Key Highlights
- Merck plans a $6.7 billion takeover of Terns Pharmaceuticals to expand its oncology portfolio
- The acquisition centers on TERN-701, a promising chronic myeloid leukemia treatment candidate
- Shareholders will receive $53 per share, representing a 6% markup over previous closing price
- Clinical trials demonstrated TERN-701 achieved 75% major molecular response in patients
- Transaction anticipated to finalize in Q2 2026 with an expected ~$5.8 billion accounting charge
Merck revealed Wednesday its intention to purchase Terns Pharmaceuticals through a transaction valued at up to $6.7 billion. This strategic acquisition represents Merck’s continued effort to diversify its drug portfolio ahead of the approaching patent expiration for Keytruda, currently the globe’s top-grossing prescription medication.
Keytruda delivered over $30 billion in sales during 2025, accounting for roughly half of Merck’s entire revenue stream. The approaching loss of market exclusivity presents a significant challenge, prompting Merck to aggressively pursue new growth opportunities.
Since 2021, the pharmaceutical giant has expanded its late-stage development programs nearly threefold through both in-house innovation and strategic acquisitions. This includes the $11.5 billion Acceleron purchase, which added the pulmonary arterial hypertension treatment Winrevair to its portfolio.
The Terns transaction follows this established strategy.
The primary asset in this acquisition is TERN-701, an investigational therapy under evaluation for chronic myeloid leukemia. CML originates in bone marrow tissue and causes abnormal proliferation of leukemia cells.
Early clinical data showed TERN-701 achieved a 75% major molecular response rate among CML patients who had undergone prior treatment. This performance has caught the eye of industry analysts who consider it a potential competitor to Novartis’ leukemia medication Scemblix.
The FDA awarded TERN-701 Orphan Drug designation for CML in March 2024.
Financial Terms
Merck has proposed $53 per share for Terns, marking a 6% premium above the stock’s pre-announcement closing value. Terns shares climbed 5.5% during premarket hours after the deal was disclosed.
The transaction is projected to complete during the second quarter of 2026. Merck anticipates recording a charge of roughly $5.8 billion, approximately $2.35 per share, which will impact both quarterly and annual financial statements.
Strengthening Oncology Focus
Just last month, Merck unveiled plans to establish a standalone division dedicated exclusively to its cancer therapeutics business. The Terns purchase aligns directly with this corporate restructuring.
Merck has taken a proactive approach to this transformation. Rather than waiting until Keytruda’s patent protection ends, the company has been systematically acquiring assets and progressing pipeline candidates ahead of schedule.
While TERN-701 hasn’t received regulatory approval yet, its preliminary clinical results and Orphan Drug status have made it one of the most anticipated leukemia programs currently in development.
The FDA’s Orphan Drug designation, awarded in March 2024 for CML treatment, provides Merck with additional regulatory advantages should the drug advance through approval.
