Terns' oral weight-loss drug shows promise in early study, shares jump

By Mariam Sunny

(Reuters) -Terns Pharmaceuticals said its oral obesity drug reduced weight by an average of 4.9% in an early stage study, joining drugmakers vying for a share of the lucrative obesity treatment market and sending its shares up 27% on Monday.

The experimental treatment is part of the second generation of weight-loss drugs under development by companies including Pfizer and Roche, which aims to offer a more convenient alternative to injections.

Market leaders Wegovy from Novo Nordisk and Zepbound from Eli Lilly are both injectable drugs. The two companies are also developing oral weight-loss treatments, the market for which is expected to hit $150 billion by the early 2030s, according to some analysts.

"We're very pleased with the totality of the data... seeing in particular, no red flags," Mizuho analyst Graig Suvannavejh said.

Terns' stock was trading at $9.93, and including Monday's gains, it is up more than 50% this year.

The company said it plans to advance the drug into mid-stage trials next year.

"We have cash to cover next steps from this program," CFO Mark Vignola said on a conference call.

Roche's experimental once-daily pill in July led to a placebo-adjusted average weight loss of 6.1% within four weeks in obese patients without diabetes in an early-stage study.

The drug, TERN-601, which belongs to the GLP-1 class like Wegovy and Zepbound, met the main goals of safety and tolerability in the study, the company said.

The rates of gastrointestinal side effects such as nausea and vomiting were mild to moderate and consistent with other drugs in the class, Terns said.

Pfizer had scrapped the twice-daily version of its obesity pill danuglipron because most patients dropped out of the mid-stage trial with high rates of gastrointestinal side effects.

A 740-milligram dosage of Terns' once-daily drug led to an average weight loss of 4.9% in the study, when adjusted for placebo rates, after four weeks of treatment.

BMO Capital Markets analyst Etzer Darout said the once-daily dose is important for the drug's competitive profile.

(Reporting by Mariam Sunny in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)