Okay, we're ready whenever you are. Good? Okay. Good afternoon, everyone, and welcome to the Goldman Sachs Healthcare Conference. We're thrilled to be joined this afternoon with the team from Terns Pharmaceuticals. Maybe we can start with you guys just providing a bit of an overview of the company. In particular, I'd love to focus on some of the key value drivers you see over the next, let's call it, 12 months - 24 months. Great. Thank you so much, Corinne, and thank you to everyone here at the conference and to those of us who are joining us online. We really appreciate you having us. I'm Amy Burroughs, the CEO. I'm here with Scott Harris, our Chief Development Officer. Terns is a small molecule company. We were founded in 2017. We've discovered all of our own molecules, and we have two exciting data readouts coming this year in 2025 in the fourth quarter. We're developing two best-in-class medicines, a best-in-class BCR-ABL inhibitor for chronic myeloid leukemia, where in the fourth quarter of this year, you'll see some pretty important data showing that molecule's potential to be the best drug in CML. We'll also see in the fourth quarter data from our oral GLP-1 receptor agonist, which we also believe can be a best-in-class agent for patients with obesity. Great. Okay, maybe you could provide some context. Let's start with the CML program. Okay, so Terns 701, relative to the broader CML landscape, there's a lot that goes on in that space. Maybe you could just start by giving us an overview of CML with a focus on where you see the unmet need. Absolutely. Chronic myeloid leukemia was a fatal disease. In fact, I lost a family member to it in the 1990s. With the advent of BCR-ABL inhibitors in 2001, it has really changed from a fatal disease to a chronic disease. This means that most patients are on therapy for the rest of their lives. The first-generation agent, Gleevec, really set the initial standard for efficacy and safety. Since that time, there have been additional agents developed, and the second-generation agents really improved on efficacy but have some real limitations when it comes to tolerability and safety. More recently, allosteric inhibitors have been in development, and recently, asciminib from Novartis was approved in the front- line in November, and they are now approved for all lines of therapy. The allosterics, as a class, we believe, are going to be and have, Novartis has been shown to be, both more effective and safer, and we believe is really going to be the best therapy in CML. We are the next, and I would say the only other credible allosteric in development that will come to market, and we developed it to be a better allosteric inhibitor than asciminib in terms of efficacy, safety, and tolerability and convenience. Great. Maybe you could help put some numbers around that. How big is the CML market today, and where do you see it growing? Yeah, CML is an orphan indication, but it is a large market with 100,000 patients in the G7. About 17,000 of those are newly diagnosed, and with patients living long lives with this chronic disease, it's expected to triple by 2040. Oh, okay. As you think about those pieces, what do you think is the target product profile for a new allosteric agent like Terns 701? Yeah, so the current BCR-ABL inhibitors on the market are good drugs, but there's opportunities to improve on efficacy, on safety, and on convenience. Our target product profile is to have a better efficacy, better major molecular response. That's the endpoint for clinical trials, and to have better safety, which we're seeing so far. We've also demonstrated a better drug-drug interaction profile. In terms of convenience, this is a product that patients are taking every day. Asciminib has a major limitation, which is having a three-hour fasting requirement, and also for many patients, it has to be dosed twice a day. Terns 701 can be dosed once a day without regard to food. Okay. You mentioned some of these features, including the convenience and tolerability, the efficacy. Maybe you can talk about the evidence that backs up your claim for that target product profile. Let's start with the convenience and tolerability piece of it. What have you shown to date that gives you confidence that you'll be able to provide a once-daily, no fasting, limited drug-drug interaction kind of drug? Yeah, so we are currently doing a healthy volunteer study where we've shown that we have superior PK. We have an 8 hr-14 hr half-life versus 5 hr-9 hr for asciminib. So we are only dosing and studying this product once a day. It's a once-a-day drug. We also show that we do not have a clinically meaningful effect on AUC when dosed with food. With asciminib, there's a 60% reduction when dosed with food on AUC. We are confident that this is a once-a-day drug that will be dosed without regard to food. When you talk about the drug-drug interactions, what have you demonstrated there? How is that limiting the current use for asciminib? Yeah, so in that same healthy volunteer study, we've looked at whether or not Terns 701 is an inhibitor of the CYPs. Importantly, we're not an inhibitor of CYP3A4, which about 60% of drugs are metabolized via that pathway. We don't have the same liability as far as concomitant medication use. That's important for this patient population because this is an older population. They have comorbidities. They're on a lot of different drugs. The other benefit, as we're still in clinical development, is we've been able to loosen the criteria for cognizant or excluded, so it helps us with enrollment. We've also shown that we're not an inhibitor of OATP1B1, which is a major transporter for the statins. I think combined with those two results we've seen in our study, we've been able to actually reduce a lot of the restrictions on cognizant. There's some precedent in this market for drugs that do versus don't have food effects. Could you talk about what that experience has been in terms of patient selection of the different drug options there? How does that kind of inform your view of where this could fit versus asciminib? Yeah, so as a chronic disease in CML, the decision on what therapy to choose for a patient and for a physician can be multifactorial. It can be related to age. It can be related to comorbidities. It can be related to, do they have a caregiver? Are they on top of it enough to be taking it with or without food? It is really, as we've been working with physicians and talking about what drives choice, it really can be very patient-dependent. For some patients, the food restriction is not a big deal. If I had CML, it wouldn't be such a big deal for me, but for many people, it is a big deal. With the second-generation TKIs, I can't speak specifically to what the exact drivers are, but nilotinib, Novartis' drug, has a food restriction. The other second-generation TKIs do not. For many patients, that takes it off the table. Sure. Okay, maybe then on efficacy, I think this is something you're kind of getting maybe an evolving kind of confidence in, having a best-in-class efficacy profile. Talk to us about where that derives that confidence in the efficacy. Yeah, so there are multiple factors that play into giving us confidence about our ability to deliver on better efficacy. The first is when you look preclinically, and we actually have an oral at EHA this Friday that shows our potency when compared to asciminib and shows our coverage of different mutational profiles. That gives us confidence. Second is really I talked to you about the superior PK, and that gives us superior target coverage. We also recently completed dose escalation and announced dose expansion where we are moving to the highest dose that we tested in escalation, which is the 500 mg dose. The next highest dose is 320 mg. Those doses, both of those from a target coverage and exposure perspective, are two to five times higher than asciminib. We believe that that additional target coverage will give us better efficacy. We put some initial data out in December showing examples of patients who had failed asciminib and were responsive to Terns 701 even at the lower doses. Great. This is a great segue into kind of talking about your own data that you presented recently in December. I guess that's recent to me at this moment. Maybe you could contextualize the results that you shared in December and talk about the key take-home messages that you wanted to convey with those data. Yeah, so it's probably the earliest dataset that's been released in CML. I think we were thrilled with the results to date in that study. When we look at, on a patient-by-patient basis, you see decreases in BCR-ABL across the board. We also showed a 50% cumulative MMR rate. I think that even though it was an early dataset, the efficacy that we're seeing along with the safety profile gives us the conviction that we really have a drug here. We completed dose escalation, as Amy mentioned, and we didn't have a dose-limiting toxicity at any of the doses that we evaluated from 160 mg up to 500 mg. Great. Based on that data, you talked about this, but you did select two doses. Maybe talk a little bit more about the dose selection, why you went with a 320 mg and a 500 mg. Yeah, as I mentioned, it was really based on the totality of evidence we had to date, looking at both efficacy and safety. The fact that we did not have a dose-limiting toxicity through the highest dose evaluated allowed us to pick the highest dose of 500 mg as one of our doses. The reason that we went with a 320 mg dose is really to satisfy the Project Optimus requirements. We did not select 400 mg as opposed to 300 mg because those doses were not different enough in terms of concentration. That is really the driver of where that dose selection came from. Okay. I would also say based on the selectivity, one of the things that's important to understand in CML and in this development is really the allosteric, the nature of Terns 701 being an allosteric, which means that it's highly selective and more selective than an active site inhibitor. We were not surprised at the wide therapeutic window that we are seeing in the clinic. Great. You mentioned a couple of times now the target coverage is better with this drug than you've seen with asciminib. How do you expect that to translate into the clinic? Yeah, so with chronic myeloid leukemia, the BCR-ABL fusion protein is the driver of the disease. The key objective is to hit that target and hit it hard to drive down BCR-ABL. If you think about it, the more drug you can get on board at a safe dose, the better effect you're going to have clinically. We've seen that with trends in increasing activity as we've gone up in dose. I think what we've shown to date is that moving forward with the higher doses, as Amy mentioned earlier, we have improved PK. We have better potency preclinically than asciminib. The fact that we can actually dose higher in the clinic than what asciminib's approved doses are gives us the target coverage in vivo in people that we need to see activity. To put it in perspective, we've done some preclinical work in models of CML, and at the dose that we have 3 mg per kg in a xenograft study, the concentrations that we're achieving now in humans is several fold higher than that. So we're already at higher doses in human than where we saw significant activity in preclinical models. Great. All this is gearing up for Q data event, like you mentioned earlier. How many patients should we expect to see at that kind of six-month endpoint? Could you just frame out the data that we're going to get? Yeah, so when we put data out last December, we said, "You're going to have to be patient and wait for the data to come out in the fourth quarter of 2025," because what is really meaningful is seeing a robust dataset with six-month major molecular response. That is because six-month major molecular response is the endpoint in the pivotal trial. What we are really aiming to show is a read-through to what we could see in a pivotal trial. The ability for you as investors, as a community, to be able to really compare that to other datasets out there in CML to really assess this efficacy and potential for superior efficacy. That is what you are going to see. We cannot guide the specific numbers. It is going to be somewhere over 40 patients. Okay, per dose or? No, total from dose escalation and expansion with six-month major molecular response. Okay. So as you think about benchmarks, we should have in mind what is an appropriate level of MMR for this kind of data cut. Yeah, so with asciminib, they saw in this type of refractory setting, they saw a 24% major molecular response rate. You're seeing comparable numbers from nilotinib. We haven't seen the data yet, but in a contemporaneous patient population. That's really the minimum bar, and we would like to see a higher number. Okay. Are there other endpoints that you're closely monitoring with this readout? Does that matter? I mean, we're looking at both the cumulative MMR rate, but the key one is really the MMR achievement rate because that is the endpoint that it has a direct read-through to what the approval endpoint is. Perfect. The other thing is really safety, right? That we continue to see the type of safety profile that we're seeing with a superior safety profile to date than what was seen in dose escalation with asciminib. Great. So having these data in hand, what are kind of the next steps that would be required? Where do you go after that? Yeah, so when you look at the sort of history of development in the chronic myeloid leukemia space, there's a pretty established playbook on how to get the drug approved. From a registrational standpoint, when we believe we have sufficient data from the current study, we'd be approaching the agency to get buy-in on what a pivotal study looks like in a second-line plus indication. That study would have a six-month MMR endpoint for an accelerated approval. In parallel with that, most likely a staggered approach, we would also launch a front-line study as well and ultimately use that front-line study to convert the second-line plus accelerated approval into a full approval. Okay. You said once you have the data you feel is appropriate to move forward. Talk a little bit beyond what we're going to get in the fourth quarter. Is there anything else you think you need to go to the agency and discuss a registrational trial? I mean, we'll know when we see it, but I would say that our expectation is that we'd be approaching the agency at some point next year to get that buy-in and what a registrational study looks like. Is it about understanding the efficacy profile, the margins that you have? Talk to us about the parameters you need. It's both. We'd be looking at confidence intervals on the efficacy endpoint, but also making sure that we have enough data to appropriately select the dose that we want to move forward with. In terms of registrational studies, you talked about a second-line patient population. Most of the early studies are in third-line. Just talk to us about the difference between third-line versus second-line. Yeah, so our understanding is our currently enrolling study is the first study that's been allowed to enroll second-line patients in a phase I study. Because of that, we would be looking to do a second-line plus study as our first registrational study as opposed to a third-line. Okay. What's the appropriate control arm for a patient population in the second-line? We're still evaluating what that would look like for the registrational study and get the buy-in from the agency. If you think about it, it would most likely be either an investigator's choice to GTKI or perhaps we could select a specific TKI such as bosutinib. Okay. What are the pros and cons as you think about the physician's choice versus a selected agent? How do you think about that decision? Will it be guided by what the agency prefers? I think we'll propose something to the agency. In collaboration with our scientific advisory board, we actually have an SAB meeting this week when we're at EHA to discuss some of those aspects. There are pros and cons to both. When you have a single agent and if you look at the historical data on that, it's easier to determine what the effect size would be. When you're deciding on an investigator's choice where you have multiple different agents, it's a little bit harder to establish what that effect size would be. Okay. How many patients roughly or ballpark do you think are appropriate for this kind of registrational trial? We think that most likely the sample size would be equivalent to what we've seen in prior studies. If you look at what asciminib looked at in a third-line plus setting, it was roughly 250 patients. You could probably ballpark that as an estimate for a second-line plus study as well. Okay, understood. You talked about going into a third-line or sorry, a front-line trial kind of a little bit staggered. What would be the scope of that kind of registrational program? Again, we'd be looking at newly diagnosed patients. In that setting, most likely it would be an investigator's choice, second-gen TKI. Again, we would be looking at MMR as the endpoint, but not a six-month MMR. We'd initially be looking at a 12-week or sorry, 12-month MMR to get the accelerated approval for the front-line indication. That study would continue on to get the full approval. Okay. It'd be similar to what asciminib did where in the front-line it would also include imatinib. Okay. Okay. Talk to us about how that market is kind of shaping up with the approval of asciminib. What do you have to think about, particularly in the second-line, in terms of inclusion criteria to make sure you're capturing the most robust patient population, like prior asciminib use, that kind of thing? Yeah, so we allow today prior asciminib use in our trial, and we would continue to do so. Would you think about stratifying the patient population or enriching for a subgroup? Does it matter? I don't think we would enrich. We could potentially consider stratifying. We've yet to decide on exactly how we'd approach that study design, but those are all options. Okay, great. You ultimately do plan to think about competing with asciminib in the front-line setting. So beyond just kind of what's required for approval, what do you think a profile needs to look like? Is it on MMR rate or are there deep MMR rates, things like that that you should need to show to kind of compete in the front-line given they'll have a time to market advantage? Yeah, I would go back to what I said about how we understand physicians and patients make decisions about their TKI of choice in CML. It is going to be based on the sort of totality of the profile and the individual patient. We do think that showing better MMR rates and better deep molecular response is compelling to patients and physicians who in the front-line, the second-line, you want to, as Scott said, hit the disease as hard as possible. Safety also really matters, say if a patient has cardiac issues or something like that. Their compliance also matters. Okay. Maybe we can switch gears and move on to obesity for a little while. In addition to the CML update that you have in the fourth quarter, we do also expect an update from your obesity program, which is studying Terns 601 in a 12-week study. Maybe let's just start. Obesity is obviously good, but I know you think that there is some theoretical differentiation for 601's profile. So maybe you could talk about what that looks like in your mind. Sure, absolutely. The obesity market is, we actually see it as still in the early days. Although there's a lot of competition, there aren't a lot of oral drugs in the clinic that will have phase II data in 2025. There's a lot of sort of next-generation things that are being done preclinically that are many years behind. In terms of oral agents that are small molecules, we don't see quite as much competition in the near term. We think that ultimately differentiation is what matters. We do see differentiation with Terns 601. We've seen that in our 28-day study. What we're really looking for is, and what physicians tell us and patients have told us, is that the amount of weight loss that we're seeing with GLP-1 receptor agonists for many patients is acceptable. What we've seen with 12-week studies is generally somewhere in the 6%-9% range or so. What we've also seen is very high rates of GI adverse events and tolerability issues and dropouts. We think that there is a lot of room for improvement on the tolerability side. We've also seen companies and products where they have to be titrated. So many steps of titration. Start at 5 mg, move up to 180 mg, take six steps in between. That's really complex in a primary care setting in particular. We already have advantages from a titration perspective in what we're testing. Our phase II- A study is testing between two and four steps of titration at three different doses. I will also mention in terms of differentiation, we have different pharmaceutical properties. We have a low solubility molecule with high protein binding, which translates to lower overall exposure in the plasma and at a high dose to higher 5x in the gut preclinically. We believe that this can translate into better tolerability and competitive efficacy. Okay. You already started to show some data in the clinic last year. How did that data kind of support what you're saying here in terms of differentiated tolerability? Yeah, so we released the 28-day data in September of last year. We saw dose-dependent increase in weight loss across all the doses that we evaluated with a tolerability profile that was in line with what we've seen with other molecules. All of that despite the fact that we titrated every three days, which was incredibly fast compared to any other molecule out there. Going forward with our 12-week study, we're evaluating the exact same dose range and the exact same population. The one thing that we've done is we've slowed down the titration. Our expectation is that we will see competitive weight loss in line with what other folks see with 12-week studies, but with a tolerability profile that's superior. Okay. One of the things that we see sometimes is the four-week data. It's relatively easy to manage the side effect profile. These are often in-patient kind of trials. When you get to the 12 weeks, tolerability worsens a little bit. I guess, do you expect to see that based on what you've in terms of execution, etc.? To what degree, what is the tolerability benchmark that you think are fine for a study of this nature? Yeah, so I mean, I can't speak to it's a blinded study. I can't speak to what we're seeing in the study right now. Yeah, the expectation is that in a less controlled setting, you may see increases in patient-reported nausea and vomiting in particular. That said, since we have slowed down the titration considerably, we think that we will overcome any potential increase you would see. If we were titrating every three days in an outpatient sort of population, you'd probably see a high rate of nausea and vomiting. The fact that we've slowed down that titration significantly, we think we'll overcome any sort of potential increase you would see based on having an uncontrolled outpatient setting. Another thing is often these 12-week studies have worse tolerability. Then as companies learn to titrate, they get better into the longer studies. What are the right benchmarks for a 12-week trial to think about around vomiting, nausea, etc.? Is there a rate that you're going to be comfortable with? I will say that our expectation is that we should see potentially half of the rate of nausea and vomiting of what we've seen with other molecules, like Terns 601, for example. Okay. Obviously, orforglipron has kind of set the bar now for this kind of candidate. Do you think that's fair for the small molecule space? And do you think it's necessary to show something like the orforglipron data in these new oral molecules that are coming along? You know, I will say that orphor did not show that data in 12 weeks, and that may be more challenging. I think they've learned a lot over time. I think they also were smart. They didn't pursue necessarily the highest dose, and they really managed titration because I think they see it the same way in terms of tolerability being important and something that patients can manage. I do think that they have set a benchmark out there. We'll see what their obesity data looks like soon. That'll be an important benchmark for all of the GLP-1 receptor agonist orals to hit and differentiate from. Yeah. As you think about what the next steps would be, you guys have talked about this is probably not a candidate that you want to take forward all the way through phase III and commercialization. What are the next steps post a data readout in the fourth quarter? Yeah. So we've spent a lot of time in the beginning talking about Terns 701, which we see as a really special asset for a small biotech that is within our capability to run a pivotal trial to get to patients to be able to commercialize it. Obesity is different. It is something that really is you really need the capabilities of a much larger company to run those phase III trials to commercialize in this type of market. We very much view this as a partnering asset, and we are interested in partnering it after this trial, primarily, frankly, due to capital allocation reasons. We have cash into 2028, and we can get a lot further on the CML data on that cash. We are interested in a partnership to take Terns 601 to the next phase. Perfect. In terms of cash and runway and all of these questions, could you just speak to you mentioned 2028, but what are the clinical activities that are embedded in that guidance? Yeah, so it's continuing with the phase I and beginning to initiate a pivotal trial for Terns 701. It is completion of this phase II- A for Terns 601, but not additional significant amount of spending on Terns 601 and continuing with some of our discovery efforts and our GIPR antagonist program. Speaking of discovery efforts, kind of where are you guys focused right now on that? Yeah, so we can only guide to the fact that we're continuing to work on the GIPR and the GIPR antagonist program in particular is an area of interest for us. We've been talking about that and working on that and excited about some of the work that our scientists have been doing. Great. Okay. I think that takes me to the end of my questions. The clock, I think, is a little off. I think we'll wrap it there. I appreciate the time this afternoon. Really enjoyed having this conversation. Thanks, Corinne, for having us and to everybody.