TERN Terns Pharmaceuticals Inc

Item 1.01 Entry into a Material Definitive Agreement.

On May 15, 2023, Terns Pharmaceuticals, Inc. (the “Company”) entered into a Sales Agreement (the “May 2023 Sales Agreement”), with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which the Company may offer and sell shares of its common stock, $0.0001 par value per share (“Common Stock”), having an aggregate offering price of up to $150,000,000 (the “Shares”) from time to time through Cowen. The Shares to be sold under the May 2023 Sales Agreement, if any, may be issued and sold pursuant to the Company’s shelf Registration Statement on Form S-3 (File No. 333-269508), which became effective on February 10, 2023 (the “Registration Statement”), a prospectus contained within the Registration Statement and a prospectus supplement, dated May 15, 2023, that the Company has filed with the Securities and Exchange Commission (together, the “May 2023 Prospectus”).

Upon delivery of a placement notice and subject to the terms and conditions of the May 2023 Sales Agreement, Cowen may sell Shares by any method that is deemed an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on or through The Nasdaq Global Select Market or any other trading market for the Company’s Common Stock.

The Company or Cowen may suspend the offering of Shares being made through Cowen under the May 2023 Sales Agreement upon proper notice to the other party, subject to certain conditions. Cowen, when acting as sales agent, will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Stock Market, Inc. to sell on the Company’s behalf all of the Shares requested to be sold by the Company. The Company also may sell Shares to Cowen as principal for its own account at a price agreed upon at the time of sale.

The compensation to Cowen for sales of Shares pursuant to the May 2023 Sales Agreement will be an amount up to 3.0% of the gross proceeds of any Shares sold under the May 2023 Sales Agreement. The Company has also agreed to provide indemnification and contribution to Cowen with respect to certain liabilities, including liabilities under the Securities Act.

A copy of the May 2023 Sales Agreement is attached as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the material terms of the May 2023 Sales Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the Company, has issued a legal opinion relating to the Shares. A copy of such legal opinion, including the consent included therein, is attached as Exhibit 5.1 hereto.

This Current Report on Form 8-K shall not constitute an offer to sell or solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of such state or jurisdiction.