Key Takeaways
- Merck’s $6.7 billion acquisition of Terns Pharma aims to expand its oncology drug portfolio
- The transaction provides Merck with TERN-701, a promising chronic myeloid leukemia treatment candidate
- The purchase price of $53 per share represents a 6% premium over Terns’ previous closing price
- Clinical trial data revealed TERN-701 achieved a 75% major molecular response in initial studies
- Transaction completion is anticipated in Q2 2026, with an expected charge of roughly $5.8 billion
Merck revealed plans Wednesday to purchase Terns Pharmaceuticals in a transaction valued at up to $6.7 billion. This strategic acquisition represents Merck’s ongoing effort to diversify its drug portfolio ahead of anticipated patent expiration for Keytruda, the pharmaceutical industry’s top-selling medication.
Keytruda brought in over $30 billion in sales during 2025, accounting for approximately half of Merck’s overall revenue. The looming loss of patent exclusivity poses a significant challenge, prompting Merck to take aggressive action.
From 2021 onward, the pharmaceutical giant has expanded its late-stage development pipeline nearly threefold through a combination of in-house research and strategic acquisitions. Notable purchases include the $11.5 billion acquisition of Acceleron, which added Winrevair, a pulmonary arterial hypertension treatment, to its arsenal.
The Terns transaction follows this established strategy.
The crown jewel of this acquisition is TERN-701, an investigational therapy currently undergoing testing for chronic myeloid leukemia. CML is a blood cancer originating in bone marrow that causes abnormal proliferation of cancerous white blood cells.
Early clinical data for TERN-701 demonstrated an impressive 75% major molecular response rate among CML patients who had received prior treatments. This performance has caught the attention of industry analysts who view it as a potential competitor to Scemblix, Novartis’ established leukemia medication.
The FDA designated TERN-701 with Orphan Drug status for CML in March 2024.
Transaction Structure
Merck has proposed a payment of $53 per share to acquire Terns, representing a 6% premium above the stock’s closing price prior to the announcement. Terns stock jumped 5.5% during premarket hours after the deal was disclosed.
The acquisition is projected to finalize during the second quarter of 2026. Merck anticipates recording a charge of approximately $5.8 billion, equivalent to roughly $2.35 per share, which will impact both quarterly and annual financial statements.
Merck’s Strategic Oncology Expansion
In the previous month, Merck unveiled intentions to establish a standalone division dedicated exclusively to its cancer treatment business. The Terns acquisition aligns perfectly with this corporate restructuring initiative.
Merck has approached this transformation methodically. Rather than waiting until Keytruda loses patent protection, the company has proactively pursued acquisitions and advanced multiple pipeline candidates.
While TERN-701 has not yet received regulatory approval, its encouraging preliminary results and Orphan Drug designation have positioned it as one of the most anticipated leukemia therapies 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 progress through the approval process.
