On Monday, Terns Pharmaceuticals (NASDAQ:TERN) saw its 12-month stock price target increased by Mizuho from $10.00 to $14.00, while its stock rating remained at Outperform. This adjustment comes after the company released Phase 1 data for its oral GLP-1 receptor agonist, TERN-601, aimed at treating obesity.
Mizuho's decision to raise the price target reflects a 40% increase based on the positive data from the recent trial. The Phase 1 results showcased promising efficacy, with a placebo-adjusted weight loss of approximately 6%, along with favorable safety and tolerability profiles. These outcomes suggest that TERN-601 could be a strong contender in the obesity treatment market.
The analyst at Mizuho has updated their model for Terns Pharmaceuticals, taking into account the potential for TERN-601 and upcoming catalysts. Notably, the company is expected to announce interim Phase 1 data for another drug candidate, TERN-701, in the fourth quarter of 2024. This drug is being developed for chronic myeloid leukemia (CML) and other cancers.
The report from Mizuho indicates a belief in the stock's substantial upside, with a projected 60% increase to the newly established price target. The Outperform rating has been reiterated, reflecting confidence in the company's prospects and the risk-reward balance for investors.
In other recent news, Terns Pharmaceuticals has made significant strides in its clinical trials and financial ventures. The company's Phase 1 trial results for TERN-601, a potential obesity treatment, showed promising outcomes, leading Jefferies to increase its price target for Terns Pharmaceuticals shares to $30.00. The firm also raised the probability of success for TERN-601 to 35%, estimating a peak sales potential of $646 million.
Terns Pharmaceuticals has initiated a $125 million stock offering, led by Jefferies and TD Cowen. The proceeds from the offering are expected to fund the development of key product candidates, including TERN-701 and TERN-601.
In the analyst realm, both TD Cowen and Mizuho Securities have maintained positive ratings on the company's shares, with TD Cowen reiterating its Buy rating and Mizuho maintaining an Outperform rating.
Recent developments also include the appointment of Elona Kogan as Terns Pharmaceuticals' new chief legal officer and the extension of the company's office lease in Foster City, California, through 2027.
Lastly, Terns Pharmaceuticals has made progress in its ongoing Phase 1 study of TERN-701, with interim findings suggesting the drug can be administered once daily with or without food. The company is also eagerly awaiting the interim Phase 1/2 CARDINAL study data for chronic myeloid leukemia, expected in 2025.
InvestingPro Insights
Terns Pharmaceuticals' recent positive Phase 1 data for TERN-601 and Mizuho's subsequent price target increase are complemented by several intriguing financial metrics and insights from InvestingPro. The company's stock has demonstrated strong performance, with a 69.98% price total return over the past year and a 30.34% return in the last six months, aligning with the positive sentiment expressed in the Mizuho report.
InvestingPro Tips highlight that Terns holds more cash than debt on its balance sheet, which could provide financial flexibility for further drug development. The company's liquid assets exceed short-term obligations, potentially offering a cushion as it progresses through clinical trials.
However, it is important to note that Terns is not currently profitable, with a negative EBITDA of -107.91M USD for the last twelve months as of Q2 2024. This is consistent with the InvestingPro Tip indicating that analysts do not anticipate the company will be profitable this year, which is typical for biotech companies in the development stage.
The fair value based on analyst targets stands at $18 USD, suggesting potential upside in line with Mizuho's increased price target. Investors interested in a more comprehensive analysis can access 11 additional InvestingPro Tips for Terns Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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