ORBIMED Sells $125M TERN Stake After 858% Surge

ORBIMED Advisors sold 5.4 million shares of Terns Pharmaceuticals (TERN) worth approximately $125 million in Q4 2025, according to an SEC filing. The transaction reduced ORBIMED's stake from over 7.5 million shares to just over 2.1 million shares remaining. This sell-off occurred after TERN stock delivered an extraordinary 858% return over the past year, dramatically outperforming the S&P 500.

The timing is significant as TERN shares reached $39.58 at the time of the filing, representing a massive valuation surge for a clinical-stage biotech company. ORBIMED maintained a smaller position worth approximately $85 million, indicating they haven't completely exited their investment.

Despite the substantial sale, TERN still represented 1.78% of ORBIMED's reportable assets under management after the transaction. The fund's top holdings include EWTX, LLY, and BSX, showing a diversified biotech and healthcare portfolio.

TERN's market capitalization now stands at $4.29 billion despite reporting negative net income of $94.44 million over the trailing twelve months. This disconnect highlights the speculative nature of clinical-stage biotech investing where valuations depend entirely on pipeline potential rather than current financials.

When a sophisticated healthcare investor like ORBIMED takes profits of this magnitude, it often signals they believe the stock has reached full valuation or that risk-reward has become less favorable. ORBIMED's partial exit suggests they're locking in gains while maintaining some exposure to TERN's upside potential.

For TERN specifically, the timing is crucial as the company approaches important clinical milestones for its NASH and obesity pipeline. The 858% rally priced in significant success, meaning any clinical setbacks could trigger substantial downside. ORBIMED's move might indicate they want to reduce risk ahead of binary trial results.

The transaction highlights the delicate balance biotech investors face between riding momentum and managing risk. While TERN's story remains compelling with multiple clinical candidates, the valuation now demands near-perfect execution and positive data readouts.

For the broader biotech sector, ORBIMED's continued large positions in established players like Lilly (LLY) and Edwards Lifesciences (EW) suggests they favor companies with proven revenue streams alongside their speculative biotech bets. This balanced approach might offer lessons for retail investors navigating high-risk, high-reward healthcare investments.