William Blair upgrades Terns Pharmaceuticals stock rating to Outperform

Investing.com - William Blair upgraded Terns Pharmaceuticals (NASDAQ:TERN) from Market Perform to Outperform on Monday, citing promising efficacy results for the company’s TERN-701 drug candidate. The stock has surged to $14.87, representing a remarkable 136% gain over the past six months according to InvestingPro data.

The upgrade follows clinical data suggesting TERN-701 could potentially disrupt the chronic myeloid leukemia (CML) treatment landscape, according to the research firm’s analysis. This positive development comes as InvestingPro data shows three analysts have recently revised their earnings expectations upward for the upcoming period.

William Blair expressed optimism that with a larger sample size and longer maturity, TERN-701 might challenge the market dominance currently held by Scemblix in both treatment-naïve and relapsed/refractory patient populations.

Despite recent share price appreciation, William Blair indicated it remains bullish on the stock’s prospects, recommending investors buy shares even at current elevated levels.

The firm’s positive outlook centers on TERN-701’s clinical performance, which it characterized as representing its "best-case scenario" for the drug candidate’s development.

In other recent news, Terns Pharmaceuticals has reported significant developments in its ongoing trials. The company’s novel BCR::ABL1 inhibitor, TERN-701, demonstrated a 75% major molecular response (MMR) rate by 24 weeks in its CARDINAL trial for chronic myeloid leukemia (CML), with the data selected for presentation at the upcoming American Society of Hematology Annual Meeting. Another report from the same trial showed a 64% MMR rate, highlighting the potential efficacy of TERN-701 in previously treated CML patients.

In contrast, Terns Pharmaceuticals faced challenges with its TERN-601 obesity treatment. The Phase 2 trial results showed a maximum placebo-adjusted weight loss of 4.6%, leading to a high discontinuation rate due to adverse events. As a result, H.C. Wainwright reiterated a Neutral rating, while Citizens and Oppenheimer both lowered their price targets to $15 and $17, respectively, despite maintaining Market Outperform and Outperform ratings. These developments reflect mixed outcomes for Terns Pharmaceuticals, with promising advancements in CML treatment but setbacks in obesity drug development.

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