Merck & Co. completed its acquisition of Terns Pharmaceuticals, Inc. on May 5 2026, finalizing a $6.7 billion cash transaction that valued Terns at $53.00 per share. The tender offer, which expired on May 4, was fully accepted, allowing Merck to integrate Terns’ assets into its oncology portfolio.
The deal brings TERN‑701, an oral allosteric BCR‑ABL1 tyrosine‑kinase inhibitor for chronic myeloid leukemia, into Merck’s pipeline. TERN‑701 has received FDA Breakthrough Therapy Designation and is projected to generate peak sales exceeding $4 billion, offering a differentiated treatment option for patients who have progressed on existing TKIs.
Strategically, the acquisition diversifies Merck’s oncology business beyond its flagship immunotherapy Keytruda. With Keytruda’s core U.S. patent set to expire in 2028, Merck is positioning itself to sustain growth by adding high‑potential assets that can fill the revenue gap expected after the patent cliff.
Merck will record a $5.8 billion charge to research and development expense, translating to approximately $2.35 per share. This cost is expected to reduce 2026 GAAP and non‑GAAP earnings per share by about $0.12 per share, a material impact that reflects the company’s investment in advancing TERN‑701 and financing the acquisition.
"The Terns acquisition reflects Merck’s continued focus on science‑driven, value‑enhancing business development aimed at bringing meaningful innovation to patients," said Robert M. Davis, chairman and chief executive officer. "We believe TERN‑701 has the potential to become a differentiated treatment option for certain patients with chronic myeloid leukemia, and we look forward to working with the Terns team to advance its clinical development.” Amy Burroughs, chief executive officer of Terns, added, "This acquisition reflects our team's deep commitment to innovation in oncology and developing high‑impact medicines. 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." Dr. Dean Y. Li, president of Merck Research Laboratories, noted, "The first approval of a BCR::ABL1 tyrosine kinase inhibitor 25 years ago transformed the prognosis for many patients with chronic myeloid leukemia. Despite new therapeutic options, there is significant need for innovative, well‑tolerated therapies with faster time to onset of molecular response leading to deeper responses and better disease control. Based on early clinical evidence, TERN‑701, a novel allosteric BCR::ABL1 inhibitor, may have the potential to provide a meaningfully differentiated option for certain patients living with CML."
"Keytruda generates more than $25 billion in annual revenue and its core U.S. patent is set to expire in 2028. Merck’s acquisition of Terns is part of a broader strategy to secure future growth by adding high‑potential oncology assets that can offset the revenue loss expected after the Keytruda patent cliff."
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