TERN-701 more than doubled the response rate of Novartis’ rival approved therapy in an early-stage trial, sending the biotech’s shares flying.
Terns Pharmaceuticals shares soared after chronic myeloid leukemia therapy TERN-701 doubled the response rate of Novartis’ approved STAMP inhibitor Scemblix in an early-stage trial.
“Unprecedented remains the only suitable adjective to describe the compound’s clinical profile,” William Blair analysts wrote Tuesday morning. Terns’ shares climbed 10% to $44.45 as the markets opened Tuesday—but pre-market trading saw the stock rise as high as 55% over the weekend in anticipation of Monday’s readout.
The results for TERN-701, revealed at the American Society of Hematology (ASH) annual meeting on Monday afternoon, showed a double whammy of improvement over Novartis’ offering. The Phase I CARDINAL trial featured patients with previously treated CML, with the readout including 38 efficacy-evaluable participants.
Terns’ allosteric BCR/ABL1 inhibitor achieved an overall major molecular response (MMR) rate of 75% at week 24, while 64% of patients achieved the MMR. The data also supported daily dosing and had no food effect.
“It is rare for an investigational agent to demonstrate unequivocal improvement in both clinical efficacy and safety and concurrently provide patients with better convenience of daily dosing with no food effect,” analysts at William Blair wrote in a note Tuesday. “We believe TERN-701 is on track to challenge Scemblix’s dominance and disrupt the treatment paradigm of CML.”
For comparison, Scemblix and another investigational CML asset, Enliven’s ELVN-001, had response achievement rates in the range of 24%-32% in their own trials, the firm wrote. The William Blair analysts wondered, therefore, will the “differentiated data turn into a Big Pharma bidding war?”
TERN-701 also “demonstrated the ability to salvage those who had previously been treated with Scemblix,” and relapsed, according to William Blair. An analysis of a small group of 10 patients who had previously received Scemblix showed a 43% MMR after treatment with Terns’ drug.
Analysts at BMO Capital Markets, in their own note on Monday, said the 75% MMR rate is impressive, but key to TERN-701’s commercial success is the ability to maintain that response. The CARDINAL data showed just that, with patients switching to the drug showing stronger responses than they had previously achieved on other treatments.
BMO projected TERN-701 could bring in peak sales of $3.4 billion in the long term. Patients with CML typically take a drug for several years before switching to another to kick-start a response again. With TERN-701 exhibiting such strong response rates, BMO is confident in the revised peak sales target.
“CML often exhibits treatment switches, and active treatment commonly utilizes long, multi-year durations for therapy in between switches.
The readout represents a comeback story for Terns, which was previously focused on metabolic diseases, including assets in obesity and metabolic dysfunction-associated steatohepatitis (MASH). The biotech changed focus to TERN-701 earlier this year, citing an oversaturated market in obesity.
As for next steps, Terns will release more data from the CARDINAL trial next year and meet with regulators to develop a registrational trial in front-line and second-line CML. Executives told investors during a call Monday afternoon that the ASH abstract had galvanized patients and enrollment had “substantially improved.”
“With enrollment timelines likely becoming more impactful in 2026, we see this expedited timeline as a meaningful positive that could benefit development timelines in the coming year,” BMO wrote.
MMR typically translates well from Phase I to Phase III, according to William Blair’s analysts. “We are optimistic that the best-in-disease results will likely be replicated in the pivotal setting,” the firm said of the future clinical programs for TERN-701.
Terns immediately used the positive data to raise some cash, offering $400 million worth of shares in a public offering on Tuesday. The cash will be used to fund development of TERN-701, including launch preparations.
