Merck Seals $6.7B Deal to Acquire Terns Pharmaceuticals and Boosts Oncology Pipeline

Merck has announced its plans to purchase clinical-stage oncology company Terns Pharmaceuticals (NASDAQ: TRNS) in a deal valued at approximately $6.7 billion. The offer equates to $53.00 per share in cash, representing a premium of 31% on the 60-day volume-weighted average price and 42% on the 90-day average as of Tuesday.

The main attraction in this acquisition is Terns' lead candidate, TERN-701. This oral allosteric BCR::ABL1 tyrosine kinase inhibitor is currently undergoing Phase 1/2 testing in the CARDINAL trial for patients with Philadelphia chromosome-positive chronic phase chronic myeloid leukemia (CML) who have either failed prior treatments, responded suboptimally, or could not tolerate earlier tyrosine kinase inhibitors (TKIs). Notably, the FDA granted TERN-701 Orphan Drug Designation in March 2024 for this indication.

Robert M. Davis, CEO of Merck, emphasized that the deal strengthens the company's foothold in hematology and oncology, highlighting TERN-701 as a potentially best-in-class therapy for certain CML patients. This signals Merck's broader strategy to diversify its oncology portfolio by branching into novel therapeutic areas.

Clinical results reported so far showcase encouraging efficacy, with major molecular responses and deep molecular responses observed as early as 24 weeks into treatment with TERN-701. Such early data have likely contributed to Merck's willingness to pay a substantial premium.

Amy Burroughs, CEO at Terns, remarked on the acquisition as a testament to the innovation culture at Terns and the opportunity to expedite the development of their lead asset by tapping into Merck's extensive oncology expertise and resources. Combining forces could accelerate TERN-701's path to market in pursuit of new cancer breakthroughs.

The transaction has been greenlit by the boards of both companies but hinges on a majority of Terns' shareholders accepting the tender offer. Regulatory approvals, like the Hart-Scott-Rodino antitrust clearance, are also among the conditions that need clearing before the deal officially closes, anticipated in Q2 2026.

Financially, Merck expects the acquisition to be accounted for as an asset purchase, generating a one-time charge near $5.8 billion, or around $2.35 per share of Merck stock, impacting both GAAP and adjusted earnings for the second quarter and full year 2026.

Following the announcement, shares of TRNS jumped over 5% in pre-market trading, climbing above the closing price of $50.00. Meanwhile, Merck's stock saw a modest pre-market bump of 0.4%, reflecting market optimism about expanding its oncology pipeline.