What Terns Pharmaceuticals, Inc. told the SEC could break it.

Terns owns no manufacturing facilities and has no plans to build any; it relies completely on third-party contract manufacturers to produce all of its drug candidates for preclinical research and clinical trials (and intends to for any commercial supply). It does not have long-term agreements with these third parties, leaving its drug supply exposed to CMO capacity, quality, pricing and continuity risk that could stop, delay or raise the cost of its programs.

“We do not own or operate manufacturing facilities for the production of any of our drug candidates, nor do we have plans to develop our own manufacturing operations in the foreseeable future. We currently rely, and expect to continue to rely, on third-party contract manufacturers to manufacture all our drug candidates for preclinical research and clinical trials. We do not have long-term agreements with any of these third parties.”

Terns imports product candidates and materials from China under manufacturing service arrangements with WuXi, concentrating its drug supply in a Chinese CDMO at a time of escalating US-China biopharma tensions. Its exposure runs through two distinct policy mechanisms: (1) legislation (BIOSECURE-style) that may restrict US companies' engagement with Chinese firms providing biopharma R&D and manufacturing services such as WuXi, and (2) threatened tariffs of 100% or more on branded/patented drugs imported into the US by manufacturers that do not build domestically. Either could force a costly, time-consuming manufacturing transfer or raise input costs.

“The U.S. government has recently made statements and taken actions that could lead to changes to U.S. and international trade policies, including imposing several rounds of tariffs and trade restrictions affecting certain products manufactured in China, and enacting legislation that, may restrict certain engagement with certain Chinese companies that provide biopharmaceutical research, development, and manufacturing services.”