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United States securities and exchange commission logo
December 7, 2020
Senthil Sundaram
Chief Executive Officer
Terns Pharmaceuticals, Inc.
1065 East Hillsdale Blvd., Suite 100
Foster City, California 94404
Re: Terns
Pharmaceuticals, Inc.
Draft Registration
Statement on Form S-1
Filed November 10,
2020
CIK No. 0001831363
Dear Mr. Sundaram:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Overview, page 1
1. We note the disclosure
that your programs are based on clinically-validated mechanisms
of action. Please
provide the basis for this statement.
2. We note your disclosure
that you received Fast Track designation from the FDA for
TERN-101 and TERN-201.
Please expand your disclosure to explicitly state
that fast track
designation does not guarantee an accelerated review by the FDA.
3. We note your statement
that in the Phase 1 clinical trials for TERN-101 no pruritus or
adverse lipid changes
were observed. Please explain what pruritus is and the effects of
the adverse lipid
changes that were observed in clinical trials for other FXR agonists.
Senthil Sundaram
FirstName LastNameSenthil
Terns Pharmaceuticals, Inc. Sundaram
Comapany7,
December NameTerns
2020 Pharmaceuticals, Inc.
December
Page 2 7, 2020 Page 2
FirstName LastName
4. Please include an organization chart showing your corporate structure.
Our Strategy, page 4
5. We note your statements that your goal is to develop and commercialize
"best-in-class"
therapies. This term suggests that your product candidates are
effective and likely to be
approved. Please delete these references throughout your document.
Risks Associated with Our Business, page 4
6. Please tell us your consideration of whether the PRC Scientific Data
Measures presents a
risk to your business that should be disclosed here. We note that you
may be restricted
from transferring your scientific data abroad, such as your
preclinical studies conducted
within China, or to your foreign partners in China. Please tell us
which parts of your
business are relevant to this consideration, including, but not
limited to, your preclincial
studies and any other clinical work that provides the basis for
current and future INDs or
other approvals with the FDA, and the relevant PRC approvals for
sending scientific
data abroad, or to your foreign partners in China. Please also clarify
the risk factor on
page 65 to disclose whether the PRC could prevent you from seeking
foreign approval and
commercialization of your product candidates.
Management's Discussion and Analysis
Net Loss Attributable to Noncontrolling Interest, page 89
7. Disclose the business reason for establishing Terns China, a financing
subsidiary, as a
variable interest entity, including relevant PRC foreign investment
rules and regulations.
Describe any operations and intended activities post China Conversion.
Management's Discussion and Alalysis of Financial Condition and Results of
Operations
Critical accounting policies and significant judgments and estimates
Common stock valuation methodology, page 100
8. Once you have an estimated offering price or range, please explain to
us how you
determined the fair value of the common stock underlying your equity
issuances and the
reasons for any differences between the recent valuations of your
common stock leading
up to the IPO and the estimated offering price. This information will
help facilitate our
review of your accounting for equity issuances including stock
compensation and
beneficial conversion features. Please discuss with the staff how to
submit your response.
Clinical validation of THR-beta agonism, page 121
9. Please identify the other NASH clinical studies described in this
section and the basis for
your belief that histological responses described here may be suitable
for accelerated
approval under current draft guidance from the FDA and the type of
accelerated approval
this would entail.
Senthil Sundaram
Terns Pharmaceuticals, Inc.
December 7, 2020
Page 3
Planned TERN-201 Phase 1b clinical trial, page 121
10. Please disclose the number of patients that you expect to enroll and the
endpoints of the
Phase 1b clinical trial for TERN-201. Please provide similar disclosure
for the planned
clinical trials for TERN-501 that you discuss on page 124.
Intellectual Property, page 129
11. Please clarify the number of patent families that are owned and the
number that are in-
licensed for TERN-101 and TERN-201.
TRN-000632 Exclusive Option and License agreement with Hansoh Pharmaceuticals,
page 134
12. We note the aggregate amount of milestone payments that Hansoh has
agreed to pay you
upon the achievement of pre-specified milestones. Please disclose
whether any milestone
payments have been made to date and the significant milestones that need
to be achieved
to receive the payments.
Notes to Consolidated Financial Statements
Note 1. Nature of the Business and Basis of Presentation
Variable Interest Entity, page F-7
13. Please tell us where you have complied with the disclosure requirements
under ASC 810-
50-3 or tell us why the disclosures are not warranted.
General
14. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
You may contact David Burton at 202-551-3626 or Sasha Parikh at
202-551-3627 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Chris Edwards at 202-551-6761 or Celeste Murphy at 202-551-3257 with
any other
questions.
Sincerely,
FirstName LastNameSenthil Sundaram
Division of
Corporation Finance
Comapany NameTerns Pharmaceuticals, Inc.
Office of Life
Sciences
December 7, 2020 Page 3
cc: Brian Cuneo
FirstName LastName