiting. These rates were significantly higher than the company's target of achieving gastrointestinal side effects at "about 50% of what the other programs have produced."

More alarmingly, the trial revealed unexpected liver-related adverse events. Three cases of asymptomatic, reversible grade 3 liver enzyme elevations were reported, with two patients showing profiles consistent with drug-induced liver injury. This finding was particularly surprising given the lack of liver toxicity signals in preclinical and phase 1 studies. Some analysts drew parallels between TERN-601 and Pfizer's discontinued oral GLP-1 candidate, danuglipron, which was also associated with liver toxicity concerns.

Market Implications and Company Strategy

The setback for TERN-601 has significant implications for Terns Pharmaceuticals' business strategy. The company had previously decided to cease funding metabolic disease trials beyond 2025, hoping to secure a partner to advance TERN-601 through pivotal trials. However, the disappointing phase 2 results have likely eliminated the chances of such a partnership, according to William Blair analysts.

In response to the news, Terns' shares fell 20% to $6.50 in after-hours trading. The company will now focus its resources on TERN-701, a leukemia candidate with phase 1 data expected later this year.

This development underscores the increasingly high bar for success in the oral GLP-1 market, where compounds must demonstrate not only significant efficacy but also favorable safety and tolerability profiles to compete with established injectable treatments and emerging oral alternatives.