Merck & Co. announced that it will acquire Terns Pharmaceuticals, a clinical‑stage oncology company, for $6.7 billion in cash. The deal values Terns at $53.00 per share, representing a premium of approximately 31% to the 60‑day volume‑weighted average price, 42% to the 90‑day average, and about 6% to Tuesday’s closing price. The transaction is expected to close in the second quarter of 2026, pending regulatory approval.
The acquisition brings TERN‑701, an oral therapy for chronic myeloid leukemia, into Merck’s oncology portfolio. Phase 1 data show a 64% major molecular response rate, while an earlier study reported a 75% response in previously treated patients. TERN‑701 received orphan drug designation from the FDA in March 2024. Merck’s strategy is to diversify beyond its flagship drug Keytruda, whose patent is expected to expire in 2028, and to add new growth drivers to its pipeline. The deal follows a series of high‑profile acquisitions, including Verona Pharma for $10 billion and Cidara Therapeutics for $9.2 billion, underscoring Merck’s aggressive pipeline transformation.
Merck’s most recent financial results, released on February 3 2026, showed worldwide sales of $65.0 billion, a 1% year‑over‑year increase, and GAAP earnings per share of $7.28. Pharmaceutical sales accounted for $58.1 billion, with oncology products—Keytruda and Welireg—driving growth. The acquisition is expected to generate a charge of approximately $5.8 billion, or $2.35 per share, in Merck’s 2026 GAAP and non‑GAAP results, but the company expects no impact on its credit rating.
"The acquisition of Terns builds on our growing presence in hematology with TERN‑701, a potential best‑in‑class candidate for the treatment of certain patients with chronic myeloid leukemia. 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," said Robert M. Davis, Chairman and Chief Executive Officer, Merck. "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," added Amy Burroughs, Chief Executive Officer, Terns. "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," noted Dean Y. Li, President, Merck Research Laboratories.
Analysts have offered mixed views on the deal. BMO Capital Markets called it "one of the best deals Merck has made since its spree began ahead of the Keytruda loss of exclusivity" and highlighted TERN‑701’s potential peak sales. William Blair analysts questioned whether the offer fully captured TERN‑701’s value and suggested a competing bid could emerge. RBC Capital Markets viewed the acquisition as a sign of high confidence in the asset, noting the low purchase premium could leave room for a rival offer.
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