This next session of the Guggenheim Oncology Conference. My name is Paul Jeng. I'm a member of the biotech research team at Guggenheim, and our next presenting company is Terns Pharmaceuticals, and I'm very pleased to welcome with us from the team, Mark Vignola, the CFO, and Erin Quirk, President and Head of R&D. Welcome.
Thank you.
Thanks for having us.
All right, let's start with a overview question. Tern has a pretty unique approach focused on validated targets across oncology as well as metabolic diseases. Maybe you could start by providing just a brief intro to the company and the platform.
Yeah, sure. Terns Pharmaceuticals is a publicly traded biotech. We are focused on novel chemistry around validated mechanisms of action for metabolic diseases and oncology.
Great. All right, let's go through some of the clinical stage programs. This is an oncology conference, we'll start with TERN-701, which is your BCR-ABL inhibitor. From a broad sense, can you talk about the sort of mechanism of TERN-701 as an allosteric inhibitor and how that differs from earlier generations of therapies in this class?
Yeah, certainly. I'll start by just prefacing the fact that the highlighted mechanisms of action in our portfolio, TERN-701, TERN-501, and TERN-601, were all internally discovered at Terns. That includes TERN-701, which is an allosteric BCR-ABL for the treatment of chronic myeloid leukemia, as you mentioned. It's a relatively new and unique mechanism of action. There's only one approved drug in class, and that's Novartis' SCEMBLIX. The generic name is asciminib. The myristoyl pocket inhibitors or allosteric inhibitors are different than all other treatments for CML, which was revolutionized back in the late 1990s with the advent of Gleevec, right? Transformed CML from a fatal disease into a chronic disease, patients could continue taking medicines chronically. Imatinib or Gleevec was an important step forward.
It targets the active site of ABL kinase. It competes with ATP for the kinase enzymatic pocket. Following Gleevec were a number of different second-generation tyrosine kinase inhibitors, each of which were more potent. Because they bound that enzymatic site more tightly, there was also more off-target kinase activity, which led to a worsened safety and tolerability profile. The myristoyl pocket or allosteric inhibitor is a totally different binding site and really represents a new class and an incredibly innovative step forward in the treatment of CML after a few decades of treatment. Of therapies being available, I should say. When TERN-701 binds the myristoyl pocket, it creates a conformational change in the molecule, which closes the ATP binding site.
Therefore, turns off the kinase but does not have that similar effect on other off-target kinases 'cause that myristoyl pocket is relatively conserved to ABL kinase. As a result, what we have seen with this class of treatment is increased potency even above the second-generation tyrosine kinase inhibitors, so improved efficacy and an improved safety and tolerability profile. Doctors are no longer having to make decisions and make that trade-off between potency and safety. Now, there's a class of medicines that works better and is better tolerated and safer.
Got it. Very helpful. Thank you. I guess how do patients currently receive the various generations of BCR-ABL inhibitors? Do they sort of progress on several before moving on to SCEMBLIX? How does that usually play out with most patients?
SCEMBLIX is approved for the treatment of third line CML, so these are patients who have failed at least two prior courses of treatment. I think in the marketplace it's primarily being used in that treatment in that patient population while data in first-line therapy is accumulating. We expect more data from that molecule versus first-line treatments in 2024. In the meantime, though, I think that the choice of active site tyrosine kinase inhibitors and physicians have four or five choices, right? Is somewhat driven by the patient profile, how young they are, what their comorbidities are, how severe their disease is, for example.
One thing that is clear is once patients are initiated on treatment, as long as they have a good response in the first year of therapy, they have a normal lifespan. In that case, they're gonna be on treatment for life. What doctors are monitoring for in the clinic is the levels of transcript of the BCR-ABL oncogene fusion protein in the blood. A molecular response is a 3-log drop, so going to less than 1% in the BCR-ABL in the plasma by 6 months of treatment, and that is the validated accelerated approval endpoint in third line treatment. Response at 2 years is the validated endpoint for final approval. We don't have to follow these patients for survival, or clinical outcomes.
It's all, a validated endpoint.
Got it. Great. All right, then talking a little more specifically about the 701 program, you know, how is this molecule, I guess differentiated from SCEMBLIX or the, I guess the other inhibitors? You know, how do you plan to position the molecule initially?
Sure. I think it's important to understand that CML is really a chronic disease and behaves a little differently than most other oncology indications. When we were developing TERN-101,
701.
TERN-701, sorry. Our target product profile was to have activity against BCR-ABL, at least as good as asciminib. We'll explain why that was important in just a moment. We were also looking for a molecule that would be easy to administer once daily, so a long half-life, good metabolic stability, and to minimize the potential for drug-drug interactions, which can be difficult for providers to manage in the clinic. I think the most important thing to understand is that TERN-701 needs to be similar to asciminib. In order to do well, it doesn't necessarily need to do better, right? We see that because right now in the market, for example, among those second-generation tyrosine kinase inhibitors I was mentioning, together in 2022, in the presence of generic imatinib, those sell...
those three drugs sold collectively $5 billion, right? That is because they are more potent than generic imatinib, but they are also undifferentiated from each other. They have a roughly the same efficacy, overall, and they have slightly different, safety profiles. There's a lot of switching that happens in CML. Maybe a patient starts on nilotinib, and they're on treatment for 15 years and doing quite well, and then they develop type 2 diabetes or they have a stroke, and so the potential cardiovascular risk of nilotinib is no longer acceptable. Even though they're responding well to the drug, they'll be switched to something else because of the safety profile. Maybe somebody develops another comorbidity, and now it's a drug interaction that necessitates a switch. Maybe they develop some GI intolerability. Maybe they just wanna try something new.
Because there's a lot of switching that's going on, the most important thing for TERN-701 is that it be at least as good as asciminib. It doesn't have to be better on efficacy. I don't know, Mark, if you have any other comments.
No, I think you summarized it well. You know, we think that the opportunity is really robust if seven-O-one looks really, really similar. I think Erin highlighted a couple of areas where we see there's potential for seven-O-one to be better than asciminib, but we see all of those as upside scenarios. Really, our base case is that if the drug looks like asciminib in the clinic, that it will be a great option for physicians to use in these switch scenarios that Erin has outlined.
Got it. You touched a bit on the market size with the products. I think you mentioned $5 billion. Is that sort of, you know, at this point maximizing, you know, where you see the market could grow? Is that something? You know, what percentage of that could your additional product provide and, I guess, any additional upside to that market size?
I mean, we see the pie is growing, the number of patients with CML is increasing. I think that this is being driven by better drugs and there's other factors that are contributing. I think better drugs is just one of the contributing factors, but the pie is growing. The number of patients is going up. I think it's a little early for us to speculate on percent that we could take, but we can point to the current second-generation market and the split there. I think, you know, the important thing to highlight there is bosutinib, which came to the market 5, 6 years after nilotinib and dasatinib, really does have a meaningful part of the market. It's almost 20% of that $5 billion market.
You know, we think that, even temporarily, there's not a lot of risk, if TERN-701 looks similar to asciminib. We do see the pie is growing.
Yeah. In third-line treatment, you know, Novartis is signaling that asciminib has the potential to be a $1 billion drug just in third-line treatment. As I mentioned, it's being studied right now in first-line treatment as well. I think that the market can only expand, you know, as the label indication expands. Mark brought up an important point. The prevalence of CML in the U.S. is expected to triple by 2040. That's mainly driven by increased survival as better drugs are available for patients. We do see the market growing, not just because of the increasing prevalence, but also because the expansion of this class into from late line into early lines of treatment.
What's the current duration of therapy in the third-line setting?
Treatment for CML is lifelong for almost all patients. There are some patients who, if they achieve a very high level of suppression, a greater than 4.5 log level of suppression and maintain that for over two years, some of those patients can come off treatment and have a treatment-free remission, but about half of them will fail and need to go back on drug. The vast majority of patients are taking drug for life.
Got it. Okay. You know, is there any, I guess, current concern about development of resistance mutations, and how does 701 sort of stack up in that respect?
Yeah. There are resistance mutations that are described that are associated with failure to the active site tyrosine kinase inhibitors. There's one mutation that's probably the most common among them, the T315I, that is a very difficult mutant to treat. Currently of the active site TKIs, I think there's only one that's approved to treat that. I mean, that's ponatinib.
Ponatinib.
which is a quite potent, but also a drug that has a significant cardiovascular toxicity profile. Asciminib is approved for the treatment of T315I at a higher dose. The dose of asciminib is 40 milligrams twice daily or 80 milligrams once daily for most patients. In T315I, it's 200 milligrams twice daily. TERN-701 also has activity against T315I also at a higher concentration, so we would anticipate that it could be have utility in treating some of these active site TKI mutations, although there may be a shift in dose.
Got it. Okay. All right. You know, you are currently partnered with Hansoh which is evaluating 701 in China. Maybe just to start, can you talk about, you know, this partnership, how it came about with Hansoh to develop in China?
Once we selected TERN-701 for development because the molecule looked like it could hit on all aspects of the target product profile that were important to us, this was a few years ago. The company was very focused on our NASH development stage assets at the time. We sought a partner who could help us get the molecule ready to go into the clinic. We licensed the China rights to Hansoh, which is a large biotech company in China. They have a marketed CML drug in country, and they have full development discovery capabilities. They picked things up from there and did the work to make the molecule ready to go first-in-human, and took it first-in-human in China last year.
There is an ongoing phase I study that is being run by Hansoh in third line CML, chronic CML patients, and it's a standard dose escalation, dose expansion design. Hansoh owns the China rights. We maintain the other global ex-China rights for the molecule as well as the development rights outside of China.
Got it. I guess just out of curiosity, how does the CML market in China compare to the US? You know, what kind of therapies are these patients who progress, being treated on compared to the US?
There are some important distinctions. It's a more common disease in China, and the age of onset is a decade or two earlier, than in the Western world. There are a number of first-line treatments that are comparable to what's available here. Importantly, ponatinib is not available in China, although there's a relatively similar drug that is available. Asciminib is not yet on the market, so there is no myristoyl pocket inhibitor available in country.
Okay. how will, I guess, initial the data from the study, in China, you know, inform your U.S. plans at all?
Yeah, this is really important. As part of the Hansoh deal, they've been able to accelerate some first-in-human data, right? Some potential proof of principle data. Their ongoing dose escalation study is looking at safety through the first 28-day cycle. Looking 28 days, and then patients, as long as they're tolerating drug and appear to be responding, they're just continued, you know, on treatment indefinitely. Secondary endpoint is PK. PK is gonna be very important for this drug because we know if it can achieve certain plasma concentrations, it will work, right, against the various different mutants. Hansoh is only administering the drug once daily in their ongoing study. That study's been ongoing for, you know, over half a year now, right?
There are patients who have been exposed for several months now at the lower dose cohorts. We begin to see that molecular response changing at around three months of therapy or a little bit later, so we may actually even get some, you know, exploratory proof of principle activity data from the trial.
Great. All right, that's a good time to sort of talk about regulatory path in the U.S. I guess, how are you thinking about that approach?
Yeah.
Do you have a single arm, you know, accelerated approval routes? Is there any sort of requirement to do the head-to-head against SCEMBLIX at some point?
Sure. Before jumping even into what the pivotal registration strategy might be, I'll point out that we were able to complete a financing in August to support the development of TERN-701 ex-China. We're now preparing to start a parallel Phase 1 study in Western population. We think that the dose selection for that study can be highly informed by Hansoh's ongoing trial, right? We may be able to do a more targeted dose escalation, for example, and then pick dose expansion that would meet project optimal standards for the US FDA, for example, right?
If the drug then meets a profile that's would indicate it should be developed further, you know, beyond dose expansion based on 6-month response data that would be coming from that trial, we think it could then pretty quickly proceed to a pivotal trial. Historically, all CML drugs have been approved via 3rd-line pivotal studies, most of them in uncontrolled studies, single arm studies. We think that that's an option that's open to us. In addition, though, we'll have information on how a Myristoyl Pocket Inhibitor asciminib can perform in first-line, because that study's ongoing right now, randomized to a physician's choice of first-line therapy. Those data will become available in 2024. That's around the time we anticipate for seeing our phase 1 data ex-China. That's really nice timing, right?
That gives us optionality that we could pursue, different pathways, towards registration in the U.S.
Got it. That initial would be in a later line setting, but, you know, how are you thinking about that previously untreated or frontline setting?
We'll be closely looking at the asciminib data in frontline setting and in switch settings, for example, to understand if there are other opportunities for a pivotal trial other than third line treatment.
Got it. Okay, great. What are, I guess, the remaining things that need to be completed this year, you know, as you initiate that phase 1 study in the U.S.?
Hansoh has a pretty complete package supporting first in human, and we're able to leverage those data. We're pretty confident that those data will support an IND filing. The rate limiting step is manufacturing drug, right? Unfortunately, our partner didn't have enough drug supply for both their study and ours. We have transferred their technology, and we're in the process of doing manufacturing at our own CDMO so that we can ensure a constant drug supply when we start the study in the second half of this year.
Okay, great. All right. You have a couple other programs in the pipeline that I wanted to touch on, including the oral GLP-1 agonist TERN-601. This is obviously a rapidly evolving market with a lot of interest there. Maybe get your thoughts on what the unmet need is currently with the approved injectable peptides and sort of where that oral program could play.
Right. GLP-1s are, you know, a mainstay of treatment for diabetes, of course. What we've seen across all of them is at least some degree of body weight loss, pretty extensive body weight loss when dosed at higher, at higher dosages. The limitations have been the injectable nature of the drug. These are peptide drugs. They're expensive to manufacture. They have a high cost of goods, and the injectable route of administration is a barrier to entry for a lot of patients who would qualify for pharmacotherapy for obesity. There is an oral peptide drug, semaglutide, which is three different branded names. Wegovy is what's used for obesity. RYBELSUS is the oral formulation of that peptide. It only is approved for diabetes.
It has poor oral bioavailability, so it can't really achieve the higher plasma concentrations needed to effectively treat and produce large magnitude weight loss that we see with Wegovy. Tern is working on a different strategy altogether with TERN-601. We're not going after a peptide approach, which is what the available GLP-1s are. We instead are going for an oral small molecule that engages the GLP-1 receptor at key points. This is a small molecule drug that would be inexpensive to manufacture and could be administered orally and potentially achieve the high plasma concentrations needed for effective weight loss.
Great. I guess what are your current timelines for, you know, phase 1 initiation and then plans?
Yeah.
initial, you know, maybe readout?
I'll say very quickly that there is an oral molecule from Pfizer in phase 2, danuglipron, and they also have a backup molecule with a better potential for once-daily dosing that's in the clinic as well. The target product profile for TERN-601 is to have activity at least as good as danuglipron, which is pretty effective. That drug, in 28 days, produced a 5.5 kilogram placebo-adjusted body weight loss with twice-daily dosing. That's pretty impressive weight loss in just one month of treatment. TERN-601, though, was selected for longer half-life and better metabolic stability, so better suited for once-daily dosing.
We would like to have a better behaved PK profile because we think that it's the constant peaks of the drugs that may be resulting in GI intolerability issues. We've selected that molecule and as TERN-601, we are in the process of completing out IND-enabling work, and plan on initiating a first-in-human study in the second half of this year. Following single ascending dose, we would then proceed to a similar study as Pfizer did with danuglipron, so that would be a 28-day study in obese patients looking at body weight loss in the first month of treatment.
Okay. Are you sort of thinking about obesity as a fairly focused indication, or is there potential to evaluate in, you know, type 2 diabetes or NASH, NAFLD, and other diseases?
Right. The TERN-601 discovery program was initiated thinking about NASH combination regimens. We've now been thinking about the drug primarily for weight management because of the relatively early proof of concept that can be achieved, right, in a 28-day multiple ascending dose study, right? I think we would, based on its profile, then consider it for development for NASH. We'll also be looking at glycemic control parameters, you know, as we proceed through development.
Okay. You know, you mentioned some combinations. Are there any that you're thinking about evaluating, maybe, you know, GPCR agonist or antagonists?
We are continuing to do some work on GLP-1 on the discovery side, and then we also announced a really exciting program for a GPCR small molecule program. I'm sure this team is aware of Mounjaro, right, Lilly's tirzepatide, which is a large molecule fusion between a GLP-1 and a GPCR agonist. We've also seen some interesting data from AMG 133, which is a antibody-drug conjugate that looks at a peptidic GLP-1 combined with a GPCR antagonist. Interestingly, both a GPCR agonist and an antagonist does appear to improve the weight loss that's seen and also mitigate some of the GI tolerability.
We are looking at both approaches from a small molecule perspective, meaning could we come up with an oral small molecule version of a GIP GPCR combination in the future.
Great. All right, the last program I wanted to touch on was the TERN-501 for NASH. There was, you know, obviously a positive phase 3 this year for resmetirom, which had some, you know, interest there because of the mechanism that's similar to your program. Can you talk about just the differentiation of 501 from other THR-βs and sort of molecule design and mechanism?
Absolutely. TERN-501 is differentiated in a number of key different features. First, it's long half-life and metabolic stability, which avoids some of the variable PK that's been seen with other THR-βs. It's also the most highly selective THR-β specific agonist of which we're aware. Even more specific for the beta thyroid hormone receptor, which is expressed in liver as opposed to the alpha thyroid hormone expressed outside of the liver, where we wanna avoid off-target activity. Also it dials out a lot of potential drug-drug interactions, so we think it could be the THR-β of choice for a fixed-dose combination. This is key differentiating features.
Okay. Then can you highlight some of the key findings from your phase 1 for the program that supported your decision to move it forward into phase 2?
Yeah. The molecule absolutely behaved as we designed it to. Very tight, non-variable, linear, predictable PK, long half-life, ranging from 13 to 21 hours. Really nice increases in sex hormone-binding globulin, which is a protein produced in the liver directly upon thyroid hormone stimulation in the liver. We saw nice linear dose increases, I think the highest that have been observed with the class, greater than the other thyroid hormone receptor betas, resmetirom that you noted.
Okay.
in phase two.
Great. The phase 2, can you just talk about the study design and decision to include a combo arm with a, the FXR agonist TERN-101?
Yeah. We're looking at 3 different doses of TERN-501 monotherapy, 1, 3, and 6 mg. This is being administered to NASH patients with a high degree of liver fat content. The primary endpoint is the reduction in liver fat at 12 weeks of treatment. A similar approach has been used for other THR-βs that are in development. They all looked at week 12 liver fat content reductions. If we look at what resmetirom has now shown, it's shown that it can resolve the steatohepatitis, the NASH, and also reduce liver fibrosis. The response rates are pretty low, right around 20%, and that doesn't account for placebo adjustment in phase 3. We think that there is room for improvement and hypothesize that a better THR-β could potentially produce a higher response rate.
Nonetheless, getting from 20% to really high meaningful response rates of 80%, 90% is probably gonna require a different mechanism of action on top of the THR-β. In our ongoing phase 2a study, we also have some arms of our FXR agonist administered alone and then 2 combination arms for THR-β with the FXR agonist. I would note that these are the 2 mechanisms of action, the only 2 that have produced statistically significant response rates in phase 3 in NASH. We're the first company to combine them. We're actually the first company to do a combination with the THR-β at all.
Yeah.
We're really looking forward to these results coming in the third quarter of this year.
Okay. Very interesting. Maybe with our last minute, if you could just, remind us of your cash runway and sort of summarize the upcoming milestones for the next year.
Yeah, happy to take that. Pro forma cash as of the third quarter is just under $300 million. That reflects the financing that Erin talked about in August and then the financing we completed in December. Key milestones that are coming up, we just talked about the NASH program. We are turning the card over on the phase 2a DUET trial in the third quarter. Then we have 2 data milestones that are coming next year. It'll be proof of concept data from the GLP-1 as well as data from the TERN-701 BCR-ABL program.
Great. All right. A lot to look forward to for the next year. With that, I think we'll wrap up here. Thanks so much to Mark and Erin for being with us today, and thanks to the audience for tuning in.
Thanks. Thanks so much for having us.
Thank you.