Analyst Outlines Doubts On This NASH-Focused Stock, Builds Neutral Case

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  • HC Wainwright initiated Terns Pharmaceutical Inc TERN with a Neutral rating and a price target of $6.00. The biopharmaceutical company has a portfolio of small molecule programs for NASH and obesity. 
  • The analyst says the Phase 2a DUET study of oral TERN-501 in Noncirrhotic Adults with NASH "lacks sufficient supporting evidence," while the rest of the company's pipeline "is too early." 
  • Terns' recent clinical track record has been disappointing, Arce tells investors.
  • The analyst notes some recent data as underwhelming, including the Phase 2a LIFT study of TERN-101 reported last year and Part 1 of the Phase 1b AVIATION study of TERN-201 10mg reported in March
  • Although top-line results from AVIATION Part 2 (20mg) are expected in 2H22, we do not expect the company to pursue further development with TERN-201, says the analyst.
  • DUET study dosing started in July, and top-line data is expected in 2H23. While acknowledging the pipeline potential, more data is needed to be more constructive. The DUET readout is unlikely to represent a significant stock catalyst.
  • Price Action: TERN shares are up 13.50% at $5.98 on the last check Monday.
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