Terns Pharmaceuticals, a clinical-stage biopharmaceutical company, saw its shares surge by 27% after announcing that its oral obesity drug, TERN-601, demonstrated significant weight loss in an early-stage study. According to Reuters, the drug led to an average weight reduction of 4.9% over four weeks when adjusted for the placebo effect, positioning Terns as a competitor in the weight-loss treatment market, which some analysts expect to value at $150 billion by the 2030s.

The drug, which is part of a class known as GLP-1 like Wegovy and Zepbound, achieved the study's primary objectives of safety and tolerability. Mizuho analyst Graig Suvannavejh noted, as per Reuters, "We're very pleased with the totality of the data... seeing in particular, no red flags," reflecting optimism about the drug’s potential. The stock's positive response was also bolstered by the company's announcement of a proposed $125 million stock offering intended to fund the development of TERN-601, among other projects.

Terns' CEO, Amy Burroughs, emphasized the promising profile of TERN-601, stating, "These compelling results underscore TERN-601’s potential to be a class-leading GLP-1R agonist based on its composite profile of initial indications of efficacy, tolerability and manufacturing scalability," according to Terns' press release. Furthermore, 67% of participants at the highest dose level experienced at least 5% body weight loss — a notable threshold for clinical relevance in weight management treatments.

Chief Medical Officer Emil Kuriakose highlighted the drug's ability to provide sustained action with once-daily dosing, as cited by Terns, "We are delighted to demonstrate potent GLP-1R agonism with TERN-601 as its distinct drug properties allowed for sustained target coverage with once-daily dosing and the evaluation of doses up to 740 mg, while being tolerable". Terns Pharmaceuticals plans to escalate the drug candidate into Phase 2 trials without any new dose range exploration anticipated. This sentiment was echoed by BMO Capital Markets analyst Etzer Darout, who pointed to the once-daily dosage as a significant factor for TERN-601's competitive edge.