TERN: Positioned for Dominance – The Intrinsic Value of TERN-701 Points to $98.57

TERN: Positioned for Dominance – The Intrinsic Value of TERN-701 Points to $98.57

Terns Pharmaceuticals (TERN) is fundamentally undervalued based on the clinical profile of its lead oncology asset, TERN-701. The latest data establish a clear trajectory for market leadership in Chronic Myeloid Leukemia (CML), justifying an intrinsic valuation target of 98.57 per share.

This valuation is not based on near-term speculation, but on a rigorous calculation of the Net Present Value (NPV) derived from TERN-701's expected peak commercial success as a truly differentiated, best-in-disease therapy.

TERN-701: A Clinically Superior Drug Poised for Market Capture

The foundation of the $98.57 target is the compelling efficacy and safety seen in the Phase 1 CARDINAL trial:

• Global CML Market Size (Peak): The estimated size remains stable at $10 Billion.

• Peak Annual Sales (TERN-701): This is the core driver of the higher valuation. Based on achieving a 30% global market share (up from the previous 25% conservative estimate), the projected Peak Annual Sales for TERN-701 increase to $4.5 Billion. This capture is driven by its anticipated dominance in 2L/3L CML and its eventual entry into the massive 1L market.

• Probability of Success (PoS): The clinical data has significantly de-risked the program. The PoS is increased from 75% to a more confident 80%, reflecting the high likelihood of successful Phase 3 trials and regulatory approval.

• Net Present Value (NPV) Factor: The robust clinical de-risking and the clear blockbuster status ($1B in sales) warrant a higher valuation multiple. The Program Value is calculated using a 5.0x Peak Sales Multiple (up from 3 to 5).

• Best-in-Class Efficacy: TERN-701 delivered a cumulative 75% Major Molecular Response (MMR) by 24 weeks at the recommended Phase 2 doses. This rate is highly competitive—if not superior—to current standard-of-care treatments, demonstrating its potential to significantly deepen responses.

• The Refractory Solution: The drug showcased powerful activity even in the toughest third- and fourth-line patients, including those who failed prior treatments like Asciminib. This immediately establishes TERN-701 as the critical treatment option where others have failed.

• Safety Profile Allows Adoption: Crucially, the compound maintained a clean profile with no dose-limiting toxicities (DLTs) observed. A highly selective drug with high efficacy and superior tolerability addresses a major need in CML, a chronic condition requiring lifelong treatment. This profile is key to maximizing physician and patient adoption.

The $98.57 Valuation: Modeling for Market Dominance

We project TERN-701 will capture 30% of the peak global CML market share by the mid-2030s. This level of penetration is warranted by the drug's clinical superiority, driving the following financial projections:

The resulting $8.45 Billion NPV for TERN-701, when combined with TERN's strong balance sheet (cash runway extending into 2028), translates directly to the $98.57 intrinsic value per share.

Financial Stability and Pipeline Optionality

The company is well-capitalized with a cash runway extending through pivotal milestones. This strong financial position minimizes the risk of near-term dilution, safeguarding the value of the TERN-701 program. Furthermore, the pipeline, including the oral GLP-1 asset TERN-601, offers additional strategic optionality that is not factored into the $98.57 target, representing potential supplementary upside.

Conclusion:

TERN is rapidly transitioning from a clinical-stage company to an emerging oncology powerhouse. The data for TERN-701 supports an aggressive adoption scenario, and the $98.57 valuation reflects the intrinsic, calculated value of this future blockbuster asset.