Merck (MRK) Seals $6.7B Deal for Terns Pharma (TERN) in Latest Cancer Portfolio Expansion

TLDR

• Merck finalizes $6.7 billion acquisition of Terns Pharmaceuticals to expand oncology portfolio
• Transaction centers on TERN-701, a promising chronic myeloid leukemia treatment candidate
• Purchase price set at $53 per share, representing a 6% premium over previous closing price
• Early clinical data showed TERN-701 achieved 75% major molecular response in treated patients
• Transaction anticipated to finalize in Q2 2026 with an estimated $5.8 billion accounting charge

Merck revealed Wednesday its intention to acquire Terns Pharmaceuticals in a transaction valued at up to $6.7 billion. This strategic purchase represents Merck’s continued effort to bolster its product pipeline ahead of the anticipated patent expiration of Keytruda, currently the world’s top-selling prescription medication, expected later in the decade.

Keytruda delivered over $30 billion in sales throughout 2025, representing approximately half of Merck’s entire revenue stream. The impending loss of market exclusivity presents a significant strategic challenge, prompting aggressive action from the pharmaceutical giant.

Since 2021, Merck has expanded its late-stage development portfolio nearly threefold through a combination of in-house research and strategic acquisitions. Notable among these was the $11.5 billion acquisition of Acceleron, which added Winrevair, a pulmonary arterial hypertension treatment, to Merck’s portfolio.

The Terns transaction follows this established strategic approach.

Merck & Co., Inc., MRK

The centerpiece of this acquisition is TERN-701, an investigational therapy under development for chronic myeloid leukemia. CML is a blood cancer originating in bone marrow that triggers abnormal proliferation of leukemia cells.

During early-phase clinical trials, TERN-701 demonstrated a 75% major molecular response rate among CML patients who had received prior treatments. This performance metric has captured analyst interest, with many viewing the compound as a potential competitor to Scemblix, Novartis’ established leukemia therapy.

The FDA awarded TERN-701 Orphan Drug designation for CML indication in March 2024.

Deal Terms

Merck has structured its offer at $53 per share for Terns, marking a 6% premium above the stock’s pre-announcement closing value. Terns shares climbed 5.5% during premarket trading after the announcement.

The transaction is projected to conclude during the second quarter of 2026. Merck expects to record an approximately $5.8 billion charge, translating to roughly $2.35 per share, which will impact both quarterly and annual financial statements.

Merck’s Broader Cancer Push

Last month, Merck unveiled plans to establish a separate business division dedicated exclusively to its oncology operations. The Terns acquisition aligns directly with this organizational restructuring.

Merck has adopted a proactive approach to this transformation. Rather than waiting for Keytruda’s patent protection to lapse, the company has been systematically securing acquisitions and advancing pipeline assets well ahead of the deadline.

While TERN-701 has not received regulatory approval, its encouraging preliminary results and Orphan Drug status have positioned it among the most closely monitored leukemia candidates currently in development.

The FDA’s Orphan Drug designation, granted in March 2024 for CML treatment, provides Merck with enhanced regulatory advantages should the compound progress through development.

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