Terns Announces Closing of Public Offering of Shares of Common Stock and Pre-Funded Warrants, Including Full Exercise of Underwriters’ Option to Purchase Additional Shares

Rhea-AI Summary

Terns Pharmaceuticals (Nasdaq: TERN) has successfully closed its previously announced public offering, raising approximately $172.7 million in gross proceeds. The offering included 14,064,048 shares of common stock at $10.50 per share and pre-funded warrants for 2,380,952 shares at $10.4999 per warrant. The underwriters fully exercised their option to purchase an additional 2,145,000 shares. Terns plans to use the net proceeds to fund research, clinical trials, development, and manufacturing of key product candidates, including TERN-701, TERN-601, and the TERN-800 series, as well as for working capital and general corporate purposes. The offering was made pursuant to a previously filed registration statement and was led by Jefferies and TD Cowen as book-running managers.

Positive

• Successful closing of public offering, raising approximately $172.7 million in gross proceeds
• Full exercise of underwriters' option to purchase additional shares, indicating strong demand
• Funds to be used for advancing key product candidates TERN-701, TERN-601, and TERN-800 series
• Strengthened financial position for research, clinical trials, development, and manufacturing

Negative

• Potential dilution of existing shareholders due to the issuance of new shares and pre-funded warrants
• Increased expenses related to underwriting discounts, commissions, and other offering costs

Financial Analyst

Terns Pharmaceuticals has successfully closed a significant public offering, raising $172.7 million in gross proceeds. This substantial capital infusion strengthens the company's financial position, providing ample resources for advancing its pipeline of small-molecule candidates in oncology and obesity. The offering's full subscription, including the underwriters' option, indicates strong investor confidence in Terns' potential. However, the issuance of additional shares and warrants will lead to dilution for existing shareholders. The $10.50 per share pricing, slightly below the current market price, suggests a balanced approach to attracting investors while minimizing dilution. This funding should extend Terns' runway, potentially through key clinical milestones for its lead candidates TERN-701 and TERN-601.

Biotech Research Analyst

Terns' successful fundraising is a positive signal for its drug development programs. The allocation of funds to key candidates TERN-701 and TERN-601, along with the TERN-800 series, indicates a focused approach to pipeline advancement. This capital injection should accelerate clinical trials and potentially expedite the path to market for these promising therapies. The company's focus on oncology and obesity targets two highly lucrative markets with significant unmet needs. However, investors should note that drug development is inherently risky and success is not guaranteed. The substantial funding does mitigate some financial risks associated with the lengthy and costly clinical trial process, potentially allowing Terns to reach critical value-inflection points without immediate need for additional financing.

Market Strategist

The successful completion of this offering, especially in the current challenging biotech funding environment, is a testament to Terns' appeal to investors. The participation of major underwriters like Jefferies and TD Cowen adds credibility to the offering. The inclusion of pre-funded warrants provides flexibility for certain investors and may indicate strategic positioning by institutional buyers. The $172.7 million raise significantly bolsters Terns' balance sheet, likely providing a runway of 18-24 months based on typical burn rates for clinical-stage biotech companies. This financial cushion should allow management to focus on execution rather than near-term funding concerns. However, investors should monitor the company's cash burn rate and clinical trial progress to gauge the likelihood of future capital needs.

FOSTER CITY, Calif., Sept. 12, 2024 (GLOBE NEWSWIRE) -- Terns Pharmaceuticals, Inc. (“Terns” or the “Company”) (Nasdaq: TERN), a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases, including oncology and obesity, today announced the closing of its previously announced underwritten public offering of 14,064,048 shares of its common stock, including 2,145,000 shares sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares, at a public offering price of $10.50 per share, and, in lieu of common stock to certain investors, pre-funded warrants to purchase 2,380,952 shares of its common stock, at a public offering price of $10.4999 per pre-funded warrant, in each case before underwriting discounts and commissions. The gross proceeds from the offering, before deducting underwriting discounts and commissions and other offering expenses payable by Terns, are approximately $172.7 million. All of the securities were offered by Terns.

Jefferies and TD Cowen acted as lead book-running managers for the offering. BMO Capital Markets and UBS Investment Bank also acted as bookrunners for the offering. Citizens JMP and Mizuho acted as co-lead managers for the offering.

Terns intends to use the net proceeds from the proposed offering, to fund research, clinical trials, development and manufacturing of the Company’s key product candidates, including TERN-701, TERN-601 and other programs, including Terns’ TERN-800 series, and for working capital and general corporate purposes.

The public offering was made pursuant to a registration statement on Form S-3 (File No. 333-269508) previously filed with the Securities and Exchange Commission (the “SEC”), which became effective on February 10, 2023. A prospectus supplement and accompanying prospectus relating to the offering was filed with the SEC and is available on the SEC’s website located at www.sec.gov. Copies of the prospectus supplement and accompanying prospectus relating to this offering may be obtained from Jefferies LLC, Attention: Equity Syndicate Prospectus Department, 520 Madison Avenue, New York, NY 10022, by telephone at 877-821-7388 or by email at prospectus_department@jefferies.com or TD Securities (USA) LLC, 1 Vanderbilt Avenue, New York, NY 10017, by telephone at 855-495-9846, or by email at TD.ECM_Prospectus@tdsecurities.com.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of these securities under the securities laws of any such state or other jurisdiction.

About Terns Pharmaceuticals

Terns Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases, including oncology and obesity. Terns’ pipeline contains three clinical stage development programs including an allosteric BCR-ABL inhibitor, a small-molecule GLP-1 receptor agonist, a THR-β agonist, and a preclinical GIPR modulator discovery effort, prioritizing a GIPR antagonist nomination candidate.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements about Terns Pharmaceuticals, Inc. (the “Company,” “we,” “us,” or “our”) within the meaning of the federal securities laws, including those related to the use of proceeds of the offering. All statements other than statements of historical facts contained in this press release are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. The Company has based these forward-looking statements largely on its current expectations, estimates, forecasts and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. These statements are subject to risks and uncertainties that could cause the actual results and the implementation of the Company’s plans to vary materially, including the risks associated with the initiation, cost, timing, progress, results and utility of the Company’s current and future research and development activities and preclinical studies and clinical trials. These risks are not exhaustive. For a detailed discussion of the risk factors that could affect the Company and the offering, please refer to the risk factors identified in the Company’s SEC reports, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2023, and its prospectus supplement. Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statements for any reason.

Contacts for Terns

Investors
Justin Ng
investors@ternspharma.com

Media
Jenna Urban
Berry & Company Public Relations
media@ternspharma.com

FAQ

How much did Terns Pharmaceuticals (TERN) raise in its recent public offering?

Terns Pharmaceuticals (TERN) raised approximately $172.7 million in gross proceeds from its recent public offering of common stock and pre-funded warrants.

What was the price per share for Terns Pharmaceuticals' (TERN) common stock in the offering?

The public offering price for Terns Pharmaceuticals' (TERN) common stock was $10.50 per share.

How many shares of common stock did Terns Pharmaceuticals (TERN) sell in the offering?

Terns Pharmaceuticals (TERN) sold 14,064,048 shares of common stock in the offering, including 2,145,000 shares from the full exercise of the underwriters' option.

What will Terns Pharmaceuticals (TERN) use the proceeds from the offering for?

Terns Pharmaceuticals (TERN) intends to use the net proceeds to fund research, clinical trials, development, and manufacturing of key product candidates, including TERN-701, TERN-601, and the TERN-800 series, as well as for working capital and general corporate purposes.