0000950170-23-063380 | 10-Q | XBRL Viewer | Terns Pharmaceuticals INC

Organization, Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Net Loss per Share (Details) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	8,715,363	4,973,722
Options to Purchase Common Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	8,295,869	4,760,085
Unvested restricted stock units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	364,594	100,880
Shares issuable under employee stock purchase plan
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	54,900	112,757

Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of Terns and its wholly owned subsidiaries Terns U.S. Opco and Terns Hong Kong and its wholly owned subsidiaries Terns China and Terns Suzhou. The Company’s condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any future period.

At-the-Market Offering

In March 2022, the Company entered into a Sales Agreement with Cowen and Company, LLC (Cowen) as sales agent, pursuant to which the Company has the ability to offer and sell, from time to time, through Cowen, shares of its common stock having an aggregate offering price of up to $75.0 million in an at-the-market offering. The shares are offered pursuant to the Company's shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC), which became effective on March 14, 2022. As of September 30, 2023, there were 7,052,550 shares of our common stock sold for aggregate net proceeds of $52.8 million after deducting commissions and offering expenses pursuant to this agreement. The Company sold 2,929,922 shares for aggregate net proceeds of $27.9 million pursuant to this agreement during the nine months ended September 30, 2023.

In May 2023, the Company entered into a Sales Agreement with Cowen as sales agent, pursuant to which the Company has the ability to offer and sell, from time to time, through Cowen, shares of its common stock having an aggregate offering price of up to $150.0 million in an at-the-market offering. The shares are offered pursuant to the Company's shelf registration statement on Form S-3 filed with the SEC, which became effective on February 10, 2023. There were no sales of the Company's common stock pursuant to this agreement through September 30, 2023.

August 2022 Financing

In August 2022, the Company issued 12,250,000 shares of its common stock at a price of $2.42 per share and, to certain investors in lieu of common stock, pre-funded warrants to purchase 14,630,000 shares of common stock at a price of $2.4199 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant. Aggregate net proceeds were $60.7 million after deducting underwriting discounts and commissions and offering expenses.

The pre-funded warrants were classified as a component of permanent stockholders’ equity within additional paid-in capital and were recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The Company valued the pre-funded warrants at issuance, concluding that their sales price approximated their fair value, and allocated net proceeds from the sale proportionately to the common stock and pre-funded warrants, of which $33.0 million was allocated to the pre-funded warrants and recorded as a component of additional paid-in capital.

December 2022 Financing

In December 2022, the Company entered into an Underwriting Agreement with Jefferies LLC and Cowen and Company, LLC, as representatives of the several underwriters, relating to the underwritten public offering of 10,350,000 shares of the Company's common stock at a public offering price per share of $7.25. Under the terms of the Underwriting Agreement, the Company granted the underwriters an option, exercisable within 30 days from the date of the Underwriting Agreement, to purchase up to 1,552,500 additional shares of common stock, which the Underwriters exercised in full. Aggregate net proceeds were $80.8 million after deducting underwriting discounts and commissions and offering expenses.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the estimates for accruals of research and development expenses, accrual of research contract costs, unrecognized tax benefits, fair value of common stock and stock option valuations. On an ongoing basis, the Company evaluates its estimates and judgments, using historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Unaudited Interim Financial Information

These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K (the Annual Report) for the fiscal year ended December 31, 2022, as filed with the SEC on March 27, 2023. There have been no significant changes to the Company's significant accounting policies described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Form 10-K for the fiscal year ended December 31, 2022.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of standard checking accounts and money market funds. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents.

The Company classifies as available-for-sale marketable securities with a remaining maturity when purchased of greater than three months. The Company’s marketable securities are maintained by investment managers and consist of U.S. government and non-U.S. government securities, corporate debt securities and commercial paper. Debt securities are carried at fair value with the unrealized gains and losses included in other comprehensive loss as a component of stockholders’ equity until realized. Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity. Amortization and accretion of premiums and discounts are recorded in interest income and/or expense.

The Company assesses its available-for-sale debt securities for impairment as of each reporting date in order to determine if a portion of any decline in fair value below carrying value is the result of a credit loss. The Company records credit losses in the consolidated statements of operations and comprehensive loss as credit loss expense within other expense, net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.

Interest receivable related to the Company's available-for-sale debt securities is presented as marketable securities on the Company's condensed consolidated balance sheets. The Company writes off interest receivable once it has determined that the asset is not realizable. To date, the Company has not written off any interest receivables associated with its marketable securities.

Operating Leases and Rent Expense

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, upon lease commencement, the Company records a lease liability which represents the Company’s obligation to make lease payments arising from the lease, and a corresponding right-of-use (ROU) asset which represents the Company’s right to use an underlying asset during the lease term.

Operating lease right-of-use assets and liabilities are recognized on the balance sheet at the lease commencement date based on the present value of the future minimum lease payments over the lease term. In determining the net present value of the lease payments, the Company uses its incremental borrowing rate applicable to the underlying asset unless the implicit rate is readily determinable. Any lease incentives received are deferred and recorded as a reduction of the ROU asset and amortized over the term of the lease. The Company does not separate lease and non-lease components and instead treats them as a single component. Rent expense, comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term. The Company determines the lease term as the noncancellable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

The Company elected to not apply the recognition requirements of the new leasing standard to short term leases with terms of 12 months or less. As a result, leases with a term of 12 months or less are not recognized on the balance sheet.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, stock-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs, including fees paid to consultants and contract research organizations, or CROs, in connection with nonclinical studies and clinical trials and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation and analysis. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Costs incurred in obtaining technology licenses are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.

The Company has from time to time entered into various research and development and other agreements with commercial firms, researchers, universities and others for provisions of goods and services. These agreements are generally cancelable, and the related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. Since inception, the Company’s historical accrual estimates have not been materially different from the actual costs.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2023		December 31, 2022
Research and development costs	$	1,991	$	1,209
Compensation and benefit costs		3,697		3,843
Accrued professional fees		1,975		925
Other		392		185
Total accrued expenses and other current liabilities	$	8,055	$	6,162

Executive Leadership Transition

In August 2023, the Company and Senthil Sundaram, former Chief Executive Officer, entered into a separation agreement. Pursuant to the separation agreement, Mr. Sundaram is entitled to receive severance in the amount of $0.6 million and 100% of his annual target discretionary bonus for 2023 in the amount of $0.3 million. During the three and nine months ended September 30, 2023, the Company recorded an accrued liability and recognized expense of $0.9 million related to the departure of the former Chief Executive Officer. These accruals are presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative. The vesting of each equity award held by Mr. Sundaram will be fully accelerated as of December 31, 2023. As a result of the change in service period for all outstanding unvested option grants to the Company’s former Chief Executive Officer in August 2023, the Company recognized $10.5 million in stock-based compensation expense during the three and nine months ended September 30, 2023. The expense was recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

In August 2023, Bryan Yoon, Chief Operating Officer and General Counsel, and Mark Vignola, Ph.D., Chief Financial Officer, received retention awards payable in cash in the aggregate amount of $0.5 million for Mr. Yoon and $0.7 million for Dr. Vignola. Each retention award will be payable in two installments of 33% of the award on February 1, 2024 and 67% of the award on August 1, 2024, subject to the applicable officer’s continued employment with the Company through such date. Expense is recognized on a straight-line basis over the requisite service period. During the three and nine months ended September 30, 2023, the Company recorded an accrued liability and recognized expense of $0.2 million related to the retention awards. These accruals are presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

Income Taxes

The provision for income taxes primarily relates to projected federal, state and foreign income taxes. To determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Income taxes are computed using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements. In estimating future tax consequences, the Company considers all expected future events including the enactment of changes in tax laws or rates. A valuation allowance is recorded, if necessary, to reduce net deferred tax assets to their realizable values if management does not believe it is more likely than not that the net deferred tax assets will be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

The Company assesses accounting for uncertainty in income taxes by modeling for the recognition, measurement and disclosure in financial statements any uncertain income tax positions that the Company has taken or expects to take on a tax return. As of each balance sheet date, unresolved uncertain tax positions are reassessed. The Company accrues interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes.

The Company recorded income tax expense for the three months ended September 30, 2023 and 2022 of less than $0.1 million. The Company recorded income tax expense for the nine months ended September 30, 2023 and 2022 of $0.2 million and less than $0.1 million, respectively. The expenses are primarily related to foreign income tax expenses from China.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

Stock-based compensation expense, including grants of stock options and restricted stock unit awards issued under the Company’s equity incentive plan and rights to acquire stock granted under the Company’s employee stock purchase plan (ESPP), is measured at the grant date based on the fair value of the awards and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The Company’s determination of the fair value of stock options with time-based vesting and rights to acquire stock under the ESPP utilizes the Black-Scholes option-pricing model. The Company lacks sufficient company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The Company estimates risk-free rates using the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term and dividend yield using the Company’s expectations and historical data. The Company uses the simplified method to calculate the expected term of stock option grants as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Under the simplified method, the expected term is estimated to be the mid-point between the vesting date and the contractual term of the option. The fair value of each stock option grant and right to acquire stock under the ESPP is calculated based upon the Company’s common stock valuation on the date of the grant. The Company accounts for forfeitures of stock option grants as they occur.

Net Loss Per Share of Common Stock

The Company follows the two-class method when computing net income (loss) per share of common stock as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share of common stock for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net income (loss) per share of common stock is computed by dividing the net income (loss) per share of common stock by the weighted average number of shares of common stock outstanding for the period. The weighted-average shares of common stock outstanding as of September 30, 2023 included pre-funded warrants that were issued in connection with the August 2022 Financing, as the warrants were issued for minimal consideration and were immediately exercisable.

Diluted net income (loss) per share of common stock is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of shares of common stock outstanding for the period, including potential dilutive shares. For purposes of this calculation, outstanding stock options and convertible preferred stock are considered potential dilutive shares. The Company’s convertible preferred stock outstanding prior to the IPO contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to such securities.

The Company reported a net loss for the three and nine months ended September 30, 2023 and 2022. In periods in which the Company reported a net loss, diluted net loss per share of common stock was the same as basic net loss per share of common stock, since dilutive shares were not assumed to have been issued if their effect is anti-dilutive. The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss attributable to common stockholders per share of common stock for the periods indicated because including them would have had an anti-dilutive effect:


	September 30,
	2023		2022
Options to purchase common stock		8,295,869		4,760,085
Unvested restricted stock units		364,594		100,880
Shares issuable under employee stock purchase plan		54,900		112,757
Total		8,715,363		4,973,722

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded as a reduction to the carrying value of stockholders’ equity as a reduction of additional paid-in capital or equity generated as a result of such offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations and comprehensive loss.

Commitments and Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. For all periods presented, the Company was not a party to any pending material litigation or other material legal proceedings.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). Under the JOBS Act, emerging growth companies have extended transition periods available for complying with new or revised accounting standards. The Company has elected to use this exemption to delay adopting new or revised accounting standards until such time as those standards apply to private companies. Where allowable, the Company has early adopted certain standards as described below.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. For non-public entities, ASU 2016-13 is effective for annual reporting periods, and interim periods within those fiscal years, beginning after December 15, 2022. Under the JOBS Act, emerging growth companies have extended transition periods available for complying with new or revised accounting standards. The Company adopted the new standard on January 1, 2023 on a prospective basis and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

There are no recently issued accounting pronouncements not yet adopted in the period.

Common Stock and Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	$ 14,083	$ 2,686	$ 22,254	$ 8,081
Research and Development Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	1,400	795	4,324	2,252
General and Administrative Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total stock-based compensation expense	$ 12,683	$ 1,891	$ 17,930	$ 5,829

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(i)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(ii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 26: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(iii)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 27: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(iv)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

Reference 28: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (f)(2)(v)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480429/718-10-50-2

+ Details

Assignment, License and Collaboration Agreements

9 Months Ended

Sep. 30, 2023

Assignment License And Collaboration Agreements [Abstract]

Assignment, License and Collaboration Agreements

6. Assignment, License and Collaboration Agreements

TERN-101 License Agreement with Eli Lilly

In February 2018, the Company entered into a worldwide exclusive license agreement with Eli Lilly and Company (Lilly) (Lilly FXR 2018 License Agreement). Under the terms of the Lilly FXR 2018 License Agreement, Lilly granted the Company an exclusive, royalty-bearing license to make, have made, use, offer for sale, sell, import, and have imported, including all rights to develop, manufacture, and commercialize covered products in the field in the territory and a sublicensing right that allows the Company to grant sublicenses to affiliates and third parties to perform any portion of the development, manufacture, and commercialization of covered products. The Company is required to use commercially reasonable efforts to meet development event milestones, develop the covered product in the field in mainland China and commercialize the covered product in the field in mainland China.

The Company agreed to pay Lilly up to an aggregate of $6.0 million in pre-specified development milestones for the first covered product in mainland China, and up to an aggregate of $50.0 million in pre-specified development milestones for the first covered product in ex-mainland China. The Company also agreed to pay Lilly tiered royalties calculated on a calendar year basis, in the mid-single digits to low teens on net sales ranging from the low hundreds of millions of dollars to the low billions of dollars. The Lilly FXR 2018 License Agreement expires upon expiry of the last remaining royalty obligation for a licensed product. As of September 30, 2023, the Company has not paid any amounts under the agreement and no milestones have been achieved. The Company has not recorded any research and development expense during the three and nine months ended September 30, 2023 and 2022 related to this agreement.

Assignment Agreement

In June 2019, the Company entered into an assignment agreement with Vintagence Biotechnology Ltd. (Vintagence) (Vintagence 2019 Assignment Agreement). Under the terms of the Vintagence 2019 Assignment Agreement, Vintagence assigned and agreed to assign to the Company any and all worldwide rights, title, and interest in and to the Vintagence technology and gave Terns a sublicensing right that allows the Company to grant sublicenses to any of its affiliates and/or to licensees or contractors to perform any portion of the development, manufacture, and/or commercialization of covered compounds or covered products. The Company will remain directly responsible for all amounts owed to Vintagence under this agreement, regardless of sublicenses. The Company is required to use commercially reasonable efforts to commercialize the covered product in the field in the major markets.

The Company paid Vintagence a non-refundable, non-creditable upfront payment of $0.7 million, which was recorded as research and development expense in the Company’s statements of operations and comprehensive loss for the year ended December 31, 2019. In addition, pursuant to the terms of the Vintagence 2019 Assignment Agreement, the Company agreed to pay Vintagence up to CNY 205.0 million in development milestones for the first covered product. The term of the Vintagence 2019 Assignment Agreement will continue in effect on a country-by-country basis until all milestone payments are made. The Company has the right to terminate the agreement in its entirety or on a covered product-by-covered product and country-by-country basis, in its sole discretion by giving 60 days advance written notice to Vintagence. As of September 30, 2023, the Company has paid $4.4 million to Vintagence which includes a milestone payment of $1.5 million in connection with the Company’s IND filing for TERN-501 in December 2020 and a milestone payment of $2.2 million in connection with the initiation of dosing in the Phase 2a DUET trial in July 2022. The Company has not recognized any research and development expense during the three and nine months ended September 30, 2023 related to this agreement. The Company has recognized research and development expense of $2.2 million during the three and nine months ended September 30, 2022 related to this agreement.

Hansoh Option and License Agreement

In July 2020, the Company entered into an exclusive option and license agreement with Hansoh (Shanghai) Healthtech Co., Ltd. (Hansoh Healthtech) and Jiangsu Hansoh Pharmaceutical Group Company Ltd. (Jiangsu Hansoh) (collectively, Hansoh) (Hansoh 2020 Option and License Agreement). Under the terms of the Hansoh 2020 Option and License Agreement, the Company granted Hansoh an exclusive, non-transferable, non-sublicensable, fully-paid, royalty-free license to conduct preliminary studies on the licensed compound (TERN-701, formerly known as TRN-000632) with an option to exclusively license the same for development and commercialization of licensed products in all prophylactic, palliative, therapeutic and/or diagnostic uses in connection with all human diseases and disorders (including development and research activities on animal models thereof) in the field of oncology, including all types of cancers (Field) in mainland China, Taiwan, Hong Kong and Macau (collectively, the Territory). In November 2021, Hansoh exercised its option and was granted an exclusive, royalty-bearing license, with the right to sublicense to exploit licensed compound and licensed products in the Field and in the Territory.

Under the Hansoh 2020 Option and License Agreement, Hansoh was required to pay the Company a refundable, non-creditable upfront payment. The Company received an upfront payment of $0.8 million during the year ended December 31, 2020, which was recognized as a refund liability and presented within accrued expenses and other current liabilities on the consolidated balance sheets as of December 31, 2020. In connection with Hansoh’s exercise of its option in November 2021, the Company recognized $1.0 million in license fee revenue within the consolidated statements of operations and comprehensive loss during the year ended December 31, 2021.

In addition, pursuant to the Hansoh 2020 Option and License Agreement, Hansoh has agreed to pay the Company up to $67.0 million in pre-specified clinical, regulatory and sales milestones. Hansoh must also pay the Company royalties in the mid-single digits based on net sales of all licensed products. The term of the Hansoh 2020 Option and License Agreement will continue until the end of the last-to-expire royalty term. As of September 30, 2023, no milestones have been met and future payments are all constrained.

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net loss	$ (69,191)	$ (44,523)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	22,254	8,081
Depreciation and amortization expense	220	391
(Accretion) amortization on marketable securities	(3,530)	647
Change in deferred taxes and uncertain tax positions	96	39
Amortization of operating lease assets	441	408
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,784)	(2,301)
Accounts payable	1,959	(251)
Accrued expenses and other current liabilities	1,957	66
Operating lease liabilities	(496)	(455)
Net cash used in operating activities	(48,074)	(37,898)
Cash flows from investing activities:
Purchase of property and equipment	(8)	(241)
Purchase of investments	(270,763)	(91,720)
Proceeds from sales and maturities of investments	185,552	84,235
Net cash used in investing activities	(85,219)	(7,726)
Cash flows from financing activities:
Net proceeds from issuance of common stock in at-the-market offering	27,924	0
Proceeds from stock option exercises	268	0
Net proceeds from the issuance of common stock and pre-funded warrants	0	61,145
Payment of deferred offering costs	(344)	(144)
Proceeds from issuance of common stock under employee stock purchase plan	241	124
Net cash provided by financing activities	28,089	61,125
Effect of exchange rate changes on cash and cash equivalents	(138)	(223)
Net (decrease) increase in cash and cash equivalents	(105,342)	15,278
Cash and cash equivalents at beginning of period	143,235	47,699
Cash and cash equivalents at end of period	37,893	62,977
Supplemental disclosure of cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	540	508
Supplemental disclosure of non-cash activities:
Right-of-use assets obtained in exchange for lease liabilities	65	1,601
Deferred offering costs included in accounts payable and accrued expense	$ 0	$ 282

Fair Value (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at September 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	12,923	$	—	$	—	$	12,923
Money market funds		23,879		—		—		23,879
U.S. government securities		—		1,091		—		1,091
Total cash and cash equivalents	$	36,802	$	1,091	$	—	$	37,893
Marketable securities
U.S. government securities	$	—	$	228,707	$	—	$	228,707
Total marketable securities	$	—	$	228,707	$	—	$	228,707

	Fair Value at December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	120,206	$	—	$	—	$	120,206
Money market funds		23,029		—		—		23,029
Total cash and equivalents	$	143,235	$	—	$	—	$	143,235
Marketable securities
U.S. government securities	$	—	$	44,203	$	—	$	44,203
Non-U.S. government securities		—		3,008		—		3,008
Corporate debt securities		—		36,265		—		36,265
Commercial paper		—		56,403		—		56,403
Total marketable securities	$	—	$	139,879	$	—	$	139,879

Schedule of Aggregate Fair Value of Marketable Securities

The aggregate amortized cost and fair value of marketable securities as of September 30, 2023, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	173,674	$	173,478
Due after one year through two years		55,459		55,229
Total marketable securities	$	229,133	$	228,707

Common Stock and Stock-Based Compensation - Schedule of Common Stock Shares Reserved for Issuance (Details) - shares	Sep. 30, 2023	Dec. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	23,527,952	22,323,490
Options Outstanding Under Incentive Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	8,295,869	4,823,928
Unvested shares of restricted stock units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	364,594	128,280
Shares Available for Future Grant under Incentive Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	918,577	1,107,362
Shares Available for Future Grant under Employee Stock Purchase Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	746,412	323,920
Shares Available for Future Grant Under Employment Inducement Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	3,451,000	1,310,000
Pre-funded warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	9,751,500	14,630,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

4. Leases

In March 2019, the Company entered into a lease agreement for office space in Foster City, California which expires October 2024. The Company has the option to extend the lease agreement for a period of five years. Additionally, the Company leases office space in Shanghai and Suzhou China.

Components of lease cost are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost	$	160	$	145	$	482	$	450
Short-term cost		4		13		12		40
Total lease cost	$	164	$	158	$	494	$	490

Weighted-average remaining lease term								1.09
Weighted-average discount rate								6.00	%

The Company's future minimum lease payments are as follows:


(in thousands)	Operating Leases
2023	$	180
2024		618
2025 and thereafter		—
Total lease payments		798
Less: Imputed interest		(28	)
Present value of lease liabilities		770
Less: Current portion of lease liabilities		(707	)
Total lease liabilities, non-current	$	63

Condensed Consolidated Statements of Stockholders Equity (Unaudited)(Parenthetical) $ in Thousands	3 Months Ended
	Sep. 30, 2022 USD ($)
Statement of Stockholders' Equity [Abstract]
Stock issuance cost	$ 426

Cash Equivalents and Marketable Securities - Schedule of Available-for-sale Marketable Securities for Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Less than 12 months, fair value	$ 173,469	$ 22,717
Less than 12 months, unrealized losses	(447)	(108)
12 months or longer, fair value	0	43,242
12 months or longer, unrealized losses	0	(437)
Total fair value	173,469	65,959
Total unrealized losses	(447)	(545)
U.S. government securities
Marketable Securities [Line Items]
Less than 12 months, fair value	173,469	0
Less than 12 months, unrealized losses	(447)	0
12 months or longer, fair value	0	29,704
12 months or longer, unrealized losses	0	(384)
Total fair value	173,469	29,704
Total unrealized losses	$ (447)	(384)
Non-U.S. government securities
Marketable Securities [Line Items]
Less than 12 months, fair value		0
Less than 12 months, unrealized losses		0
12 months or longer, fair value		3,008
12 months or longer, unrealized losses		(15)
Total fair value		3,008
Total unrealized losses		(15)
Corporate debt securities
Marketable Securities [Line Items]
Less than 12 months, fair value		22,717
Less than 12 months, unrealized losses		(108)
12 months or longer, fair value		10,530
12 months or longer, unrealized losses		(38)
Total fair value		33,247
Total unrealized losses		$ (146)

Organization, Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Organization, Basis of Presentation and Summary of Significant Accounting Policies

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Terns Pharmaceuticals, Inc. (Terns) is a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases including oncology, obesity and non-alcoholic steatohepatitis (NASH).

Terns was incorporated as an exempted company in the Cayman Islands in December 2016. In December 2020, the Company effected a de-registration of the Company in the Cayman Islands and a domestication in the State of Delaware, pursuant to which it became a Delaware corporation. Terns owns all of the share capital of Terns Pharmaceutical HongKong Limited (Terns Hong Kong) and Terns, Inc., a Delaware corporation (Terns U.S. Opco). Terns Hong Kong holds all of the share capital of Terns China Biotechnology Co., Ltd. (organized in Shanghai, People’s Republic of China (PRC)) (Terns China) and Terns (Suzhou) Biotechnology Co., Ltd. (organized in Suzhou, PRC) (Terns Suzhou).

Basis of Presentation

At-the-Market Offering

August 2022 Financing

December 2022 Financing

Summary of Significant Accounting Policies

Use of Estimates

Unaudited Interim Financial Information

Cash, Cash Equivalents and Marketable Securities

Operating Leases and Rent Expense

Research and Development Expenses

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2023		December 31, 2022
Research and development costs	$	1,991	$	1,209
Compensation and benefit costs		3,697		3,843
Accrued professional fees		1,975		925
Other		392		185
Total accrued expenses and other current liabilities	$	8,055	$	6,162

Executive Leadership Transition

Income Taxes

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

Net Loss Per Share of Common Stock


	September 30,
	2023		2022
Options to purchase common stock		8,295,869		4,760,085
Unvested restricted stock units		364,594		100,880
Shares issuable under employee stock purchase plan		54,900		112,757
Total		8,715,363		4,973,722

Deferred Offering Costs

Commitments and Contingencies

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

There are no recently issued accounting pronouncements not yet adopted in the period.

Common Stock and Stock-Based Compensation - Summary of Restricted Stock Award Activity (Details) - Restricted Stock	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number of Shares
Number of Shares, Unvested restricted common stock, beginning balance \| shares	128,280
Number of Shares, Granted \| shares	291,076
Number of Shares, Vested \| shares	(34,762)
Number of Shares, Forfeited \| shares	(20,000)
Number of Shares, Unvested restricted common stock, ending balance \| shares	364,594
Grant-Date Fair Value
Grant-Date Fair Value, Unvested restricted common stock, beginning balance \| $ / shares	$ 4.09
Grant-Date Fair Value, Granted \| $ / shares	10.21
Grant-Date Fair Value, Vested \| $ / shares	3.42
Grant-Date Fair Value, Forfeited \| $ / shares	7.04
Grant-Date Fair Value, Unvested restricted common stock, ending balance \| $ / shares	$ 8.87

Cash Equivalents and Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Fair Value And Amortized Cost of Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	September 30, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	23,879	$	—	$	—		$	23,879
U.S. government securities		230,225		20		(447	)		229,798
Total	$	254,104	$	20	$	(447	)	$	253,677

Classified as:
Cash equivalents								$	24,970
Marketable securities									228,707
Total								$	253,677

	December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	23,029	$	—	$	—		$	23,029
U.S. government securities		44,555		31		(383	)		44,203
Non-U.S. government securities		3,024		—		(16	)		3,008
Corporate debt securities		36,411		—		(146	)		36,265
Commercial paper		56,403		—		—			56,403
Total	$	163,422	$	31	$	(545	)	$	162,908

Classified as:
Cash equivalents								$	23,029
Marketable securities									139,879
Total								$	162,908

Schedule of Available-for-sale Marketable Securities for Unrealized Loss Position

The aggregate fair value of the Company’s available-for-sale marketable securities that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer is as follows:


	September 30, 2023
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	173,469	$	(447	)	$	—	$	—		$	173,469	$	(447	)
Total	$	173,469	$	(447	)	$	—	$	—		$	173,469	$	(447	)

	December 31, 2022
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	—	$	—		$	29,704	$	(384	)	$	29,704	$	(384	)
Non-U.S. government securities		—		—			3,008		(15	)		3,008		(15	)
Corporate debt securities		22,717		(108	)		10,530		(38	)		33,247		(146	)
Total	$	22,717	$	(108	)	$	43,242	$	(437	)	$	65,959	$	(545	)

Fair Value - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Fair Value Disclosures [Abstract]
Liabilities, Transfers into Level 3	$ 0
Assets, Transfers into Level 3	$ 0

Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional paid-in capital	Accumulated Other Comprehensive Loss	Accumulated deficit
Balances at Dec. 31, 2021	$ 160,303	$ 3	$ 342,711	$ (338)	$ (182,073)
Balance at Beginning of period (in shares) at Dec. 31, 2021		25,269,271
Stock-based compensation expense	2,744		2,744
Unrealized gain (loss) on available-for-sale securities	(551)			(551)
Foreign exchange translation adjustment	(7)			(7)
Net loss	(13,773)				(13,773)
Balances at Mar. 31, 2022	148,716	$ 3	345,455	(896)	(195,846)
Balance at end of period (in shares) at Mar. 31, 2022		25,269,271
Balances at Dec. 31, 2021	160,303	$ 3	342,711	(338)	(182,073)
Balance at Beginning of period (in shares) at Dec. 31, 2021		25,269,271
Foreign exchange translation adjustment	(198)
Balances at Sep. 30, 2022	183,694	$ 4	411,634	(1,348)	(226,596)
Balance at end of period (in shares) at Sep. 30, 2022		37,613,829
Balances at Dec. 31, 2021	160,303	$ 3	342,711	(338)	(182,073)
Balance at Beginning of period (in shares) at Dec. 31, 2021		25,269,271
Balances at Dec. 31, 2022	276,943	$ 5	520,178	(822)	(242,418)
Balance at end of period (in shares) at Dec. 31, 2022		53,723,171
Balances at Mar. 31, 2022	148,716	$ 3	345,455	(896)	(195,846)
Balance at Beginning of period (in shares) at Mar. 31, 2022		25,269,271
Exercise of stock options (in shares)		10,000
Issuance of common stock under employee stock purchase plan	124		124
Issuance of common stock under employee stock purchase plan (in shares)		84,558
Stock-based compensation expense	2,651		2,651
Unrealized gain (loss) on available-for-sale securities	(292)			(292)
Foreign exchange translation adjustment	(53)			(53)
Net loss	(13,930)				(13,930)
Balances at Jun. 30, 2022	137,216	$ 3	348,230	(1,241)	(209,776)
Balance at end of period (in shares) at Jun. 30, 2022		25,363,829
Issuance of common stock in connection with exercise of pre-funded warrants	60,719	$ 1	60,718
Issuance of common stock in connection with exercise of pre-funded warrants, shares		12,250,000
Stock-based compensation expense	2,686		2,686
Unrealized gain (loss) on available-for-sale securities	31			31
Foreign exchange translation adjustment	(138)			(138)
Net loss	(16,820)				(16,820)
Balances at Sep. 30, 2022	183,694	$ 4	411,634	(1,348)	(226,596)
Balance at end of period (in shares) at Sep. 30, 2022		37,613,829
Balances at Dec. 31, 2022	276,943	$ 5	520,178	(822)	(242,418)
Balance at Beginning of period (in shares) at Dec. 31, 2022		53,723,171
Issuance of common stock in at-the-market offering	27,924		27,924
Issuance of common stock in at-the-market offering, Shares		2,929,922
Vesting of restricted stock units (in shares)		16,503
Stock-based compensation expense	3,938		3,938
Unrealized gain (loss) on available-for-sale securities	418			418
Foreign exchange translation adjustment	(12)			(12)
Net loss	(21,528)				(21,528)
Balances at Mar. 31, 2023	287,683	$ 5	552,040	(416)	(263,946)
Balance at end of period (in shares) at Mar. 31, 2023		56,669,596
Balances at Dec. 31, 2022	276,943	$ 5	520,178	(822)	(242,418)
Balance at Beginning of period (in shares) at Dec. 31, 2022		53,723,171
Foreign exchange translation adjustment	(101)
Balances at Sep. 30, 2023	258,425	$ 6	570,864	(836)	(311,609)
Balance at end of period (in shares) at Sep. 30, 2023		61,785,216
Balances at Mar. 31, 2023	287,683	$ 5	552,040	(416)	(263,946)
Balance at Beginning of period (in shares) at Mar. 31, 2023		56,669,596
Exercise of stock options	248		248
Exercise of stock options (in shares)		95,176
Issuance of common stock under employee stock purchase plan	241		241
Issuance of common stock under employee stock purchase plan (in shares)		114,739
Issuance of common stock in connection with exercise of pre-funded warrants		$ 1	(1)
Issuance of common stock in connection with exercise of pre-funded warrants, shares		4,174,960
Vesting of restricted stock units (in shares)		10,552
Stock-based compensation expense	4,233		4,233
Unrealized gain (loss) on available-for-sale securities	(298)			(298)
Foreign exchange translation adjustment	(61)			(61)
Net loss	(17,896)				(17,896)
Balances at Jun. 30, 2023	274,150	$ 6	556,761	(775)	(281,842)
Balance at end of period (in shares) at Jun. 30, 2023		61,065,023
Exercise of stock options	20		20
Exercise of stock options (in shares)		9,000
Issuance of common stock in connection with exercise of pre-funded warrants, shares		703,486
Vesting of restricted stock units (in shares)		7,707
Stock-based compensation expense	14,083		14,083
Unrealized gain (loss) on available-for-sale securities	(33)			(33)
Foreign exchange translation adjustment	(28)			(28)
Net loss	(29,767)				(29,767)
Balances at Sep. 30, 2023	$ 258,425	$ 6	$ 570,864	$ (836)	$ (311,609)
Balance at end of period (in shares) at Sep. 30, 2023		61,785,216

Condensed Consolidated Balance Sheets(Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 37,893	$ 143,235
Marketable securities	228,707	139,879
Prepaid expenses and other current assets	3,855	2,071
Total current assets	270,455	285,185
Property and equipment, net	526	757
Operating lease assets	671	1,047
Other assets	35	37
Total assets	271,687	287,026
Current liabilities:
Accounts payable	3,325	1,645
Accrued expenses and other current liabilities	8,055	6,162
Current portion of operating lease liabilities	707	661
Total current liabilities	12,087	8,468
Taxes payable, non-current	1,112	1,071
Operating lease liabilities, non-current	63	544
Total liabilities	13,262	10,083
Commitments and contingencies
Stockholders' equity:
Common stock, $0.0001 par value, 150,000,000 shares authorized at September 30, 2023 and December 31, 2022; 61,785,216 and 53,723,171 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	6	5
Additional paid-in capital	570,864	520,178
Accumulated other comprehensive loss	(836)	(822)
Accumulated deficit	(311,609)	(242,418)
Total stockholders' equity	258,425	276,943
Total liabilities and stockholders' equity	$ 271,687	$ 287,026

Common Stock and Stock-Based Compensation - Summary of Stock Option Activity (Details) - Stock Options $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares
Number of Shares
Number of Shares, Outstanding beginning balance \| shares	4,823,928
Number of Shares, Granted \| shares	4,104,000
Number of Shares, Exercised \| shares	(104,176)
Number of Shares, Forfeited \| shares	(527,883)
Number of Shares, Outstanding ending balance \| shares	8,295,869	4,823,928
Number of Shares, Exercisable \| shares	3,292,030
Number of Shares, Vested and expected to vest \| shares	8,295,869
Weighted-Average Exercise Price
Weighted-Average Exercise Price, Outstanding beginning balance \| $ / shares	$ 8.22
Weighted-Average Exercise Price, Granted \| $ / shares	9.68
Weighted-Average Exercise Price, Exercised \| $ / shares	2.57
Weighted-Average Exercise Price, Forfeited \| $ / shares	6.63
Weighted-Average Exercise Price, Outstanding ending balance \| $ / shares	9.11	$ 8.22
Weighted-Average Exercise Price, Exercisable \| $ / shares	8.61
Weighted-Average Exercise Price, Vested and expected to vest \| $ / shares	$ 9.11
Weighted-Average Remaining Contractual Term and Aggregate Intrinsic Value
Weighted-Average Remaining Contractual Term, Outstanding	8 years 6 months	8 years 5 months 15 days
Weighted-Average Remaining Contractual Term, Exercisable	7 years 6 months
Weighted-Average Remaining Contractual Term, Vested and expected to vest	8 years 6 months
Aggregate Intrinsic Value, Outstanding, beginning balance \| $	$ 11,721
Aggregate Intrinsic Value, Exercised \| $	917
Aggregate Intrinsic Value, Outstanding, ending balance \| $	919	$ 11,721
Aggregate Intrinsic Value, Exercisable \| $	733
Aggregate Intrinsic Value, Vested and expected to vest \| $	$ 919

Cash Equivalents and Marketable Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Cash Equivalents and Marketable Securities

2. Cash Equivalents and Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	September 30, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	23,879	$	—	$	—		$	23,879
U.S. government securities		230,225		20		(447	)		229,798
Total	$	254,104	$	20	$	(447	)	$	253,677

Classified as:
Cash equivalents								$	24,970
Marketable securities									228,707
Total								$	253,677

	December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	23,029	$	—	$	—		$	23,029
U.S. government securities		44,555		31		(383	)		44,203
Non-U.S. government securities		3,024		—		(16	)		3,008
Corporate debt securities		36,411		—		(146	)		36,265
Commercial paper		56,403		—		—			56,403
Total	$	163,422	$	31	$	(545	)	$	162,908

Classified as:
Cash equivalents								$	23,029
Marketable securities									139,879
Total								$	162,908


	September 30, 2023
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	173,469	$	(447	)	$	—	$	—		$	173,469	$	(447	)
Total	$	173,469	$	(447	)	$	—	$	—		$	173,469	$	(447	)

	December 31, 2022
	Less than 12 months					12 months or longer					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government securities	$	—	$	—		$	29,704	$	(384	)	$	29,704	$	(384	)
Non-U.S. government securities		—		—			3,008		(15	)		3,008		(15	)
Corporate debt securities		22,717		(108	)		10,530		(38	)		33,247		(146	)
Total	$	22,717	$	(108	)	$	43,242	$	(437	)	$	65,959	$	(545	)

At September 30, 2023, the Company had 52 available-for-sale marketable securities in an unrealized loss position without an allowance for credit losses. The Company does not intend to sell these securities and the Company believes it is more likely than not that marketable securities in an unrealized loss position will be held until maturity and that the Company will not be required to sell these securities before recovery of their amortized cost basis. The Company believes that an allowance for credit losses is unnecessary as the securities are of high credit quality and the decline in fair value is due to market conditions and/or changes in interest rates.

Common Stock and Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Common Stock and Stock-Based Compensation

5. Common Stock and Stock-Based Compensation

The Company is authorized to issue 150,000,000 shares of common stock and 10,000,000 shares of preferred stock. All classes of stock have a par value of $0.0001. There were no shares of preferred stock outstanding as of September 30, 2023 and December 31, 2022.

The Company had reserved shares of common stock for issuance in connection with the following:


	September 30, 2023		December 31, 2022
Options outstanding under incentive award plans		8,295,869		4,823,928
Unvested restricted stock units		364,594		128,280
Shares available for future grant under incentive award plans		918,577		1,107,362
Shares available for future grant under employee stock purchase plans		746,412		323,920
Shares available for future grant under employment inducement award plans		3,451,000		1,310,000
Pre-funded warrants		9,751,500		14,630,000
Total shares reserved		23,527,952		22,323,490

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, if any, as may be declared by the Company’s board of directors, subject to the preferential dividend rights of the convertible preferred stock. Through September 30, 2023, no cash dividends have been declared or paid by the Company.

Stock-Based Compensation Plans

The Company has three stock-based compensation plans, the 2017 Incentive Award Plan (the “2017 Plan”), the 2021 Incentive Award Plan (the “2021 Plan”) and the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”). Although awards made under the 2017 Plan continue to be governed by its terms, the 2017 Plan was terminated at the time of our IPO and no further awards are made under this plan. The 2021 Plan, while effective, authorizes the granting of equity awards to employees and directors of the Company, as well as non-employee consultants. The 2022 Inducement Plan authorizes the granting of equity awards to newly hired employees of the Company.

2021 Incentive Award Plan

In January 2021, the Company's board of directors approved the 2021 Plan which permits the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards and other stock awards to employees, directors, officers and consultants. In February 2021, 2,400,007 shares were authorized for issuance under the 2021 Plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) the amount equal to 5% of the number of shares issued and outstanding on the last day of the immediately preceding fiscal year or (ii) such lower number of shares as may be determined by the Company’s board of directors. The 2021 Plan is the successor to the 2017 Incentive Award Plan and no additional awards may be issued from the 2017 Plan. However, the 2017 Plan will continue to govern the terms and conditions of the outstanding awards granted under this plan. Shares of common stock subject to awards granted under the 2017 Plan that are forfeited or lapse unexercised and which following the effective date of the 2021 Plan are not issued under the 2017 Plan will be available for issuance under the 2021 Plan. The number of authorized shares reserved for issuance under the 2021 Plan was increased by 2,686,158 shares effective as of January 1, 2023. As of September 30, 2023, 918,577 shares of the Company’s common stock were available for future grants under the 2021 Plan.

2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the “2021 ESPP”) was approved by the Company’s board of directors in January 2021. In February 2021, a total of 240,000 shares were initially reserved for issuance under this plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) 1% of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the Company’s board of directors. The number of authorized shares reserved for issuance under the 2021 ESPP was increased by 537,231 shares effective as of January 1, 2023. As of September 30, 2023, 746,412 shares of the Company’s common stock were available for future grants under the 2021 ESPP.

Under the 2021 ESPP, eligible employees may select a rate of payroll deduction up to 15% of their eligible compensation subject to certain maximum purchase limitations. The duration for each offering period is 24 months and is divided into four purchase periods of approximately six months in length. Offerings are concurrent. The purchase price of the shares under the offering is the lesser of 85% of the fair market value of the shares on the offering date or 85% of the fair market value of the shares on the purchase date. A look-back feature in the 2021 ESPP causes the offering period to automatically reset if the fair value of the Company’s common stock on the last day of the purchase period is less than that on the original offering date. 2021 ESPP purchases by employees are settled with newly-issued common stock from the 2021 ESPP’s previously authorized and available pool of shares.

As of September 30, 2023, there was $0.6 million of unrecognized stock-based compensation expense related to unvested employee stock purchases. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 1.57 years as of September 30, 2023. There were 114,739 and 84,558 shares purchased by employees under the 2021 ESPP during the nine months ended September 30, 2023 and 2022, respectively.

2022 Employment Inducement Award Plan

In September 2022, the Company's compensation committee approved the 2022 Employment Inducement Award Plan (the "2022 Inducement Plan"), which authorized 1,400,000 shares of common stock to be issued and permitted the granting of nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards to newly hired employees and officers. In September 2023, the Company approved an amendment to the 2022 Inducement Plan which increased the number of authorized shares reserved for issuance by 3,113,250 shares. As of September 30, 2023, 3,451,000 shares of the Company's common stock were available for future grants under the 2022 Inducement Plan.

Pre-Funded Warrants

In connection with the August 2022 Financing, the Company sold pre-funded warrants to purchase 14,630,000 shares of common stock at a price of $2.4199 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant. As of September 30, 2023, 4,878,500 pre-funded warrants have been exercised.

Stock Options

Stock options granted to employees and non-employees under the plans generally vest over four years and allow the holder of the option to purchase common stock at a stated exercise price. Options granted under the plans generally expire ten years after the date of grant. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

The following table summarizes the stock option activity for all stock plans during the nine months ended September 30, 2023:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2022		4,823,928		$	8.22		8.46	$	11,721
Granted		4,104,000			9.68
Exercised		(104,176	)		2.57				917
Forfeited		(527,883	)		6.63
Outstanding as of September 30, 2023		8,295,869		$	9.11		8.50	$	919
Exercisable, September 30, 2023		3,292,030		$	8.61		7.50	$	733
Vested and expected to vest, September 30, 2023		8,295,869		$	9.11		8.50	$	919

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

As of September 30, 2023, there was $24.1 million of unrecognized stock-based compensation expense related to unvested stock options which is estimated to be recognized over a period of 2.68 years.

Restricted Stock Units

Restricted stock units (RSUs) granted to employees under the plans generally vest over four years. The number of shares issued on the date the RSUs vest is net of the minimum statutory tax withholdings, which are paid in cash to the appropriate taxing authorities on behalf of the Company’s employees. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

The following table summarizes the RSU activity for all stock plans during the nine months ended September 30, 2023:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2022		128,280		$	4.09
Granted		291,076			10.21
Vested		(34,762	)		3.42
Forfeited		(20,000	)		7.04
Unvested restricted stock units as of September 30, 2023		364,594		$	8.87

As of September 30, 2023, there was $2.7 million of unrecognized stock-based compensation expense related to RSUs which is estimated to be recognized over a period of 3.13 years.

Stock-Based Compensation Expense

The Company estimated the fair value of options granted and rights to acquire stock granted under the Company’s employee stock purchase plan using a Black-Scholes option pricing model with the following assumptions presented on a weighted average basis:


	Nine Months Ended September 30,
	2023			2022
Stock Option Plans
Expected term (years)		6.05			5.99
Expected volatility		73.79	%		72.69	%
Risk-free interest rate		3.58	%		2.21	%
Fair value of underlying common stock	$	9.68		$	4.32
Weighted average grant-date fair value per share	$	6.53		$	2.82
Employee Stock Purchase Plans
Expected term (years)		1.26			0.75
Expected volatility		86.49	%		70.86	%
Risk-free interest rate		4.85	%		1.89	%
Fair value of underlying common stock	$	11.30		$	1.66
Weighted average grant-date fair value per share	$	5.82		$	0.65

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Research and development expense	$	1,400	$	795	$	4,324	$	2,252
General and administrative expense		12,683		1,891		17,930		5,829
Total stock-based compensation expense	$	14,083	$	2,686	$	22,254	$	8,081

Leases - Schedule of Components of lease cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating lease cost	$ 160	$ 145	$ 482	$ 450
Short-term cost	4	13	12	40
Total lease cost	$ 164	$ 158	$ 494	$ 490
Weighted-average remaining lease term	1 year 1 month 2 days		1 year 1 month 2 days
Weighted-average discount rate	6.00%		6.00%

Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Schedule of components of lease cost

Components of lease cost are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Operating lease cost	$	160	$	145	$	482	$	450
Short-term cost		4		13		12		40
Total lease cost	$	164	$	158	$	494	$	490

Weighted-average remaining lease term								1.09
Weighted-average discount rate								6.00	%

Schedule of future minimum lease payments required under operating leases

The Company's future minimum lease payments are as follows:


(in thousands)	Operating Leases
2023	$	180
2024		618
2025 and thereafter		—
Total lease payments		798
Less: Imputed interest		(28	)
Present value of lease liabilities		770
Less: Current portion of lease liabilities		(707	)
Total lease liabilities, non-current	$	63

Leases - Schedule of maturities of operating leases (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Operating Leases
2023	$ 180
2024	618
2025 and thereafter	0
Total lease payments	798
Less: Imputed interest	(28)
Present value of lease liabilities	770
Less: Current obligation of lease liabilities	(707)	$ (661)
Total lease liabilities, non-current	$ 63

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Fair Value - Schedule of Aggregate Amortized Cost and Fair Value of Marketable Securities (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Fair Value Disclosures [Abstract]
Due in one year or less	$ 173,674
Due after one year through two years	55,459
Total marketable securities	229,133
Due in one year or less	173,478
Due after one year through two years	55,229
Total marketable securities	$ 228,707

Common Stock and Stock-Based Compensation - Additional Information (Details)		1 Months Ended		9 Months Ended
	Jan. 01, 2023 shares	Sep. 30, 2023 USD ($) $ / shares shares	Feb. 28, 2021 shares	Sep. 30, 2023 USD ($) Plan Vote $ / shares shares	Sep. 30, 2022 shares	Dec. 31, 2022 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, voting rights				Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends
Number of voting rights per share \| Vote				1
Cash dividends declared or paid \| $				$ 0
Number of stock-based compensation plans \| Plan				3
Number of shares authorized		150,000,000		150,000,000		150,000,000
Preferred stock, shares authorized		10,000,000		10,000,000
Preferred stock, par or stated value per share \| $ / shares		$ 0.0001		$ 0.0001
Common stock, par value \| $ / shares		$ 0.0001		$ 0.0001		$ 0.0001
Preferred Stock, Shares Outstanding		0		0		0
Pre-funded warrant exercise price \| $ / shares		$ 0.0001		$ 0.0001		$ 0.0001
Initial total shares reserved		23,527,952		23,527,952		22,323,490
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grants				4,104,000
Unrecognized stock-based compensation expense related to unvested stock options \| $		$ 24,100,000		$ 24,100,000
Unrecognized stock-based compensation expense recognized period				2 years 8 months 4 days
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense related to unvested stock options \| $		$ 2,700,000		$ 2,700,000
Unrecognized stock-based compensation expense recognized period				3 years 1 month 17 days
2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, number of shares authorized			2,400,007
Increase of number of authorized shares reserved for issuance under the 2021 Plan	2,686,158
Share-based payment award, shares available for future grants		918,577		918,577
Increase of authorized shares, percent of common stock outstanding			5.00%
2017 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase of number of authorized shares reserved for issuance under the 2021 Plan			0
2021 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase of number of authorized shares reserved for issuance under the 2021 Plan	537,231
Share-based payment award, shares available for future grants		746,412		746,412
Initial total shares reserved			240,000
Shares purchased by employees under the ESPP				114,739	84,558
Increase of authorized shares, percent of common stock outstanding			1.00%
Unrecognized stock-based compensation expense recognized period				1 year 6 months 25 days
Percentage of fair market value of the shares on the offering date				85.00%
Percentage of fair market value of the shares on the purchase date				85.00%
Unrecognized stock-based compensation expense related to unvested employee stock purchases \| $		$ 600,000		$ 600,000
2021 Employee Stock Purchase Plan \| Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Based Compensation Rate of Payroll Deduction				15.00%
2022 Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares authorized		1,400,000		1,400,000
Increase of number of authorized shares reserved for issuance under the 2021 Plan		3,113,250
Shares available for future grants				3,451,000
Pre-funded warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Pre Funded warrants exercised		4,878,500		4,878,500
Common stock, par value \| $ / shares		$ 0.0001		$ 0.0001
Pre-funded warrants to purchase		14,630,000		14,630,000
Pre-funded warrant price \| $ / shares		$ 2.4199		$ 2.4199
Pre-funded warrant exercise price \| $ / shares		$ 0.0001		$ 0.0001

Condensed Consolidated Balance Sheets(Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	150,000,000	150,000,000
Common stock, shares issued	61,785,216	53,723,171
Common stock, shares outstanding	61,785,216	53,723,171

Cash Equivalents and Marketable Securities (Additional Information) (Details)	Sep. 30, 2023 Position
Investments, Debt and Equity Securities [Abstract]
Securities, available-for-sale, unrealized loss position, number of positions	52

Common Stock and Stock-Based Compensation - Schedule of Stock Options Weighted Average Assumptions (Details) - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Employee Stock Purchase Plans
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected option life	1 year 3 months 3 days	9 months
Expected volatility	86.49%	70.86%
Risk-free interest rate	4.85%	1.89%
Fair value of underlying common stock	$ 11.3	$ 1.66
Weighted average grant-date fair value per share	$ 5.82	$ 0.65
Stock Options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected option life	6 years 18 days	5 years 11 months 26 days
Expected volatility	73.79%	72.69%
Risk-free interest rate	3.58%	2.21%
Fair value of underlying common stock	$ 9.68	$ 4.32
Weighted average grant-date fair value per share	$ 6.53	$ 2.82

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Organization, Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Research and development costs	$ 1,991	$ 1,209
Compensation and benefit costs	3,697	3,843
Accrued professional fees	1,975	925
Other	392	185
Total accrued expenses and other current liabilities	$ 8,055	$ 6,162

Fair Value - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Assets:
Marketable securities	$ 228,707
Recurring
Assets:
Total cash and cash equivalents	37,893	$ 143,235
Marketable securities	228,707	139,879
Recurring \| Cash in bank balances
Assets:
Total cash and cash equivalents	12,923	120,206
Recurring \| Money market funds
Assets:
Total cash and cash equivalents	23,879	23,029
Recurring \| U.S. government securities
Assets:
Total cash and cash equivalents	1,091
Marketable securities	228,707	44,203
Recurring \| Non-U.S. government securities
Assets:
Marketable securities		3,008
Recurring \| Corporate debt securities
Assets:
Marketable securities		36,265
Recurring \| Commercial paper
Assets:
Marketable securities		56,403
Recurring \| Level 1
Assets:
Total cash and cash equivalents	36,802	143,235
Recurring \| Level 1 \| Cash in bank balances
Assets:
Total cash and cash equivalents	12,923	120,206
Recurring \| Level 1 \| Money market funds
Assets:
Total cash and cash equivalents	23,879	23,029
Recurring \| Level 2
Assets:
Total cash and cash equivalents	1,091
Marketable securities	228,707	139,879
Recurring \| Level 2 \| U.S. government securities
Assets:
Total cash and cash equivalents	1,091
Marketable securities	$ 228,707	44,203
Recurring \| Level 2 \| Non-U.S. government securities
Assets:
Marketable securities		3,008
Recurring \| Level 2 \| Corporate debt securities
Assets:
Marketable securities		36,265
Recurring \| Level 2 \| Commercial paper
Assets:
Marketable securities		$ 56,403

Organization, Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	September 30, 2023		December 31, 2022
Research and development costs	$	1,991	$	1,209
Compensation and benefit costs		3,697		3,843
Accrued professional fees		1,975		925
Other		392		185
Total accrued expenses and other current liabilities	$	8,055	$	6,162

Schedule of Antidilutive Securities Excluded from Computation of Net Loss per Share


	September 30,
	2023		2022
Options to purchase common stock		8,295,869		4,760,085
Unvested restricted stock units		364,594		100,880
Shares issuable under employee stock purchase plan		54,900		112,757
Total		8,715,363		4,973,722

Organization, Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended			9 Months Ended		12 Months Ended
	Aug. 31, 2023	Aug. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Common stock, authorized			150,000,000			150,000,000		150,000,000
Common stock, par value			$ 0.0001			$ 0.0001		$ 0.0001
Other Accrued Liabilities, Current			$ 392			$ 392		$ 185
Preferred stock, shares authorized			10,000,000			10,000,000
Preferred stock, par or stated value per share			$ 0.0001			$ 0.0001
Income tax expense			$ 58	$ 13		$ 190	$ 40
Foreign Country [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Income tax expense			100	$ 100		200	$ 100
Mr. Sundaram
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Severance Costs	$ 600
Other Accrued Liabilities, Current			900			900
Stock-Based Compensation Expense			10,500			10,500
Discretionary Bonus	100.00%
Discretionary Bonus Amount	$ 300
Mr. Yoon
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Retention awards payable	500
Dr. Vignola
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Retention awards payable	$ 700
Mr. Yoon and Dr. Vignola
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Other Accrued Liabilities, Current			$ 200			$ 200
December 2022 Financing [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued								10,350,000
Underwriters option to purchase additional shares								1,552,500
Net proceeds from issuance of common stock								$ 80,800
Shares issued, price per share								$ 7.25
At-the-Market Offering [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued						2,929,922
Net proceeds from issuance of common stock						$ 27,900
Offer price					$ 75,000
At-the-Market Offering [Member] \| Common Stock
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued						7,052,550
Net proceeds from issuance of common stock						$ 52,800
August 2022 Financing [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued		12,250,000
Net proceeds from issuance of common stock		$ 33,000
Common stock, par value		$ 0.0001
Shares issued, price per share		$ 2.42
Aggregate net proceeds after deducting underwriting discounts and commissions and other offering expenses common stock		$ 60,700
Pre-funded warrant price		$ 2.4199
Pre-funded warrants purchased		14,630,000
Sales Agreement With Cowen
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Offer price						$ 150,000

Fair Value

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value

3. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are defined below:

•

Level 1—Quoted prices in active markets for identical assets or liabilities at the measurement date.

•

Level 2—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the Company’s other assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at September 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	12,923	$	—	$	—	$	12,923
Money market funds		23,879		—		—		23,879
U.S. government securities		—		1,091		—		1,091
Total cash and cash equivalents	$	36,802	$	1,091	$	—	$	37,893
Marketable securities
U.S. government securities	$	—	$	228,707	$	—	$	228,707
Total marketable securities	$	—	$	228,707	$	—	$	228,707

	Fair Value at December 31, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	120,206	$	—	$	—	$	120,206
Money market funds		23,029		—		—		23,029
Total cash and equivalents	$	143,235	$	—	$	—	$	143,235
Marketable securities
U.S. government securities	$	—	$	44,203	$	—	$	44,203
Non-U.S. government securities		—		3,008		—		3,008
Corporate debt securities		—		36,265		—		36,265
Commercial paper		—		56,403		—		56,403
Total marketable securities	$	—	$	139,879	$	—	$	139,879

The aggregate amortized cost and fair value of marketable securities as of September 30, 2023, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	173,674	$	173,478
Due after one year through two years		55,459		55,229
Total marketable securities	$	229,133	$	228,707

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Assignment, License and Collaboration Agreements - Additional Information (Details) $ in Thousands, ¥ in Millions		1 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Nov. 30, 2021 USD ($)	Jul. 31, 2022 USD ($)	Jul. 31, 2020 USD ($)	Jun. 30, 2019 CNY (¥)	Feb. 28, 2018 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
TERN-101 License Agreement with Eli Lilly
Assignment License And Collaboration Agreements [Line Items]
Agreement milestones payment								$ 0
Research and development expense						$ 0	$ 0	0	$ 0
TERN-101 License Agreement with Eli Lilly \| China
Assignment License And Collaboration Agreements [Line Items]
Aggregate pre-specified development milestones for the first covered product					$ 6,000
Aggregate pre-specified development milestones for the first covered product in ex-mainland					$ 50,000
Assignment Agreement
Assignment License And Collaboration Agreements [Line Items]
Aggregate pre-specified development milestones for the first covered product \| ¥				¥ 205.0
Research and development expense						$ 0	$ 2,200	0	$ 2,200
Amount paid under the agreement								$ 4,400
Number of days advance written notice								60 days
Milestone payment								$ 1,500
Assignment Agreement \| Research and Development Expense
Assignment License And Collaboration Agreements [Line Items]
Upfront payment											$ 700
Hansoh Option and License Agreement
Assignment License And Collaboration Agreements [Line Items]
Upfront payment received										$ 800
License revenue	$ 1,000
Hansoh Option and License Agreement \| Maximum
Assignment License And Collaboration Agreements [Line Items]
Amount agree to pay in pre-specified clinical, regulatory and sales milestones			$ 67,000
Phase 2a DUET
Assignment License And Collaboration Agreements [Line Items]
Milestone payment		$ 2,200

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Nov. 03, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Registrant Name	Terns Pharmaceuticals, Inc.
Entity Central Index Key	0001831363
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		61,794,522
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-39926
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-1448275
Entity Address Address Line1	1065 East Hillsdale Blvd
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Foster City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94404
City Area Code	650
Local Phone Number	525-5535
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	TERN
Security Exchange Name	NASDAQ

Leases (Additional Information) (Details)	Mar. 31, 2019
Lease Agreements [Member] \| Foster City, California
Lessor, Lease, Description [Line Items]
Option to extend	The Company has the option to extend the lease agreement for a period of five years

Common Stock and Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Common Stock Shares Reserved for Issuance

he Company had reserved shares of common stock for issuance in connection with the following:


	September 30, 2023		December 31, 2022
Options outstanding under incentive award plans		8,295,869		4,823,928
Unvested restricted stock units		364,594		128,280
Shares available for future grant under incentive award plans		918,577		1,107,362
Shares available for future grant under employee stock purchase plans		746,412		323,920
Shares available for future grant under employment inducement award plans		3,451,000		1,310,000
Pre-funded warrants		9,751,500		14,630,000
Total shares reserved		23,527,952		22,323,490

Summary of Stock Option Activity

The following table summarizes the stock option activity for all stock plans during the nine months ended September 30, 2023:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2022		4,823,928		$	8.22		8.46	$	11,721
Granted		4,104,000			9.68
Exercised		(104,176	)		2.57				917
Forfeited		(527,883	)		6.63
Outstanding as of September 30, 2023		8,295,869		$	9.11		8.50	$	919
Exercisable, September 30, 2023		3,292,030		$	8.61		7.50	$	733
Vested and expected to vest, September 30, 2023		8,295,869		$	9.11		8.50	$	919

Schedule of Stock Options Weighted Average Assumptions


	Nine Months Ended September 30,
	2023			2022
Stock Option Plans
Expected term (years)		6.05			5.99
Expected volatility		73.79	%		72.69	%
Risk-free interest rate		3.58	%		2.21	%
Fair value of underlying common stock	$	9.68		$	4.32
Weighted average grant-date fair value per share	$	6.53		$	2.82
Employee Stock Purchase Plans
Expected term (years)		1.26			0.75
Expected volatility		86.49	%		70.86	%
Risk-free interest rate		4.85	%		1.89	%
Fair value of underlying common stock	$	11.30		$	1.66
Weighted average grant-date fair value per share	$	5.82		$	0.65

Summary of Restricted Stock Award Activity

The following table summarizes the RSU activity for all stock plans during the nine months ended September 30, 2023:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2022		128,280		$	4.09
Granted		291,076			10.21
Vested		(34,762	)		3.42
Forfeited		(20,000	)		7.04
Unvested restricted stock units as of September 30, 2023		364,594		$	8.87

Schedule of Stock-based Compensation Expense

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Research and development expense	$	1,400	$	795	$	4,324	$	2,252
General and administrative expense		12,683		1,891		17,930		5,829
Total stock-based compensation expense	$	14,083	$	2,686	$	22,254	$	8,081

Cash Equivalents and Marketable Securities - Schedule of Fair Value And Amortized Cost of Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Amortized Cost	$ 254,104	$ 163,422
Unrealized Gains	20	31
Unrealized Losses	(447)	(545)
Fair Value	253,677	162,908
Cash equivalents	24,970	23,029
Marketable securities	228,707	139,879
Total	253,677	162,908
Money market funds
Marketable Securities [Line Items]
Amortized Cost	23,879	23,029
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	23,879	23,029
U.S. government securities
Marketable Securities [Line Items]
Amortized Cost	230,225	44,555
Unrealized Gains	20	31
Unrealized Losses	(447)	(383)
Fair Value	$ 229,798	44,203
Non-U.S. government securities
Marketable Securities [Line Items]
Amortized Cost		3,024
Unrealized Gains		0
Unrealized Losses		(16)
Fair Value		3,008
Corporate debt securities
Marketable Securities [Line Items]
Amortized Cost		36,411
Unrealized Gains		0
Unrealized Losses		(146)
Fair Value		36,265
Commercial paper
Marketable Securities [Line Items]
Amortized Cost		56,403
Unrealized Gains		0
Unrealized Losses		0
Fair Value		$ 56,403

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating expenses:
Research and development	$ 14,831	$ 12,161	$ 46,038	$ 28,959
General and administrative	18,353	5,131	32,462	16,242
Total operating expenses	33,184	17,292	78,500	45,201
Loss from operations	(33,184)	(17,292)	(78,500)	(45,201)
Other income:
Interest income	3,480	499	9,568	782
Other expense, net	(5)	(14)	(69)	(64)
Total other income, net	3,475	485	9,499	718
Loss before income taxes	(29,709)	(16,807)	(69,001)	(44,483)
Income tax expense	(58)	(13)	(190)	(40)
Net loss	$ (29,767)	$ (16,820)	$ (69,191)	$ (44,523)
Net loss per share, basic	$ (0.42)	$ (0.44)	$ (0.98)	$ (1.5)
Net loss per share, diluted	$ (0.42)	$ (0.44)	$ (0.98)	$ (1.5)
Weighted average common stock outstanding, basic	71,530,180	38,511,655	70,897,320	29,743,579
Weighted average common stock outstanding, diluted	71,530,180	38,511,655	70,897,320	29,743,579
Other comprehensive loss:
Net loss	$ (29,767)	$ (16,820)	$ (69,191)	$ (44,523)
Unrealized (loss) gain on available-for-sale securities, net of tax	(33)	31	87	(812)
Foreign exchange translation adjustment, net of tax	(28)	(138)	(101)	(198)
Comprehensive loss	$ (29,828)	$ (16,927)	$ (69,205)	$ (45,533)