Key Highlights
- Merck plans to purchase Terns Pharmaceuticals for $6.7 billion in strategic oncology move
- Acquisition centers on TERN-701, a promising chronic myeloid leukemia treatment candidate
- Shareholders will receive $53 per share, representing a 6% premium over previous closing price
- Clinical trial data showed TERN-701 achieved 75% major molecular response in early testing
- Transaction scheduled to finalize in Q2 2026 with an expected ~$5.8 billion accounting charge
Merck revealed Wednesday its intention to purchase Terns Pharmaceuticals in a transaction valued at $6.7 billion. This strategic acquisition represents the pharmaceutical giant’s ongoing effort to bolster its drug portfolio ahead of Keytruda’s upcoming patent expiration.
Keytruda delivered over $30 billion in sales throughout 2025, accounting for approximately half of Merck’s entire revenue stream. The impending loss of market exclusivity poses a significant challenge, prompting the company to aggressively expand its development pipeline.
Since 2021, Merck has expanded its late-stage development portfolio nearly threefold through organic research initiatives and strategic purchases. Notable examples include the $11.5 billion Acceleron acquisition, which added the pulmonary arterial hypertension treatment Winrevair to its portfolio.
The Terns transaction follows this established acquisition strategy.
The primary asset driving this acquisition is TERN-701, an investigational therapy currently undergoing evaluation for chronic myeloid leukemia. CML is a malignancy originating in bone marrow that triggers abnormal proliferation of leukemia cells.
Clinical study results demonstrated TERN-701 achieved a 75% major molecular response rate among CML patients who had received prior treatment. This impressive outcome has captured analyst attention, with many viewing it as a potential competitor to Novartis’ CML medication Scemblix.
Regulatory authorities granted TERN-701 Orphan Drug designation for CML therapy in March 2024.
Financial Terms
Merck is proposing $53 per share for Terns, marking a 6% increase above the stock’s pre-announcement closing price. Terns shares jumped 5.5% during premarket trading after the deal was disclosed.
The transaction is anticipated to conclude during the second quarter of 2026. Merck expects to record an approximately $5.8 billion charge, translating to roughly $2.35 per share, which will impact both quarterly and annual financial statements.
Expanding Merck’s Oncology Focus
Last month, Merck unveiled intentions to establish a standalone division dedicated exclusively to its cancer therapeutics business. The Terns purchase aligns directly with this organizational restructuring.
Merck has approached this transformation methodically. Rather than waiting for Keytruda’s patent protection to lapse, the pharmaceutical company has proactively pursued acquisitions and advanced pipeline assets.
While TERN-701 has not yet secured regulatory approval, its encouraging clinical results and Orphan Drug status position it among the most anticipated leukemia drug candidates currently in development.
The FDA awarded the Orphan Drug designation in March 2024 specifically for CML treatment, providing Merck with additional regulatory advantages should the compound progress through development.
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