Andrew Berens, your biotech analyst here at Leerink Partners. It's day one post, lunch at our annual healthcare conference. Thanks for joining us. We're really happy to have with us Terns Pharmaceuticals. We have Amy and Scott. Thank you for joining us.
Thanks for having us, Andy.
Sure. You guys made a big transformation from a metabolic company now to a CML company, so we'll talk about that. Maybe for the people in the audience that don't know your story that well or know the new story, can you give an overview of the company?
Yeah, absolutely. Terns Pharmaceuticals was founded in 2017. We've discovered all of our own molecules. Our lead asset, and really our focus is TERN-701, really a next generation allosteric BCR-ABL inhibitor for chronic myeloid leukemia. At ASH in December, we put out data really showing unprecedented efficacy in primarily third line plus difficult to treat CML patients. In fact, we saw efficacy comparable to what the other allosteric sees in the front line and similar with our deep molecular response achievement rates. We are seeing also a differentiated safety profile, which is really important in CML as a chronic disease. We also do not have a food effect, so it can be taken without regard to food, and the other allosteric needs to be taken in a fasted state.
Great. Well, why don't we talk a little bit about the opportunity CML because it is a unique, hematologic disease in that it's chronic. Patients are on the drugs for a very, very long time. I think you alluded to this, safety tolerability, convenience is definitely a big part of the factor. Can you just give us a little overview about CML and its current state? You know, there is another allosteric inhibitor that's doing very well. Maybe you could talk to us about that a little bit.
Absolutely. CML, before the advent of BCR-ABL inhibitors was a fatal disease. imatinib, the first generation inhibitor, really solved the survival issue. However, about 75% of patients in the front line eventually become refractory to imatinib. Second generations came along with better efficacy, however, they have bigger tolerability issues. One of the biggest reasons for a patient switching from a second gen is tolerability, and some of them also have a food effect. About 40%-50% of patients switch from the front line on those first and second generation inhibitors. Once a patient becomes second line plus, they become more difficult to treat and higher risk.
Okay. The, the current Scemblix commercial opportunity is growing pretty aggressively. Can you just talk to us a little bit about that?
I have a commercial background, and if this was my commercial team, I would say they did a fantastic job over the last year. Scemblix has had really a tremendous launch going to about 1/4 of the market in front line and is the predominant treatment of choice, so 50% or more market share in second line plus patients. That's really because today in CML, it is the safest therapy in CML. It has some safety liabilities that I'm sure we'll talk about, but currently with what's available today on the market, it is the safest and most tolerable. It also is shown to be more effective than imatinib in the front line setting.
It was not shown to be more effective than the second line agents, and there's more and more data coming out to say the efficacy is fairly comparable. In third line plus patients, they do see better efficacy and also coverage of active site mutations.
Okay. They just expanded into the front line. How is that drug doing in the front line?
It has about a quarter of the market, which is a tremendous market uptake for a new therapy, particularly in the presence of 4 other front line therapies that have been around for a long time, and physicians get used to them. Really, I think what the asciminib launch is showing is that there continues to be a demand for safer, more tolerable, effective therapies in the front line in CML. People are willing to pay a branded price. The second gen TKIs are just in the process of going generic. We've seen this before, Andy. You know, I think when the second gens came out, there was, "Oh, we've been using imatinib for a long time.
It's a pretty good drug." However, second gens provided better efficacy, and particularly for higher risk patients, younger patients, that before asciminib was the primary treatment for CML was the second gen TKI.
Yeah. It's, it's interesting because, Gleevec, imatinib is a drug that's approved in other indications where we haven't seen that it's that easy to displace, like GIST.
It's still the standard of care in GIST. The fact that Scemblix has done well, what is it that's driving... And you said a quarter of the market. Just to clarify, how long has it been with a front line label?
It was approved in November 2024, so really just over a year because that reflects, end of 2025 data.
Okay. what is it that's driving the adoption over Gleevec in the front line?
In the front line, we believe it's primarily safety because it provides the efficacy of. It's better than imatinib on efficacy, but it provides the efficacy of a 2G TKI, but much safer and more tolerable. We talk about safety. You know, dasatinib is, in the U.S., the primary second-gen TKI that's used in the front line. It has a 30% rate of pleural effusion. That's a pretty attractive proposition.
Okay. When patients fail Scemblix or switch from Scemblix, let's say, is it primarily, you mentioned tolerability. There's some component that progressed though too?
From asciminib from Scemblix?
Yeah. Yeah.
The real-world data is still coming out, and the ASC4FIRST trial is about half safety tolerability and half efficacy. We still see that over a third, a third to over a third of patients in the frontline do not get to the endpoint of Major Molecular Response in a year. We know that faster, deeper responses can translate into better outcomes longer term and ultimately in CML in the frontline, what you really hope for is to get a patient to treatment-free remission or to a deep response where they never become second line. Once a patient becomes second line, they're higher risk.
Okay. Now, you mentioned treatment failures. A fair number I believe of patients that fail may not have been able to get full dose Scemblix. Is that true, too, because of the safety tolerability issues?
You know, we don't have any data on that in the frontline. I don't think that asciminib is often down-dosed. Really what it leads to is switching to another therapy.
Okay. What were the data that Scemblix had in the frontline so we can compare it to what, you know, you guys are trying to do.
Well in their ASC4FIRST trial they saw 67% major molecular response at a year. They're also doing a trial called ASC4START , where they're seeing about 60% which is comparable to the 2 GTKIs. Now, we haven't done a frontline trial yet. In the 3rd line plus setting which is a very comparable patient population to what we have although they didn't have asciminib failures. When we include asciminib failures at the go forward doses, we're seeing a 75% MMR achievement rate at 6 months compared to their 25% in a less refractory patient population. We also see in the label for asciminib about a 20% rate of hypertension, pancreatic toxicity, and those were all things that were seen early on in the asciminib trials.
We have been dosing for long enough in enough patients that we're pretty confident that that's something idiosyncratic to their molecule. It's not an on target effect of allosteric inhibitors.
Okay. In terms of the data that you guys have shown so far, can we just run through that?
Data we presented in December at ASH, as Amy already mentioned, we saw 75% MMR achievement rate by 24 weeks, at the go forward doses of 320 and above. At that same dose range, we also saw a deep molecular response rate of 36%. When you look at these numbers, these are all trending 2- 3 times higher than what we've seen with asciminib. Also from a safety standpoint which is very important, Amy mentioned we have yet to see any signal related to hypertension, pancreatic toxicity. The cytopenias which are expected in this patient population are also significantly lower than what we saw with asciminib.
Then you add on top of that, the lack of a food effect, the once daily dosing, I think that overall the profile is looking very good.
Okay. How many patients was that?
Total patients enrolled, in or as from a September data cut was 63. Efficacy of valuable patients was 38. Yes.
Okay. How did you guys define efficacy valuable?
Efficacy valuable, a patient had to be on study for, at least 24 weeks, discontinued for any reason prior to 24 weeks or, achieved an MMR before 24 weeks.
Okay. There were about, you said it was sort of about 30 patients that didn't meet the efficacy valuable population?
Correct.
I'm bringing this up because you're obviously gonna have a big update, sometime between the middle of the year and the end of the year. Some investors are just concerned, I think, that the data will look different because you'll have everybody after you know, 6 months or more and maybe the early responders were reflected in the initial update. What would you say to those investors?
Well, what we've seen with other studies is that the MMR at 24 weeks tends to converge with the MMR achievement rate by 24 weeks once you've enrolled all the patients and followed all the patients for the 24 weeks. We're still in an actively enrolling study right now, so every month we're adding new patients to the study. Depending on when you take that snapshot in time of when you look at the data, that number is going to fluctuate. To get a real sense of what the final achievement rate looks like, you need to enrolled all patients, followed them all for six months, and then you can see what that number looks like.
Just to clarify, you said you don't see that deterioration that investors seem to be worried about when you get to that 6-month mark, there really hasn't been a deterioration.
What I can say is that patients that have achieved MMR tend to not lose MMR.
Okay.
If a patient gets an MMR at two months, at three months, they tend to maintain that MMR for quite some time. When you get to the six month or the 24-week time point, typically that patient still has the MMR.
Okay.
you know, we presented the data in the terms of the mean response rate as well as the confidence interval. What I can tell you related to the 95% confidence interval is that we are 95% confident that the ultimate number will fall somewhere within that confidence interval. When you look at the go forward doses of 320 and above, that confidence interval was between 52% and 90%.
Okay.
Andy, I'll just add to that. As you point out, there are some early in your report, there are some early responders that you see, but MMRs tend to deepen over time.
Yeah.
There's nothing to say that patients don't get to MMR at five months or six months. As Scott said, we're confident within that interval.
Even at the low end of our confidence interval, we're still over 2x the MMR-
Yeah, that's what I was gonna ask you.
... that asciminib saw in their third line plus study.
Okay, 'cause investors, let's say, you know, they're generally cynical people. Let's say 52%, which is probably not likely, but that's still pretty significantly above Scemblix without considering the safety tolerability.
Yeah
Benefits of the drug.
Yeah. We don't know at the end what it's gonna look like exactly. No one would say it's gonna be exactly 75%. It could be 78%. It could be 52%. We're confident that it's better. As I was saying before, the safety is also incredibly meaningful.
Okay. Yeah, that was when we did diligence, that was the feedback we got was that the safety tolerability is a meaningful commercial driver.
Yeah.
I mean, 'cause it is a great... Yes, it's oncology, but it's also a chronic disease, and these patients are on the drug for a long, long time. You know. Okay. What about, I mean, there's obviously the frontline opportunity, which is pretty large. I mean, you know, there are new patients coming to the market, and if you have the best drug, there's reason to believe that doctors will put them on that drug 'cause, you know, you said it, that if you respond and you respond well as a frontline patient, your life's gonna be very different than if you don't respond well. How many of those patients do you think are out there each year, like, the incident population of patients?
In the front line, it's about 17,000 in the G7.
Okay. That's a pretty significant opportunity even if you can capture.
Yeah.
Just like that.
Today there's about 13,000 in the second line and second line plus population. Over time, with the introduction of allosteric inhibitors, better responses in the front line, that population may shrink. There's still gonna be... You know, there's also the prevalent population of about 100,000 who may switch. When you have a better therapy to go to, you might switch faster, but there's plenty of opportunity without switching patients who are doing well, in CML for frontline, where we see, you know, the majority of the opportunity here for TERN-701 given its profile, but also some of those prevalent patients switch over time to second line, to third line to really be the allosteric of choice.
Because there you really care about efficacy. Our efficacy is so much better than anything that's ever been seen before in this patient population, and we're also the only one to show efficacy in asciminib refractory patients. There's been a lot of talk about class switching and things like that. We believe it's really gonna be driven by the data.
Who sees responses in asciminib refractory patients?
Yeah. Well, that was my next question is, you know, we're talking about almost 20,000 patients in the front line. How important... I mean, it's already seems to be established that doctors wanna use allosteric inhibitors in the front line. How important is it that you work in asciminib patients that have failed asciminib? Like, how important is it that you're active in some of those mutations that drive the resistance? Amy?
I think it's a proxy for efficacy. As we don't yet have frontline data, I think showing that we can be effective shows that we're differentiated, and this is not just another allosteric inhibitor, so it's important there. Going back to the prevalent population, there's a lot of people who are gonna be put on asciminib in the front line and the second line, things like that, between now and when we get to market.
Okay.
The mutation population is very, very low. Even if you look at the long-term data coming out of the Novartis's ASCER-1 study, you're seeing myristate pocket mutations in the 4%-7% range. It's
Four, four to seven.
4- 7.
Like single digits.
Yeah.
Okay.
Yeah.
What is the main reason that patients fail asciminib? What else if it's not a mutation in the pocket where?
It's. Go ahead.
There's still sort of real world data's coming out, but in the ASC4FIRST trial, it's about half sort of safety and tolerability and about half efficacy. If they fail and it's not a resistant mutation, it could be target coverage. We don't know exactly. As you've seen from our data, we do see responses in patients who are refractory to asciminib for efficacy. It could be better potency, better target coverage, different binding to the pocket. Even on patients like the F317L patient that we showed in December that was, you know, resistant to asciminib, in fact took double the dose of asciminib and still progressed, was on the Enliven trial, progressed 100% mutated coming into the TERN-701 trial and had a rapid response.
We really see this as clinical validation for some of the preclinical data that we've seen around potency.
Okay. Enliven, is, you know, obviously it's another developed stage biotech company that has investors behind it and seems to be a very polarized argument. Is there room for both drugs?
There's absolutely room for both drugs. I think that if you talk to our investigators, some of them are the same investigators, and they want more options for CML patients. When you have refractory patients, they want as many drugs as they can, and it looks like an active drug, and it looks like a drug that has a good safety profile. You know, we don't see it as a direct competitor for TERN-701 in the front line. For example, some of those myristate pocket mutations could be a treatment of choice.
Right. Okay. What is their goal for the front line?
Can't really... We can't really speak to that. I know they've talked about doing that.
I think it's also a commercial question.
Right. Okay. Do you see a small molecule, non-allosteric inhibitorHaving a portion of the front line, is that? It's really shifting more now since the allosterics?
I think we'd need to see more data. I mean, with comparable efficacy, you'd still generally pick an allosteric. It's just more selective. The mechanism is inherently more selective. I think it would really be based on efficacy data, which, you know, based on the efficacy data we've seen to date, I think TERN-701 looks like it's in a different realm.
Okay. I mean, They've given some guidance for how big they think that drug is gonna be. What have they said?
Well, they initially started with $3 billion. They recently revised it to $4 billion. I think some analysts are pushing and saying, "We think it could be bigger than that." You know, we actually agree. We think that's driven by, you know, they'll continue to get strong uptake in the frontline, likely to, you know, 50% or more, and they'll also get long duration of treatment, and we think TERN-701 can follow on that with an even better drug, get strong frontline share, and potentially even longer duration of treatment, as Scott was saying, lower rates of cytopenias, lower rates of other adverse events.
What are the? Cause we agree with you. It's a very large market opportunity. It's very easy to get to $4 billion or $5 billion with pretty modest assumptions on duration, pricing, and penetration even. What are some of the limitations that it can't get bigger than that in allosteric? I mean, I was surprised when we started doing our doc checks that they all said that about 30% of patients will be price sensitive, and they will not have access to the drug. Maybe we could talk a little bit about that dynamic.
Well, right now, I mean, in the NCCN guidelines, they're listed in the frontline. They therefore have very good commercial coverage. In the U.S., I think as we've done some of our market research, there's also just docs that say, you know, even from sort of a public health and utilization of healthcare dollars, who even if a patient has good coverage, they might say for one reason or another, you know, "imatinib I think is good enough for that patient." Maybe it's comorbidities, age, risk profile, or something like that. We think there'll still be a market for generics, and that's mostly due to cost concerns. Occasionally, like imatinib might be used 'cause the patient has cardiac risks or other things that maybe make asciminib not appropriate.
Yeah. I mean, 701 seems better than Scemblix, but Scemblix seems like it's better than a lot of the small molecules, but what is it that makes it not appropriate for some patients with comorbidities?
It's appropriate for most, but cardiac risk factors, in particular with the hypertension the patient has, you know, gets or has, uncontrolled hypertension, that would be something, or, risk of pancreatic toxicity.
Okay. Yeah. We heard a lot about the pancreatic toxicity being a big part of the decision, and to be clear, 701 so far has not had either of those toxicities?
No. asciminib saw it very early on. They even saw it in dose escalation, and they've continued to see it in additional trials, ASC4FIRST, ASC2ESCALATE , some ISTs. It's not very common at their currently approved dose. However, if you're a community hematologist, it's not something you wanna see or deal with.
it's not.
It does appear to be dose-dependent as well.
It is dose-dependent?
Yes.
It's not just lipase elevations, it's actual pancreatitis, where the patient has pain, can't eat, vomiting, gets pretty sick?
The clinical pancreatitis number is lower, but the elevated lipase amylase elevations, that number is around, I think, 18%.
Okay. What % are actually clinical pancreatitis, do you think?
Good question. I don't know.
I don't know the actual percentage. At the currently approved dose, it's pretty low.
Okay. It's still enough, I think. We heard about it from the physicians. They are worried about it. Okay. It's a big validated opportunity that Novartis is very excited about, and I'm sure you're on their radar. You know, what would Novartis do to... Would they potentially combine with a small molecule to protect? Is there any, you know, concern that they might strike a deal with Enliven? Okay.
You know, I think if you combine asciminib with an active site inhibitor, you know, you're taking on additional toxicities, you know. Enliven, they see some elevated amylase, lipase, and just active site inhibitors are inherently less selective, might increase arterial occlusive events over time. It's a lot more costly. You know, we've heard from physicians that for a very small percentage of high-risk patients, that combination studies longer term could be interesting and even more so with TERN-701 given the profile. For now, we're very focused on running our second-line plus and first-line pivotals.
Okay.
Yeah. I mean w ith the profile that's emerging for TERN-701 in terms of efficacy and safety, we don't feel that there is a need to combine with an active site inhibitor. That said, there's probably a very small percentage of patients perhaps that have a compound mutation that may actually benefit from the combination of an allosteric and an active site. It's a very small percentage of the patients. You also have to consider treating with two drugs as opposed to one, the treatment cost just goes up dramatically as well.
Right.
Yeah. Novartis is gonna make a lot of money on asciminib. I don't think there's much they can do. I mean, they've been running an ask to escalate study with the hypothesis that, you know, maybe they underdosed, could they dose higher and get better response rates, and that data is not looking particularly impressive. Before we came out with data, there was a little bit of talk of, "Well, couldn't you just dose up asciminib and get TERN-701?" I think we have multiple data points now to say that that's not the case.
Okay. We're getting close to the end. We have a lot to talk about, the regulatory strategy, why don't we talk about that and where you are in dose selection?
Right now, the rate limiting step for us in moving forward to pivotal is selection of the go forward dose. At the ASH presentation last year, we had announced that we had already enrolled greater than 85 patients. We've enrolled enough patients back in December that we need to actually do the analysis to select the dose. Typically to satisfy the Project Optimus requirements, you wanna see around 20 patients dosed at each dose level with about 6 months of follow-up. We'll have that data that we need to do the exposure safety analysis, the exposure efficacy analysis, select that dose with the justification, approach the FDA at an end of phase II meeting mid-year.
Not only will we get buy-in on the dose to go forward, we'll get buy-in on the design of that first pivotal study, which is in the second-line-plus population. We'll also take that opportunity to get guidance on what the frontline study looks like as well.
All right. When would the frontline study start potentially?
Hard to say right now. Typically, the major barrier to starting a frontline study in an indication where there are already approved therapies is an adequate safety database. Based on the safety profile that we're seeing in the CARDINAL study, you know, I think that we could be aggressive and suggest that we already have enough safety data to launch a frontline study. We're guiding to around, you know, 6 months to 1 year gap between the start of that second-line-plus study and our frontline study. Could it be shorter perhaps? We'll see what the FDA says.
Okay.
Likely initiate sometime in 2027, but can't guide to that.
Yeah. Okay. How has the enrollment been for your trials so far?
Fantastic. It's only increased since we released data last year. Enrollment is going really well. We'll have the CARDINAL study fully enrolled this year. We don't need to wait till we fully enroll that study in order to approach the agency with the data to support the dose and the plans going forward. Enrolling in the CARDINAL study will also allow there to not be a gap between, you know, for sites. We don't have to have sites stop enrolling in anticipation of that registrational study. It'll also be the basis for additional data updates as we go out, you know, looking at durability of effect, longer term data that we'll release from the CARDINAL study going forward.
Other than Enliven in which we've mentioned a bit, are there other competitors? Any, any Chinese competitors with an allosteric that are coming?
There's a Chinese competitor with an allosteric that's really not comparable in terms of safety or efficacy. They've been in studies for a while. It's kind of a funky drug. They have a long half-life. I actually think they present another example that an allosteric inhibitor is not an allosteric inhibitor for BCR-ABL. There's nothing else really that we have seen out there.
Well, one of the things that I was intrigued by, that I feel like is very unique in the targeted oncology space is that CML has a biomarker, you know, as an endpoint and that offers a lot of advantages. Number one, it makes the trial a lot shorter, you're not running an ALK-positive lung cancer trial for six years in the front line. It also, I think, eliminates a lot of the translational risk from phase I to phase III.
Yeah
Because you're doing the same thing.
Same endpoint.
Yeah.
It's the same population.
You don't have to.
Larger study.
To survival.
Yeah.
Which is always a risk.
We saw basically the same from phase III to phase I.
Yeah.
Sorry, one to phase III. Sorry.
Yeah. I think the translational risk is much less in CML than some of the.
We agree indications.
You agree?
Yeah.
All right. Any questions from the audience before we wrap it up? In the front line, would it be a head-to-head versus seven?
We have options for a frontline study. We could do a study that's very similar to what Novartis did with ASC4FIRST, where we'd have TERN-701 versus imatinib or a 2GTKI. Based on the strength of the data that we're seeing coming out of the CARDINAL study, we're strongly considering including asciminib as an option in that arm. The way you would do that is you could include asciminib in the 2GTKI strata because from the ASC4FIRST study, they didn't show a statistically significant benefit on efficacy, so they would be in the same strata. We could have imatinib or a 2GTKI plus asciminib strata that we would compare against.
From a commercial perspective, we'd like to see head-to-head data versus asciminib, and we think that, based on the third line plus data, which for other drugs has translated into much better in the front line, we're confident that we would win there.
Haven't made a decision yet, but we're leaning strongly towards including it.
Any other questions?