Merck has agreed to acquire Terns Pharmaceuticals in an all-cash transaction valued at approximately $6.7 billion, as the company continues efforts to expand its pipeline ahead of the expected loss of exclusivity for its blockbuster drug Keytruda. The deal centers on Terns’ lead asset, TERN-701, a mid-stage oral therapy being developed for chronic myeloid leukemia (CML).
Under the terms of the agreement, Merck will purchase all outstanding shares of Terns for $53 per share, representing a 31% premium to the biotech’s average stock price over the preceding 60 days. The boards of both companies have approved the transaction, which is anticipated to close in the second quarter of the year.
TERN-701 is an oral allosteric inhibitor targeting the BCR-ABL1 protein, which is associated with CML through a specific genetic mutation. The drug is currently being evaluated in a Phase 1/2 clinical trial involving patients with Philadelphia chromosome-positive chronic-phase CML who have previously undergone treatment with at least one tyrosine kinase inhibitor and experienced treatment failure. The therapy has also received orphan drug designation from the U.S. Food and Drug Administration.
Clinical data presented last year showed that TERN-701 achieved major molecular response rates of up to 75% at 24 weeks in a heavily pretreated patient population. The treatment also demonstrated a tolerability profile supportive of daily dosing, with most adverse events reported as low grade, alongside a low incidence of severe adverse events and discontinuations. Additional findings indicated reductions in diseased white blood cells and low rates of lipase elevation, with no meaningful changes in blood pressure observed.
Analysts have highlighted the drug’s potential commercial value, estimating that TERN-701 could generate peak annual sales exceeding $4 billion. They also described the therapy as capable of challenging the dominance of Scemblix, a treatment approved in 2021 for the same indication that generated $1.285 billion in annual sales.
In a statement announcing the acquisition, Merck CEO Robert Davis said, “The Terns takeover further diversifies and strengthens our position in oncology as we continue to look for opportunities to broaden our portfolio into other therapeutic areas.” He also noted that the addition of TERN-701 contributes to the company’s growing presence in hematology and described the drug as a potential best-in-class candidate.
The acquisition comes as Merck prepares for the expiration of key patent protections for Keytruda in 2028. The company has pursued multiple strategies to offset potential revenue declines, including business development activities and product reformulation. A subcutaneous version of Keytruda was cleared by the FDA in September last year and is being marketed as Keytruda Qlex.
Recent transactions include the $10 billion acquisition of Verona Pharma, which added a chronic obstructive pulmonary disease therapy, and the $9.2 billion purchase of Cidara Therapeutics, bringing in a Phase 3 antiviral candidate. These deals form part of a broader effort to strengthen both Merck’s late-stage pipeline and its commercial portfolio.
For Terns, the agreement follows a strategic shift toward oncology after stepping back from metabolic disease programs. The company had discontinued development of an obesity candidate after a Phase 2 trial fell short of expectations and showed signs of liver injury, subsequently focusing its resources on advancing TERN-701, with plans to initiate late-stage trials in the near term.
Analysts have expressed mixed views on the acquisition price, with some suggesting the offer may not fully reflect the drug’s potential and noting that it could attract competing bids from other pharmaceutical companies.
Why Merck Is Acquiring Terns Pharmaceuticals
The acquisition reflects Merck’s strategy to diversify its revenue streams and reduce reliance on blockbuster drugs like Keytruda. With patent expirations expected later this decade, Merck is investing heavily in next-generation therapies. By acquiring Terns, Merck gains a high-potential leukemia candidate that could play a critical role in its future portfolio.
About TERN-701 and Its Potential
TERN-701, now part of Merck’s pipeline, is an oral allosteric BCR::ABL1 tyrosine kinase inhibitor currently in Phase 1/2 clinical trials. Early data suggests that TERN-701 may deliver strong molecular response rates and improved tolerability, making it a potentially best-in-class treatment option. For Merck, this asset represents a key opportunity to compete in the growing leukemia treatment market.
Strategic Impact on Merck’s Oncology Portfolio
With this deal, Merck continues to expand its presence in hematology and oncology. The addition of TERN-701 strengthens Merck’s ability to address unmet needs in blood cancers while enhancing its competitive positioning globally. Analysts view this acquisition as part of Merck’s broader effort to build a sustainable pipeline of innovative therapies.
