Key Highlights
- Terns Pharmaceuticals is being purchased by Merck in a $6.7 billion transaction to enhance oncology capabilities
- Merck gains rights to TERN-701, a clinical-stage drug targeting chronic myeloid leukemia
- The offer price stands at $53 per share, representing a 6% premium over previous closing price
- Clinical trials demonstrated TERN-701 achieved a 75% major molecular response in patients
- Transaction completion is slated for Q2 2026 with an anticipated $5.8 billion accounting charge
Merck revealed Wednesday its intention to purchase Terns Pharmaceuticals in a transaction valued at up to $6.7 billion. This strategic acquisition represents the pharmaceutical giant’s ongoing effort to diversify its product portfolio ahead of Keytruda’s looming patent expiration in the coming years.
Keytruda brought in over $30 billion during 2025 and accounted for roughly half of Merck’s entire revenue stream. The impending loss of patent protection poses a significant challenge, prompting aggressive strategic planning.
Since 2021, Merck has expanded its late-stage development pipeline nearly threefold through both in-house research and strategic acquisitions. Notable transactions include the $11.5 billion Acceleron purchase, which added Winrevair, a pulmonary arterial hypertension treatment, to its portfolio.
The Terns transaction continues this strategic approach.
The primary asset driving this acquisition is TERN-701, an investigational therapy currently in development for chronic myeloid leukemia. CML originates in bone marrow tissue and causes abnormal proliferation of leukemia cells.
Early clinical data showed TERN-701 delivered a 75% major molecular response rate among CML patients who had received prior therapy. This performance metric has captured analyst interest, with many viewing the compound as a potential competitor to Novartis’ Scemblix in the leukemia market.
TERN-701 received FDA Orphan Drug designation for CML in March 2024.
Transaction Structure
Merck has proposed $53 per share to acquire Terns, marking a 6% premium above the pre-announcement closing price. Following the disclosure, Terns shares climbed 5.5% during premarket sessions.
The transaction is projected to finalize during the second quarter of 2026. Merck anticipates recording approximately $5.8 billion in charges, equating to roughly $2.35 per share, which will impact both quarterly and annual financial statements.
Expanding Oncology Footprint
Last month, Merck unveiled plans to establish a standalone division dedicated exclusively to its oncology operations. The Terns acquisition aligns directly with this organizational restructuring.
Merck has taken a proactive stance regarding this transformation. Rather than waiting until Keytruda loses market exclusivity, the company has been systematically building its pipeline through acquisitions and advancing development candidates.
While TERN-701 has not yet received regulatory approval, its promising clinical results and Orphan Drug status have positioned it among the most anticipated leukemia therapies currently under investigation.
The FDA’s Orphan Drug designation, awarded in March 2024 for CML treatment, provides Merck with additional regulatory advantages should the compound progress through development stages.
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