so much. My name is Akash Tewari. I'm a pharma and biotech analyst here at Jefferies, day one of our beautiful London Healthcare Conference. No rain, at least as of now. I have the pleasure of hosting the Terns Management Team. Amy, why don't I hand it off to you for some intro remarks, and then we'll get started with Q&A?
Great. Thanks so much, Akash. I'm here with Scott Harris, our Chief Development Officer. Really excited to be here, not only because it's not raining in London, but because it's a really exciting time for Terns. It's nice to see many of you, many familiar faces in the audience. We will be making Forward-Looking Statements, so I would refer you to the disclosures on our website. I will get bonuses for that from our lawyer. It's a really exciting time for us at Terns. As many of you know, we ASH released an abstract on November 3rd showing that we had unprecedented Major Molecular Response Rates in Highly Refractory CML Patients in our phase I study. On December 8th, there will be an Oral Presentation at ASH. We guided in September to some of the things that we would disclose in this quarter.
Some of those things you will find in the abstract, again, at a high level, really Unprecedented Efficacy of 64%. The best that's ever been seen in a phase I study is 32%. We also really saw nothing remarkable in terms of safety. We only had one discontinuation due to an adverse event. We have known all along that we do not have a food effect. In our trial, patients are dosed without regard to food. We know that, for example, asciminib has a 60% reduction in AUC when taken with Food. Yeah, it's an exciting time for us.
This is true. You guys are the belle of the ball right now. It is very Impressive Data. Look, I wanted to hit on kind of how much you know about your Molecule. I think this is something that gets lost because when I look at your Clinical Development Strategy, it was not just that you generated data internally. Of course, that takes the highest amount of importance. Hansoh has had that same asset in China. You guys have actually had a sense of what the long-term durability is, your Safety, your Therapeutic Window in a way that I do not think a typical company that is doing Dose Escalation Studies would see. That also allowed you to go with higher starting doses.
Can you talk about how much of your holistic view that this drug has "Unprecedented Efficacy" is fueled by not only data that you have internally, but maybe data that you have generated externally from China?
Yeah. I would say you're right, Akash. We have a great partner in China in Hansoh, and we were able to take their data. We discovered TERN-701 at Terns, and we out-licensed it to Hansoh in Greater China. They actually started their phase I trial before we did. We were able to take some of that data to the FDA and, as you said, started a therapeutically active dose at 160 mg. Hansoh has not chosen to put their data out. We are really relying on our data in terms of on a go-forward basis. However, I would say that data is very helpful as we think about moving quickly into pivotal trials into a second-line trial first, second-line plus trial first, and a first-line trial. Having additional safety data from more patients is incredibly helpful.
Understood. I think the question everyone has is like, the data is unbelievably good, right? You're showing a 64% response rate. By the way, these are good problems to have. I think the analysis that I think on the investor side we're all trying to figure out is, OK, I look at asciminib, and Novartis did somewhat of a Dose Escalation Program, but patients were not on the drug for a very long period of time. You had about 30% of patients kind of discontinue or down-dose. There was the FDA review, and then there was Novartis' own review. When you think about external validation that more potent selective allosteric inhibition leads to an order of magnitude more efficacy, do you feel like Novartis really tested that scientific question?
You know, it's hard for me to speculate on what Novartis knows or fully studied. We think they had their reasons for expanding at 80 milligrams. It may have to do with the safety window. It may have to do with some of their strategy in terms of having nilotinib as a marketed product at that time and some combination strategy. I guess the other thing that I would say, Akash, is some of what's beneath that question that we often get is, could you just up-dose the asciminib and get TERN-701-like responses? There's actually a study out there right now sponsored by Novartis called ASC2ESCALATE . Some of the data is early, but I would say the data that's out there on higher dose does not indicate that it is the same.
What we would say is that TERN-701 is a Chemically Distinct Molecule with many different features, including the easy and obvious one, which is the lack of the Food Effect. There are other properties that we think, the enhanced target coverage, it binds differently in the Myristoyl Pocket. This is not just like imatinib and ponatinib are both active site inhibitors, but they are very different. The same applies to the allosteric. This is a distinct molecule, and you cannot just up-dose asciminib. Scott, would you add anything to that?
No, I think you've covered it. I think that also last year at EHA, we did present data from a preclinical study where we evaluated TERN-701 and asciminib across cell lines that had been engineered with point mutations, not just in BCR-ABL itself, but also within the Myristoyl Pocket. We show that we have better potency compared to asciminib, not just in the general BCR-ABL mutations, but even mutations within the Myristoyl Pocket itself. Clearly, TERN-701 is binding differently in that Pocket. That is helping us as far as being able to start with a more potent molecule. When we look at Preclinical Models where Novartis evaluated asciminib in a Xenograft Model take their dose that was fully efficacious and translate that into their 80 mg dose concentration in human, they're about 2x target coverage.
We run that same study, that same model, take our Efficacious Dose in that and translate that into the doses that were evaluated in the clinic and the concentrations we're seeing in the clinic. We have multiples above that as far as target concentration. I think it's more than just potency. There are many aspects of 701 that all come together that I think is leading to this enhanced efficacy that we're seeing.
Understood. Maybe just hitting back on Hansoh, it's always been kind of unclear how much do you see safety data? Do you see efficacy data? What are you able to see with the Hansoh Data? Because from my understanding, they got to 400, they got to 500, they got to some of those really, I think, potent doses where you're showing different Target Exposure.
Is there congruence in the efficacy data and the safety profile with what we see with the Hansoh data set and what we see at your ASH Abstract? I think that's the real question here.
Yeah. Hansoh is a close partner of ours. We are not in a Co-development Agreement, but we do see each other's data and work together. I would just say that nothing in our statements about TERN-701 and our data is contradicted in the Hansoh Data, but I really can't comment further on Hansoh's Data.
Understood. That is in and of itself very helpful. Now, I think one of the questions that I think we get is, again, asciminib refractory, patients or not. You know my view. I just do not think that is really the Market Opportunity for the Drug Long Term. When we think about an apples-to-apples comparison to, let's say, Enliven's drug, you have maybe three lines of therapy versus four, but it really does come down to the mutations and the prior line of therapy to me than actually lines of therapy. How generally comparable is your data set versus the initial phase II data sets we have seen from asciminib and then also what we are seeing with the Enliven Molecule?
Yeah. We think that they're very comparable. If you look at Disease Burden, which in CML is measured by baseline transcripts, we had 56% above 1%. Enliven had 52%. Asciminib was in that range. You're right, Akash. It's not just how many lines of therapy. It's everything combined. It's how many lines of therapy. What did they have? Did they discontinue due to Efficacy or Tolerability? All of our numbers really line up with what you see in other phase I data sets. People ask us all the time, is there something to account for this difference besides that TERN-701 is just a better agent? We don't think so.
Understood. Now, Zaki and I were kind of spitballing this. If we agree that your starting dose when you had three-month data was kind of the exposure that asciminib had, and there is a deepening of MMR Responses that you see in kind of a second-line plus setting. If they were, let's say you were in the low 30s before, 25%-30% range, asciminib would probably double that amount as you go from three to six months with Larger N. What I'm really trying to think about is that 64% rate you just showed up. The implication to me is, what are the additional patients that you're showing at higher exposures? Our back-of-the-envelope way of thinking about it is you could have higher than 64% response rates when you get to higher exposures, right?
It's not just driven by deepening of MMR from three to six months with the low-dose patients, but there's, again, a dose response that you should be able to see in this data when it comes out at ASH. How crazy am I with that type of thought process?
Akash, you know that I can't exactly comment on that. You do know that we expanded at 320 and 500. We said that back in April. We looked at all the doses, and we chose to expand at 320 and 500. As you've seen from the abstract, we have a pretty clean safety profile. We did want to go as high as possible in dose to hit the target harder. 320 is the next dose down that's different enough from a PK Standpoint, from a Project Optimist Perspective, to be testing two doses that are different.
Understood. Now, as much as we'll talk about second line, I think the more provocative this is a first-line drug, at least in my opinion. It doesn't sound like your team's saying, we're going to run a study head-to-head against asciminib. One area that I think you could maybe differentiate it on is if I look at asciminib, they showed superiority against imatinib, but not against Investigator Choice. If I were to say maybe that's the bar that the Terns Management Team wants to hit in a first-line study, is that reasonable? If you're confident that you can hit against Investigator Choice, why not think about adding a head-to-head study against asciminib?
Yeah, that's a great question, Akash. Those are things that we're not prepared to guide to, but we're thinking about. We believe from a regulatory standpoint, we can take the same path to market that asciminib took in terms of looking against second gen and also imatinib in the front line. That's likely the fastest way to market. However, that is data that we would very much like to generate that we have confidence in. We're looking at whether or not we do that in the pivotal or we think about other ways to generate that data. Stay tuned.
OK, understood. When you think about, you mentioned this, I want to take in a asciminib -like development program, but why not improve on it, right? What would you do differently than a asciminib in terms of their development program? How do you accelerate kind of looking at first line and second line adjacently, right? You do have a unique amount of long-term data here that maybe Novartis did not even have when they went into the first line.
Yeah. So I mean, right now, we are laser-focused on generating the data that we need at 320 and 500 to go to the FDA at some point next year, not only with the dose that we propose to move forward with, but also that development plan. Second line plus, as Amy mentioned, is the fastest path to market. Typically, the barrier to getting into front line is the safety database that you have. We think that we could start a second line plus study and shortly after that, say within 6-12 months, actually initiate that front line study itself. We would have two registrational studies going at the same time. We would have the second line plus study going first and that front line study in a staggered fashion running in parallel with it.
Right. Would it be fair to say you know what your first line dose is right now? I mean, again, you take kind of like a fourth of the dose if we look at some of the asciminib studies or the other TKIs. I mean, how much visibility does your team have on the right exposure you have in first line? Because you are going to have to probably cut the dose significantly here.
Yeah. We have not chosen our dose for our pivotals, for either of our pivotals. We are still considering that. We are not planning to guide to that in December. We are looking at data over a longer period of time from more patients in this phase I to trial to make that incredibly important decision for the drug.
Understood. Now, I feel like with 701, too, because to a certain extent, you had to also respond to Novartis, right? I also do not think your team knew exactly what this drug was until you got more data. I think two years ago, there was this idea, hey, maybe we combine and we get Curative Regimens in the front line setting. It became Novartis stopped talking about that. I think to a certain extent, your team also became less interested in combo approaches in CML. Have you walked away from 701 and potentially having a quote unquote curative signal in certain patients, right? Could you do that as a Monotherapy?
Cure in CML is generally a Treatment Goal for some first line patients. In CML, it's called Treatment-free Remission. It's usually not attempted until a patient has been in a Deep Molecular Response for three to five years. There is data to say that faster and deeper Kinetics of Response can lead to more successful Treatment-free Remission, which is really, again, the cure. They take patients off drug, and they see if their BCR-ABL levels come back. They monitor them closely. That data takes a lot of time to generate, but that would be the ultimate goal. I think with a drug that can show faster, deeper responses, there is the possibility of that.
OK.
Yeah, I would just say with what we're seeing coming out of the phase I study right now, I don't think a combination approach is the right approach to get to market fast. Would we consider that at another point? Perhaps.
OK, understood. When we think about the capital needed to run a asciminib-like program, I mean, I would think it's probably a couple hundred million, both in front line and second line each. I mean, that's a heavy lift. First of all, ballpark, am I thinking about this the right way in terms of capital needed to get this on the market? Or actually, it might be cheaper than what I just laid out.
Direct costs for a, call it a 250-ish patient trial with six-month endpoint is under $100 million. For a front line trial, asciminib did 400 patients with a 48-week endpoint. That is well under $150 million. You are off a bit. I know you are good with numbers, though.
No. That is me throwing out. OK. Now, as we get into ASH, and I know the question always comes, like, how much more data are you going to show? I know there are obviously limitations you have because I know you are going to be presenting there as well. What have you generally answered to that question? What I would say is data can get worse. Data can stay the same. Data can get better. I feel like all of the questions we get from investors is why your data is going to get worse. What is the right framework we should be thinking about for this ASH update in December?
Yeah, I agree with you, Akash. It could go any direction. I can't answer it more specifically than that. The other piece of that, which I think you're also getting at, is sort of what's going to be different about ASH , right? We did do a webinar in early September to really guide to the data that would come out in Q4. You'll notice that not all of that is in the ASH Abstract. There's also a lot of things about CML data at the detail. For example, you really want to look at a Shift Table. A Shift Table shows you the baseline transcripts of the patients and how they moved across categories. You immediately go to the shift table and you look at, well, what about the patients who are in the most difficult to treat category, the above 10%?
How did those patients do? Did you get most of your MMRs in the patients that came in, in the easiest to treat, the ones that were just above MMR in the above 0.1%-1%? I am guiding people that the interesting piece about ASH is the type of breadth of the data that we guided to back in September. This is already in the abstract, a pretty robust data set when you look at, is this a better MMR Rate? How confident can you be? I mean, you wrote that great report on confidence intervals even before the data came out. It's not so much about how many more patients. Most companies cut their ASH data sometime between September and October. You would expect to see maybe some more patients.
We think the more interesting is the kind of detail you can't share in an abstract. To hear the MD Anderson Physician get up and talk about it at ASH .
Understood. By the way, for the record, the confidence interval that would get you out of asciminib is north of 55%. Interesting. You mentioned this, and I think it's quite important. When we think about timelines on enrollment, I mean, it sounds like your drug's really getting buzz on the Clinician Side. The rate of enrollment has meaningfully increased from when you initially got into the clinic to now, I think, some of the data that you've generated internally at some of these centers of excellence. How does that change your timelines to getting to market, right? I mean, could you improve upon what Novartis did? Because again, to a certain extent, I felt like asciminib did come out of nowhere, right?
When you saw that big jump on efficacy in first line MMR, that was as stunning of a data set we've seen in CML. I don't know if people will be so surprised this time now that you also have this abstract. Timelines and enrollment, how quickly can you really go here?
You know, I don't know, Akash. I think people were actually quite surprised when we came out with this abstract. I don't think people were expecting it to be even in the ballpark of 64%. I would say the same thing with our investigators. We're not necessarily expecting to see that. It's really outside the realm of what they thought better was. As we all know, the more compelling a drug looks, the easier it is to recruit for a clinical trial. We haven't guided to specific timelines to getting to market. We've assumed similar timelines to what asciminib had for their trials. When we get close, we'll guide further on that when we gain alignment from the FDA next year on our pivotal trial design and move forward. Would you add anything to that?
The only thing I would add is that when we released data in December of last year, small data set, but we saw a bump in enrollment based on that alone. The ASH abstract data is recent. We have not had trouble with enrollment. Let's talk in six months, and I'll let you know how things improved after the ASH presentation.
Understood. Now, Amy, you're giving a pretty famous answer on you need to raise money. We don't think right now is the time to do it. And you did have.
I stick to my answer.
Right. I want to hit on a broader point because I think the way—and I'm not the only one who's picking this up. I think several of your investors are as well. I don't feel like, again, you think about error bars. We're not in the error bars of what you think the strategic value of 701 is, which kind of brings this interesting question, which is, A, I don't know if you're going to get full value even post ASH if we're talking about orders of magnitude different in terms of what you view and what, let's say, the street is currently assigning. You start thinking about, well, maybe you can get External Validation, right? A strategic could say, well, I can see this pretty easily.
How do you balance raising the $250 million that you'll need to run that kind of first line, second line program? At the same time, I look at you, and you do not feel like your stock's fairly valued at $2 billion.
I have not made a comment on our stock value, first of all. I am not going to comment on that. I will say that we have cash into 2028. We are laser-focused on continuing to execute in this trial. We have guided to, before we start our first pivotal, we would like to have the cash to finish that pivotal. That is really the guidance that we have today.
Understood. Let's put it this way. I look at like a Nuvalent, and they had, looks like, more impressive out data. But you have a drug from Pfizer. It's a $2 billion asset. And there could be a wider therapeutic window. You have patients who are on drug for a really long period of time. Safety matters. I can't help but think there are some read acrosses to the CML Market. And then I think how some investors look at ALK. And that company is sitting at a meaningfully higher valuation to you. I mean, is that the right analogy? When we think about the scope of how you view the value of 701, do you feel like an ALK Analogy is appropriate here? What else would you kind of look at? What would you point investors to?
Yeah. I would actually sort of ask you that question more than me. I'm not as familiar with the ALK story and very focused here. As you know, Akash, I have a commercial background. And what I really see here is that we have an indication where phase I data translates pretty well to phase III. It's effectively the same endpoint. So I see a de-risk path to market on a multi-billion dollar drug and something where it is an orphan drug, something that could be commercialized by a company like Terns in an attractive area.
Understood. On that note, we'll call it. Thank you so much. I really do appreciate it.
Thanks, Akash.
Thanks, Akash.