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    Terns Pharmaceuticals (TERN) Is Down 7.7% After Strong TERN-701 Phase 1 Data - Has The Bull Case Changed?

    Simply Wall St·12/23/2025 01:15:25
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    • Earlier in December, Terns Pharmaceuticals reported positive Phase 1 results for its chronic myeloid leukemia candidate TERN-701, including a 64% major molecular response rate and a 75% response rate at doses of 320 mg and above over 24 weeks, supporting advancement into Phase 2 trials.
    • This progress underscores how TERN-701 is emerging as a central pillar of Terns’ pipeline, potentially reshaping the company’s future clinical focus.
    • We will now examine how the encouraging TERN-701 Phase 1 response rates influence Terns Pharmaceuticals’ investment narrative and risk profile.

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    What Is Terns Pharmaceuticals' Investment Narrative?

    For Terns, the big-picture thesis now hinges on whether TERN-701 can justify the company’s premium valuation and heavy cash burn. The strong Phase 1 response rates in chronic myeloid leukemia give investors a clearer clinical anchor and likely elevate TERN-701 to the key near-term catalyst, especially as management prepares for Phase 2 and potential pivotal trial discussions. That said, the stock has already moved sharply, and recent gains may have priced in a good portion of this optimism. With zero revenue, widening losses and repeated equity raises, dilution and funding needs remain front and center, even after the latest offering. The recent data improves the story, but it also concentrates Terns’ risk profile around the success, pace and competitive positioning of a single lead asset.

    However, investors also need to weigh the company’s continued dilution and persistent losses. Our comprehensive valuation report raises the possibility that Terns Pharmaceuticals is priced higher than what may be justified by its financials.

    Exploring Other Perspectives

    TERN 1-Year Stock Price Chart
    TERN 1-Year Stock Price Chart
    Simply Wall St Community members see Terns’ fair value between about US$53.56 and US$98.57 across 2 views, reflecting very different expectations. When you set that against the company’s lack of revenue and reliance on one lead program for future value, it underlines why many market participants are watching both clinical milestones and future capital raises so closely.

    Explore 2 other fair value estimates on Terns Pharmaceuticals - why the stock might be worth just $53.56!

    Build Your Own Terns Pharmaceuticals Narrative

    Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

    • A great starting point for your Terns Pharmaceuticals research is our analysis highlighting 5 important warning signs that could impact your investment decision.
    • Our free Terns Pharmaceuticals research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Terns Pharmaceuticals' overall financial health at a glance.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.