Terns Pharmaceuticals (TERN) Valuation Check After Expanded Global Rights To TERN-701
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Terns Pharmaceuticals (TERN) is back in focus after amending its agreement with Hansoh, shifting to an exclusive, sublicensable, royalty-bearing perpetual worldwide license for TERN-701 outside specified Asian territories.
See our latest analysis for Terns Pharmaceuticals.
The Hansoh amendment and recent equity inducement grants arrive after a sharp 102.42% 90 day share price return and a very large 1 year total shareholder return. However, the 30 day share price return of 8.20% and year to date share price return of 8.20% suggest some momentum has cooled in the short term.
If Terns’ move has you thinking more broadly about drug developers, it could be a good moment to scan other healthcare stocks that might fit your watchlist next.
With Terns trading at US$36.82 against an average analyst target of US$58.13 and recent momentum cooling after a very large 1 year return, investors may wonder whether there is still upside potential or if future growth is already reflected in the share price.
Terns Pharmaceuticals is trading on a P/B of 14.1x, which sits well above both its US Pharmaceuticals industry average and peer group, even after the recent share price pullback.
The P/B ratio compares the company’s market value to its book value, which is essentially net assets on the balance sheet. For early stage drug developers with limited or no revenue, investors often focus on P/B because earnings based metrics are less meaningful while products are still in clinical trials.
In Terns’ case, that 14.1x P/B is expensive compared to the US Pharmaceuticals industry average of 2.5x and the peer average of 3.2x. That gap suggests the market is assigning a much richer valuation to Terns’ asset base than to many peers, despite the company currently reporting no revenue and a net loss of $94.44m. With insufficient data to calculate a fair P/B ratio using the SWS model, there is no regression based anchor that points to a level the market could shift toward.
See what the numbers say about this price — find out in our valuation breakdown.
Result: Price-to-book of 14.1x (OVERVALUED).
However, that premium P/B multiple, ongoing net loss of US$94.44m, and dependence on successful trial outcomes could quickly challenge the current valuation narrative.
Find out about the key risks to this Terns Pharmaceuticals narrative.
If you look at this and think you would weigh the data differently, you can review the numbers yourself and shape a tailored view in minutes: Do it your way.
