Merck's $6.7B Terns Buyout Bolsters Leukemia Drug Pipeline

Merck Moves to Secure Oncology Future with Terns Acquisition

Merck & Co. announced on Wednesday its definitive agreement to acquire Terns Pharmaceuticals, a clinical-stage oncology company, for approximately $1.7 billion. The all-cash deal, priced at $13.00 per share, is a strategic move by the pharmaceutical giant to fortify its cancer treatment portfolio, particularly as it faces the upcoming patent expiration of its blockbuster drug, Keytruda. The acquisition centers on Terns' lead candidate, TERN-701, a promising oral therapy for chronic myeloid leukemia (CML).

This transaction underscores Merck's proactive strategy to diversify its revenue streams and reduce its reliance on Keytruda, which accounted for over $10 billion in sales in 2025, representing about half of the company's total revenue. The acquisition of Terns and its hematology assets signals a significant investment in the future of Merck's oncology division.

Financial Details of the Transaction

The agreement values Terns at an approximate equity value of $1.7 billion, which equates to about $1.7 billion net of acquired cash. The $13.00 per share offer represents a 6% premium over Terns' closing stock price on March 24, 2026, and a more substantial 31% premium to the 60-day volume-weighted average price. The deal has received unanimous approval from the boards of directors of both companies.

Merck anticipates the transaction will be accounted for as an asset acquisition and is expected to close in the second quarter of 2026. Upon closing, Merck will record a one-time charge of approximately $1.8 billion, or $1.35 per share, which will affect its second-quarter and full-year 2026 financial results. The completion is contingent upon customary conditions, including regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act and a majority of Terns' stockholders tendering their shares.

Spotlight on TERN-701: A New Hope for CML Patients

The cornerstone of the acquisition is TERN-701, an investigational, oral allosteric BCR::ABL1 tyrosine kinase inhibitor (TKI). This drug is being developed for patients with chronic myeloid leukemia who have previously been treated with at least one other TKI but experienced treatment failure or intolerance. CML is a type of blood and bone marrow cancer characterized by the overproduction of white blood cells.

TERN-701 is currently being evaluated in a Phase 1/2 clinical trial known as the CARDINAL study. The drug has shown significant promise in early trials, demonstrating a 75% major molecular response rate among treated patients. This performance has positioned it as a potential best-in-class candidate and a future competitor to existing CML therapies. In recognition of its potential for treating a rare condition, the U.S. Food and Drug Administration (FDA) granted TERN-701 an Orphan Drug designation in March 2024, which provides incentives for its development.

Strategic Importance for Merck's Pipeline

Robert M. Davis, chairman and chief executive officer of Merck, stated that the acquisition builds on the company's growing presence in hematology. "This transaction further diversifies and strengthens our position in oncology as we continue to look for opportunities to broaden our portfolio into other therapeutic areas," he said. The move aligns with Merck's recent decision to establish a dedicated business division for its oncology operations, signaling a focused effort to lead in cancer treatment innovation long after Keytruda's patents expire.

For Terns, the deal provides an opportunity to accelerate the development of its lead candidate. Amy Burroughs, chief executive officer of Terns, commented, "By working together, we will advance TERN-701, leveraging the deep expertise and significant resources at Merck, a global biopharmaceutical leader with a proven track record of delivering cancer breakthroughs for patients who need them most."

Market Reaction and Terns' Performance

The announcement was preceded by significant investor speculation, which fueled a remarkable surge in Terns Pharmaceuticals' stock value. Over the past 12 months, Terns' stock (TERN) had rallied an extraordinary 1,406%, and it had increased six-fold in the last six months alone. Following the official announcement, the stock traded over 4% higher in premarket trading, reflecting market approval of the deal's terms.

Path Forward

With board approvals secured, the acquisition's finalization now depends on shareholder and regulatory consent. The tender offer initiated by a Merck subsidiary will require a majority of Terns' outstanding shares to be committed. The successful integration of Terns' operations and the continued clinical development of TERN-701 will be critical milestones for Merck in the coming months. This acquisition is a clear statement of Merck's intent to remain a dominant force in the oncology landscape for years to come.