Great. Good morning, everyone. Day two of the London Healthcare Conference. My name is Akash Tiwari. I'm a pharm and biotech analyst here at Jefferies. Really appreciate all of you joining us. I have the pleasure of hosting the Terns management team, including Erin Quirk, President and Head of Research and Development, and Mark Vignola, Chief Financial Officer, and a good friend of mine. Anyway, it's a busy time for you guys. You have, you know, your long-term opportunities, GLP-1, CML, and kind of NASH.
But, you know, I feel like also the competitive landscape on all three of those indications are also starting to change, and, you know, I'm excited to kind of dig into that with you right now. I guess maybe to start off, I'll give it to you for some maybe brief intro remarks. What is kind of your biggest focus right now as a company in terms of execution over the next year? And, like, what do you think investors should be paying the most attention to?
I'll kick that off. So first, let me say, Akash, thanks so much for having us at the conference. It's been really great to be here and interact with so many people. So yeah, so Terns has had a very busy quarter with a lot of execution coming up. We recently announced that we've taken our oral GLP-1, TERN-601, and started a phase I study, so that is in the clinic now. And then TERN-701, our allosteric BCR-ABL inhibitor for CML, has now cleared the IND with the FDA, and we've announced the study design.
So we'll start screening for that study before the end of the year. So we're pretty excited to be getting those phase I programs off the ground. That sets us up nicely for data catalyst in the second half of next year, weight loss data, 28-day weight loss data with the GLP-1, and then initial interim data in CML patients with the BCR-ABL inhibitor.
Understood. So let's, you know, I kinda wanna focus on your GLP-1 candidate, 601, given, you know, you might be having this kind of same 28-day titration data that we've seen from some of your peers, you know, by Q2 of next year. You know, I think one of the things, and this is maybe more for the audience, is you guys chose to use Pfizer's danuglipron scaffold as what you base 601 off of. And, you know, it's interesting, you talk to a lot of investors, and, you know, everyone, like, we think, like, danuglipron's out of, like, as the black sheep of oral GLP-1s, right? There's a sense, you know, beta-arrestin selectivity matters, or, you know, you know, it maybe has safety questions, right?
I want to give a chance to kind of address that for you. Like, in terms of the issues you see with the original danuglipron scaffold, right? Whether it's half-life, whether it's, you know, exposure, what made you choose that scaffold? And then from a safety perspective, e.g., things like GI toxicity, but we're talking about, you know, QTc signal or, like, a liver tox or anything like that. What made you feel comfortable that danuglipron would be a safe choice here for patients?
Sure. So, TERN-601 was discovered in-house, that the crystal structure of danuglipron engaged with the GLP-1 receptor was published, and that made a lot of sense to us because we knew exactly the areas on the receptor where we needed to target to make the interaction happen. So that was probably the key reason, Akash, that we started out with danuglipron, is because there was such good proof of concept preclinically, and then clinically with that data set. And that's what we're all about at Terns, is de-risked biology where we can make improvements. It was pretty clear, though, from first-in-human data and even from preclinical data, that at the exposures needed for weight loss, danuglipron was gonna perform best as a twice-daily drug.
Dosing convenience is important to us, and so we started looking at discovery that can engage that molecule in the same place, but we also screened for molecules that had the potential for once-daily dosing, so we were always gonna bring forward something that was once daily. We thought a lot at Terns about partial agonism toward and full agonism away from beta-arrestin. It makes all the sense in the world biologically, right? You avoid recruitment of beta-arrestin, you keep the molecule intact, the structure, the target remains there. Understood. But as we watched the data accumulate, we weren't seeing good clinical reasons to extend our discovery programs to the point to dial out all beta-arrestin activity. Because the weight loss has been about the same, especially in earlier phase I studies-
Right
Between the biased and the partially biased and the fully biased agonists, and we just really haven't seen an improvement in safety either. We think that safety, for GI at least, is probably driven primarily off of PK overall.
Right.
So we're not saying that the fully biased agonists don't work. We're just saying that we haven't seen that the juice is worth the squeeze for putting in the extra quarter, two, or three of discovery efforts. So that's what's allowed us to be one of the first biotechs in the clinic by just understanding that the partially biased agonist, we think, is a very reasonable and de-risked approach, and bringing that forward.
Understood. Now, if you were to think about. You know, like, I cover Pfizer, so there's I'd love to get your take, just selfishly, right? Pfizer seems to have very cagey body language around the updated obesity data set that's gonna come out potentially by year-end, right? But this is kinda my thinking: If there was a true safety issue, right, where this was some type of QTc signal or an impact on diastolic blood pressure, they probably would've, you know, killed that program on the Friday when, you know, they, they cut their guidance.
And it seems like even on the Q3 transcript, it sounded like they at least thought it was a safe molecule. So Just in terms of safety and efficacy at for danuglipron, let's say at the 120 mg BID, and potentially 200 mg BID dose, with that kind of 4-week titration profile, what are your kind of expectations on GI dropouts and also weight loss at that time point?
Yeah. Look, so, we've talked about this before, Akash. So in their earlier, shorter phase II study, 12 and 16 weeks, we did see high dropout rates with danuglipron. I think what may have happened there is that the molecule was just too aggressively titrated. They didn't take the time to go low and to start low and go slow with the titrations.
And as a result, I think they saw the GI toxicity, and I'm wondering if the more tempered weight loss there is because the patients who dropped out of the study were the ones who were getting the most exposures and losing the most weight. So by they didn't weren't able to fully complete Let's say, the 12-week dosing period because there was about a 25% dropout rate in that study. So now Pfizer has taken the time to, you know, extend dosing, I think, beyond 30 weeks in this trial, right? You know
Right, now it's 32.
Yeah. So they are starting low and going slowly. So I think we'll have a more fuller picture of what the GI tolerability could be with danuglipron. They're using the immediate release formulation, is my understanding, right? So I do expect that the weight loss will probably be better with BID dosing than with QD, but I don't think that's necessarily a read-through to TERN-601. We're committed to once-daily dosing
Right.
and picked a molecule that, based on its preclinical PK, we think will be once daily, you know, in humans. So if the molecule can deliver weight loss that's within range of what patients are looking for, and it doesn't necessarily have to be 25% body weight loss here, I think that something that's, you know, at 15% between 10% and 15% body weight loss, there's a lot of people who could use that medication orally, and that would provide access to a lot of people who really aren't able to get access to the injectables right now.
So I will push you on that because I think for investors, there's a big difference between 10 and 15 right now. Right? So if you were to guess, of that range, even within 10-15, for danuglipron, let's say at those higher doses, any sense on would it be more like 15, 13, 15, or is it gonna be more like 10?
Listen, we'll just have to see what the data shows, Akash.
I know. I like-
But I think there's every reason to be optimistic that it will be more towards the 15% end of the range.
Interesting. Okay, so then let's think about it this way. In terms of GI dropouts, I think one thing that is a little different is, for example, if you look at orfoglipron, they have this kind of beautiful chart about the temporal nature of the side effects, right? And you see this with a lot of the other GLP-1s. It's elevated, but then it declines over time, right? And it seems typical for a G-protein coupled receptor kind of target to do that.
The thing about danuglipron was that the AEs from GI were elevated over an extended period of time, right? They didn't necessarily go down. And I think the question to me is, like: Is that because of full agonism? Is that because of BID and the sheer amount of drug that they're giving here, right? So, what's your sense on that kind of temporal aspect of AEs, and do you think it's maybe driven by the fact that they have to give the drug twice a day?
Yes, I think it's all driven by PK. So orfoglipron has a long half-life, something like 40 hours, if I remember correctly. So it has a very slow on, right? And so, you're not poking the bear like you are twice a day with danuglipron, where it's up, it's down, it's up, it's down, it's up and down, that repetitive Cmax pushing on GLP-1, and then the subsequent drop in PK. What we are hearing from the investigators that are doing these trials and managing those patients, they say that's the issue. So if you can avoid those large peak to drop, peak to trough drops in PK, there could be a better GI tolerability signal. So that's something we'll be looking for with TERN-601 and looking to optimize that peak to trough ratio.
So maybe building on that point, and I'd love to get an answer, if you can, any sense on where the half-life for six oh one falls? orfoglipron's at 40 hours, danuglipron's, like, kind of at four, right? Can you ballpark us on where six oh one kind of checks out?
So based on our animal data, we would expect a PK that would cover people through their waking hours, right? Which is what you need to do to decrease appetite. So I'm not gonna give you an exact hour because, you know, sometimes PK predictions are wrong, but we're very hopeful and feeling good about the fact that we could really be once daily and covering people's waking hours, which is what you need to do to suppress appetite.
Okay, understood. Understood. Okay, so then maybe, moving on, in terms of how do you kind of position this molecule, right? Like, because although my suspicion is Pfizer shows at 120 mg or 200 mg BID, 13%-15% efficacy, but they have GI, you know, tox of around 20%. And they're gonna say, "We're gonna have a modified-release formulation. We're gonna have data on that Q1 2024, and we're gonna try to bridge both datasets with the FDA." If that ends up playing out, which, you know, like, who knows? It's very hard to kind of predict anything right now, but how does 601 and its competitive landscape kind of change if that's what Pfizer actually ultimately pursues?
So I, I agree with that. Could be a very highly likely, you know, outcome of what we're gonna be seeing in full with danuglipron over the next couple of quarters, right? So I, I agree with you there. Back to 601, what we're gonna be reporting out next year is 28-day weight loss data in healthy people who are obese or overweight. And if you go back and look at the 28-day weight loss, whether it's orfoglipron, whether it's danuglipron, or now Structure, it's really about the same, right? You know what I mean?
It's somewhere between 4.5% and 5% body weight loss, is where we need to be, I think, in 28-day data. So if TERN-601 can produce something in that range with once daily dosing, we don't need to beat on 28-day weight loss. We need a competitive molecule, because what I will tell you is, most everybody sees the obesity market going towards oral combinations, right? We're seeing better outcomes for both for weight loss tolerability now with injectable combinations like irzepatide.
That's a, that's a GLP-GIP, you know, agonist combination molecule. So this is what we are all about at Terns, is, creating molecules that can be combinable, for the best outcomes for patients, but we are looking at oral small molecules. So if TERN-601 could be the anchor once-daily GLP-1 that performs as well as any other GLP-1 out there, right? And which we can build combinations 'cause it's combinable, it's easy to manufacture, it's low enough dose, you know, that you could have a fixed dose combination. That's the profile that we're seeking, 'cause that's what the future's gonna be.
Okay, so you're saying something that I don't think is necessarily well appreciated, and it's funny because when you know, Astra got the Eccogene compound, they mentioned the ability to combine.
That's right.
Now, I think one question that I certainly have for orfoglipron, and we're trying to find the studies, is really drug-drug interactions, right? It's a four chiral center. It's a fairly complex molecule. We were able to find some of the unredacted studies with danuglipron, and, you know, you do see a statistical increase in terms of statin exposure, but it's not to the extent of something that can't get managed with dose optimization. Can you help us? You know, like, what is the DDI component here? Why is it so important from a safety perspective? What does the FDA require some of these oral GLP-1s and GLP-1s in general to run from a DDI perspective to move their compounds forward? And generally, when in kind of the clinical development program does that happen?
Yeah. So I can tell you what we think about it for Terns, right?
Sure.
So DDIs are important because, if you're going to be co-prescribing or even co-formulating medications, they have to play well with one another, right? So you can't destroy the PK of the other, of the other, drug in the regimen, nor can it destroy, for example, the, the GLP-1's PK, for example. So we look for molecules that don't necessarily have a ton of DDI potential, a very, very strong Cytochrome P450 induction or inhibition. They have different. The molecule has different ways of being cleared, so if you dose it with something that does, you know, inhibit one pathway, it has another pathway to be cleared.
We think the best time to be doing these DDI studies is once you understand your therapeutic dose, right, your clinical dose range, 'cause then you can conduct the clinical DDI studies that you need to conduct at a dose that matters, right? So it's a little bit early for us to understand. We'll spend next year understanding what that therapeutic dose range could be for TERN-601 before we would do those studies. Then, and then whether there's nothing special about the GLP-1s, Akash. You just follow the FDA guidance on, you know-
Yeah
On what does the preclinical data show, the inhibition or reduction liabilities are, and are you gonna get that concentration in the clinic? Then, yeah, you need to do a clinical DDI study.
Understood. Do you think the danuglipron, I mean, they have 1,400 patients over the data. They have some of the I mean, obviously, lotilipron got killed because one of the reasons was the DDI with, I think, omeprazole. Do you feel like you there is a directional read-across with the danuglipron DDI studies and their safety profile with six oh one, or is that maybe not an appropriate comp?
Well, for safety profile, I think that's fine because it's the same structural class. By the way, we think we understand what caused liver toxicity with lotilipron. lotilipron, danuglipron, half the molecules, you know, is identical, right? So it's got to be the other half of the molecule for lotilipron, and 601 doesn't share any of that structural moiety. So we're not concerned, you know, from a liver standpoint there, and we think that the safety data so far with danuglipron is great, you know, for the overall scaffold. I just feel like there was another question in there I may have missed.
No, that's really helpful. Okay, so that's what you feel there. Now, maybe kind of stepping back and thinking about strategically, right? Like, these are $2 billion obesity development programs. I mean, frankly, NASH, God knows how much Moderna spent to get it to this point. This seems like very much a large cap development program, right? So what do you think about being the comp? Like, let's say that you do have, you know, data in hand, 28 data, let's say Q2 2024, where do you guys kinda stand strategically? Is that something you look to partner? Is that something you wanna keep internally? Is that something that you feel like maybe that, you know, we should go out and say, like, put, you know, put in the hands of another pharma company-
Yeah
As a strategic?
Look, this is a big market with a lot of patients, and so ultimately, yes, I do think these molecules are best served and we can get them to patients through the hands of, you know, large pharma, most likely. In the meantime, though, where we are today, there's a lot of value that can be added by data that we can absolutely generate in-house. 28-day data, even a 12- to 16-week study is very doable for a company like Terns.
Okay.
So right now, yeah, let's understand the value it can bring. Listen, if a strategic becomes interested, you know, as Mark always says, we owe it to the shareholders to consider the potential partnerships that could come. But the nice thing is that we have options right now, right? We have cash on hand. We can deliver on these early phase data sets. I'll pass it to Mark because I've been monopolizing.
No, I'll just reiterate what Erin said. I think we have a responsibility to bring any sort of offer to the board, but recognizing that there's important value-creating milestones, and I completely agree with Erin. You know, this is an indication that I think is t hese patients are best served by a large footprint.
Mm.
So, you know, as we move forward, we'll certainly be cognizant of that thought.
Understood. Actually, there's one more question on safety I wanted to. You know, there is this. It's interesting, like, I think if you, like, if you look at the Eccogene patents, it seems to be similar to orfoglipron. You know, we have the orfoglipron data, and there's this question of like, the safety profile, even for the Eccogene compound that AstraZeneca licensed. You know, you see, at least in the case with orfoglipron. You see, in some instances, you see a 10X elevation in the first 40 patients with the data in that New England Journal of Medicine paper. But it seems like those are transient in nature, right? And they're kind of self-resolving.
Scientifically, Aaron, like I, you know, this is more just for my own kind of edification, but what do you think is going on there that's leading to these transient elevations in ALT, but not maybe, it's not a histology case, right? But you, you do see some impact, but then it seems to go down. Like, what is going on there, and do you expect that to be potentially a more concerning safety signal with longer term duration and more patients with data?
Bottom line, I wish I knew.
Right. And by the way, danuglipron also, everyone shows some,
Sure.
- elevation.
These transient transaminase elevations are seen with lots of different classes of drugs. So it's, it's, you know, I think some of it could just be, you know, you're adjusting metabolism in the liver. Here, you know, here's my own little theory, and again, I have no data to base this on. Drugs that rapidly remove fat from the liver can cause a transient change, you know, in ALT. Something is about resetting mitochondrial beta oxidation parameters. And we do know that the GLP-1s are pretty good at removing liver fat. So, in these obese patients, nobody's found the liver fat. I wonder if that might be what's going on. It's just a theory, but I think it's very reassuring if indeed these are transient-
Right.
If they're not accompanied by changes in bilirubin, or any, you know, signs or symptoms of hepatotoxicity.
Understood. And, maybe out of curiosity for your, NASH program, right? Or even if we step back and we look at some of the other players in the space with a similar mechanism of action, have we seen those type of transient liver enzyme elevations? I mean, you do have, what, 30%-50% liver fat reduction with the thyrobetas.
At week 12,
Yeah.
The transaminases are the same as placebo, so there's no overt liver safety signal that we've seen with TERN-501 or THR-β agonist.
Understood. Makes sense. Now, maybe lastly, on 701.
Yeah, let's talk about CML.
We will, we will switch it up. The question I get a lot is, you know, with your, with your partner and, you know, there's a study going on in China, and, you know, A, is that phase I kind of initial dose escalation data going to be released by your partner? And number two is, if it isn't, A, are you able to see that data? And number two, are the PIs in your U.S. trial able to access that data? And, how should we think about the therapeutic window and some of the signals you're seeing with the early data set that you're accruing ex-U.S.?
The second question is the more important question. So yes, our agreement with Hansoh is that we are able to see their data. There's a data sharing agreement there. We press released just a few weeks ago when we announced the design of the study, that we've been able to leverage the data that Hansoh has been producing over the past almost year and a half now in CML patients, right? They started at 40 milligrams, we started at 160 milligrams.
So we've been able to leverage that safety data, and we've been able to look at their data, and we are encouraged that the 160 milligram dose is a dose that could have signs of clinical efficacy. Yes, we can share that with investigators, and that's important because then they're excited about the drug, and they're gonna encourage patients to enroll in our trial because they think they can actually get some potential benefit, you know, out of the doses that we're even starting with overall.
Yeah, and just because I don't want it to seem like we're being evasive, the first part of your question-
Yeah
Is whether or not Hansoh is going to be releasing data from their study. We continue to say that it is Hansoh's guidance to give. Thus far, they have not given that guidance. There's not a lot of precedent for releasing of early CML data. Novartis didn't release early data sets for asciminib. So, I just don't wanna avoid the question just, it is Hansoh's guidance to give, and thus far, they have not provided any updates on interim looks at that data set.
Understood. Okay, so I got time for one more question. One more hot take from you, Erin and Mark, and maybe even Mark, 'cause I know from your old Intercept days. Hot take, do you think irzepatide hits in NASH for synergy? 192 patients, four arms. Apparently, there's GLP receptors in the liver. What do you think? On fibrosis.
Oh, I don't think it's gonna hit on fibrosis.
I don't think it's gonna hit fibrosis.
The hottest of hot takes. Okay, very interesting. Well, I really do appreciate the time. Or actually, whoa, we have 1 minute? Minutes. We have two minutes. Okay, cool. Sorry, I don't have the, I don't have the thing here, so I got paranoid. So okay, so let's put it this way: in that scenario where 'cause I do think this is kind of an overhang, right? Certainly in the NASH space, if you know, GLP-1s quote-unquote "take over." In a scenario where irzepatide does not hit on fibrosis, what does that do in terms of your strategic thinking around that program, right?
'Cause I, I feel like you guys have taken a pause and you said: Look, probably maybe something we could look to partner out, but the clinical devel-- you know, the juice might not be worth the squeeze in terms of developing it internally versus your excitement, let's say, on GLP-1 or CML. But in a scenario where, you know, suddenly there is more interest in NASH as a standalone kind of therapeutic category, does that change your view on how you if you, if you were to actually proceed with this program by yourself?
You know, there's a lot, there's a lot there. I'm trying to think of the right order with which to answer. You know, clearly, the indication and companies that are working in the indication has taken a hit, certainly since June and ADA data that came out. You know, I think we and you and others have continued to reiterate that GLP-1s have yet to show any sort of improvement on fibrosis in the liver. And this is really the key predictor of outcomes when we look at what is a predictor in steatohepatitis that shows whether something bad is gonna happen to you? It's whether or not you can resolve your liver fibrosis.
And thus far, all of the GLP-1s I'm aware of that have been tested have not shown an improvement in liver fibrosis. So, you know, as I look for what kind of things can change thinking, certainly this, this data set that's coming up in the near term, would just, would be another point showing that GLP-1s are not able to improve scarring in your liver. So it's, it's obviously a data set that we and others are gonna be paying attention to.
I flew to London from the, from, from, AASLD in Austin. And you know, I have to say, when you get outside of an echo chamber of ADA, that hepatologists are really very excited about having the first therapeutic available to them, and that would be resmetirom for Madrigal. So there's a lot of enthusiasm in the hepatology community to have an option for patients that are coming in with elevated liver enzymes. They're, you know, potentially already on a GLP-1, already in a weight loss dose of a GLP-1, but still have sick livers.
Yeah.
Yeah, I agree.
Yeah, I agree, and in many ways, I think the NASH field is like the obesity field. Resmetirom is gonna be an oral drug, right? Our THRB is an oral drug. There's so many more patients that are gonna be able to access treatment with an oral small molecule than an injectable. So even if irzepatide hits, I don't think that's the panacea for treatment of NASH.
Understood. Now-