Terns files $125m financing after positive obesity data

Fresh from reporting encouraging results with its oral weight-loss drug, Terns Pharma has moved swiftly ahead with a public offering, seeking to raise upwards of $125 million to fund additional trials of the drug.

The financing announcement came right after Terns reported phase 1 results with its oral GLP-1 receptor agonist TERN-601, showing that a once-daily dose of the drug was able to achieve 5.5% weight loss in just 28 days, 4.9% more than a placebo, at the highest dose tested.

The result immediately puts Terns among a growing list of drugmakers trying to bring oral alternatives to injectable obesity drugs like Novo Nordisk's Wegovy (semaglutide) and Eli Lilly's Zepbound (tirzepatide), which also includes the two drug giants along with other rivals like Pfizer, Roche, and Viking Therapeutics.

Lilly said in June that its orforglipron candidate achieved a near-15% weight loss after 36 weeks in a phase 2 trial, while Novo Nordisk has said it is preparing to file an oral semaglutide formulation for obesity later this year, and also has early-stage results for a next-generation candidate called amycretin.

Pfizer recently selected a once-daily formulation of danuglipron as its candidate for phase 3 testing, while Roche recently reported phase 1 results with its candidate CT-966 - a candidate acquired as part of its $3.1 billion takeover of Carmot Therapeutics.

Terns will have some heavyweight competition to contend with – leading to speculation that TERN-601 may become a licensing target for a larger drugmaker – but the company reckons that its drug could be "class-leading" based on its efficacy, fairly clean tolerability profile, and ease of manufacture. It is planning to start phase 2 trials of the candidate next year.

There were no treatment-related dose interruptions, reductions, or discontinuations at any dose in the study, with side effects mainly gastrointestinal reactions like nausea and vomiting, in line with other drugs in the GLP-1 class. Six of nine patients at the highest 740 mg daily dose group experienced moderate (grade 2) side effects, with none in the severe category.

For comparison, Roche's oral GLP-1 achieved 6.1% placebo-adjusted weight at the optimum dose in its phase 1 trial, while Viking's VK2735 – like Zepbound, a dual GLP-1 and GIP agonist – also achieved a 3.3% reduction at the 28-day timepoint.

Terns is also allocating an additional tranche of shares worth up to $18.75 million to underwriters of the offering. The company ended the second quarter with cash of around $225 million.