Key Highlights
- Merck finalizes a $6.7 billion acquisition of Terns Pharmaceuticals to expand its oncology offerings
- The transaction provides Merck with TERN-701, a promising chronic myeloid leukemia candidate
- Shareholders will receive $53 per share, representing a 6% premium over previous closing price
- Clinical trial data revealed TERN-701 achieved a 75% major molecular response rate among participants
- Transaction completion is scheduled for Q2 2026, bringing an estimated $5.8 billion charge to Merck’s books
Merck revealed its intention to purchase Terns Pharmaceuticals on Wednesday in a transaction valued at $6.7 billion. This strategic acquisition represents Merck’s continued efforts to expand its drug portfolio ahead of patent expiration for Keytruda, currently the world’s top-selling prescription medication, which faces exclusivity loss later in this decade.
Keytruda brought in over $30 billion during 2025, accounting for roughly half of Merck’s entire revenue stream. The approaching patent cliff has prompted aggressive action from the pharmaceutical giant to secure its future revenue sources.
Beginning in 2021, Merck has expanded its late-stage development portfolio nearly threefold through a combination of internal research and strategic purchases. The $11.5 billion Acceleron acquisition stands as a prime example, adding pulmonary arterial hypertension treatment Winrevair to Merck’s product lineup.
The Terns transaction follows this established strategy.
The primary asset driving this acquisition is TERN-701, an investigational therapy under evaluation for chronic myeloid leukemia. CML represents a cancer type originating in bone marrow that triggers uncontrolled proliferation of leukemia cells.
Early-phase clinical research demonstrated TERN-701 achieved a 75% major molecular response rate among CML patients who had received prior treatments. This performance metric has captured analyst attention, with many viewing the candidate as a potential competitor to Scemblix, Novartis’ established leukemia therapy.
The FDA awarded TERN-701 Orphan Drug designation for CML treatment during March 2024.
Transaction Structure
Merck will pay $53 per share to acquire Terns, marking a 6% premium above the pre-announcement closing price. Terns shares climbed 5.5% during premarket hours after the deal became public.
The transaction timeline projects closure during the second quarter of 2026. Financial impacts include an expected charge of roughly $5.8 billion, translating to approximately $2.35 per share, affecting both quarterly and annual reporting periods.
Expanding Oncology Focus
Merck announced last month its plans to establish a dedicated division concentrating exclusively on oncology operations. The Terns purchase aligns directly with this corporate restructuring initiative.
Merck has approached this transformation methodically. The pharmaceutical company has pursued expansion opportunities years ahead of Keytruda’s patent expiration, building a robust pipeline through multiple acquisitions and advancing numerous development candidates.
While TERN-701 remains under investigation without regulatory approval, its early clinical performance combined with Orphan Drug status has positioned it among the most anticipated leukemia therapies currently in development.
The FDA’s Orphan Drug designation, awarded during March 2024 for CML treatment, provides Merck with additional regulatory advantages as the drug progresses through development stages.
