Merck & Co., Inc. to Acquire Terns Pharmaceuticals, Inc., Strengthening Hematology Pipeline with TERN-701 for Chronic Myeloid Leukemia (CML)
Merck & Co.—known as MSD outside the United States and Canada—and Terns Pharmaceuticals, Inc. have announced a definitive agreement under which Merck will acquire Terns in an all-cash transaction valued at approximately $6.7 billion. The deal represents a significant strategic move for Merck as it continues to strengthen and diversify its oncology and hematology pipeline through targeted acquisitions of innovative, clinical-stage assets.
Under the terms of the agreement, Merck, through a subsidiary, will purchase all outstanding shares of Terns for $53.00 per share in cash. This offer reflects a substantial premium for shareholders—approximately 31% above the company’s 60-day volume-weighted average stock price and 42% above its 90-day average as of March 24, 2026. After accounting for acquired cash, the net value of the transaction is estimated at around $5.7 billion, underscoring Merck’s willingness to invest heavily in promising oncology innovations.
The acquisition is centered on Terns’ lead investigational therapy, TERN-701, which has shown encouraging early clinical potential in the treatment of Chronic Myeloid Leukemia (CML). TERN-701 is a novel, orally administered allosteric BCR::ABL1 tyrosine kinase inhibitor (TKI), a class of drugs that has transformed the treatment landscape for CML over the past two decades. However, despite the success of existing TKIs, there remains a significant unmet need for therapies that are more effective, better tolerated, and capable of delivering deeper and faster molecular responses.
Robert M. Davis, Chairman and Chief Executive Officer of Merck, emphasized that the acquisition aligns with the company’s broader strategy of expanding its presence in hematology while reinforcing its leadership in oncology. He noted that TERN-701 has the potential to become a best-in-class therapy for certain patients with CML, particularly those who have not responded adequately to existing treatments. According to Davis, the addition of Terns’ pipeline will further strengthen Merck’s position as it continues to explore opportunities to broaden its reach across multiple therapeutic areas.
TERN-701 is currently being evaluated in the Phase 1/2 CARDINAL clinical trial (NCT06163430), which is enrolling patients with Philadelphia chromosome-positive (Ph+) chronic phase CML. These patients have previously received at least one prior TKI therapy and have experienced treatment failure, suboptimal response, or intolerance. This patient population represents a challenging clinical segment, as resistance or intolerance to existing therapies can limit treatment options and negatively impact long-term outcomes.
In recognition of its potential, the U.S. Food and Drug Administration granted Orphan Drug Designation to TERN-701 in March 2024 for the treatment of CML. This designation is intended to encourage the development of therapies for rare diseases by providing certain regulatory and financial incentives, including market exclusivity upon approval.
Early clinical data for TERN-701 have been promising. In studies conducted to date, the drug has demonstrated encouraging rates of major molecular response (MMR) and deep molecular response (DMR) within 24 weeks of treatment. These responses are critical indicators of disease control in CML and are associated with improved long-term outcomes. Notably, these benefits have been observed even in patients with a high disease burden and in those who have undergone multiple prior lines of therapy, including treatment with other allosteric TKIs.
Equally important is the safety and tolerability profile of TERN-701. The majority of treatment-emergent adverse events reported in clinical trials have been low grade, with relatively few severe adverse events or treatment discontinuations. Additionally, no clinically meaningful changes in blood pressure have been observed, and the incidence of lipase elevation—a potential safety concern with some therapies—has remained low. These findings suggest that TERN-701 could offer a more tolerable alternative for patients who struggle with side effects from existing treatments.
Amy Burroughs, Chief Executive Officer of Terns Pharmaceuticals, described the acquisition as a testament to the company’s commitment to innovation in oncology. She expressed confidence that Merck’s global expertise, resources, and proven track record in developing cancer therapies will help accelerate the advancement of TERN-701. Burroughs also acknowledged the contributions of patients, investigators, and advocacy groups whose participation has been essential in progressing the clinical development of the therapy.
From a scientific perspective, Dean Y. Li, President of Merck Research Laboratories, highlighted the historical impact of BCR::ABL1-targeting therapies in transforming CML from a life-threatening condition into a more manageable chronic disease for many patients. However, he emphasized that unmet needs persist, particularly for therapies that can achieve faster onset of action and deeper molecular responses. Based on early clinical evidence, he noted that TERN-701 has the potential to deliver a differentiated treatment option that could further improve disease control for patients.
The transaction has received approval from the boards of directors of both companies, signaling strong alignment between the two organizations. Under the agreed terms, Merck will initiate a tender offer through a subsidiary to acquire a majority of Terns’ outstanding shares. The completion of the acquisition will depend on several customary conditions, including regulatory approvals and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Financially, the transaction is expected to be accounted for as an asset acquisition. Merck anticipates recording a charge of approximately $5.8 billion, or about $2.35 per share, which will be reflected in both its second-quarter and full-year 2026 GAAP and non-GAAP financial results. The deal is expected to close in the second quarter of 2026, assuming all conditions are satisfied.
The acquisition of Terns represents another step in Merck’s ongoing strategy to bolster its oncology pipeline through targeted investments in innovative therapies. As competition intensifies in the oncology space, large pharmaceutical companies are increasingly seeking to acquire or partner with smaller biotech firms that offer differentiated technologies or promising clinical candidates. By integrating TERN-701 into its portfolio, Merck aims to enhance its capabilities in hematologic malignancies and address unmet needs in CML treatment.
For patients, the potential impact of this acquisition could be substantial. If ongoing clinical trials continue to produce positive results, TERN-701 may emerge as a new therapeutic option that offers improved efficacy and tolerability compared to existing treatments. This could be particularly meaningful for patients who have exhausted current options or who experience significant side effects from available therapies.
In conclusion, Merck’s planned acquisition of Terns Pharmaceuticals underscores the company’s commitment to advancing oncology innovation and expanding its leadership in hematology. With a strong scientific rationale, promising early clinical data, and the backing of a global pharmaceutical leader, TERN-701 is well positioned to progress through development and potentially reshape the treatment landscape for chronic myeloid leukemia in the years ahead.
Source Link:https://www.merck.com/
