Merck Finalizes Acquisition of Terns Pharmaceuticals, Strengthening Its Portfolio
Merck & Co.—known as MSD outside the United States and Canada—has officially completed its acquisition of Terns Pharmaceuticals, marking a significant expansion of its oncology pipeline and reinforcing its long-term strategy of pursuing science-driven, value-focused business development.
The transaction underscores Merck’s continued emphasis on acquiring innovative assets with the potential to address unmet medical needs, particularly in oncology, where the company has been actively strengthening its portfolio. With this acquisition, Merck gains full control of Terns’ lead investigational candidate, TERN-701, a next-generation tyrosine kinase inhibitor (TKI) being developed for the treatment of chronic myeloid leukemia (CML).
Robert M. Davis, Chairman and Chief Executive Officer of Merck, highlighted the strategic rationale behind the deal, emphasizing the company’s commitment to advancing innovative therapies that can deliver meaningful clinical benefits. He noted that TERN-701 has the potential to become a differentiated treatment option for certain patients with CML, particularly those who have exhausted existing therapies. Davis also expressed optimism about integrating Terns’ capabilities and expertise into Merck’s broader research and development framework to accelerate the clinical advancement of this promising candidate.
A key factor supporting the acquisition is the recent regulatory momentum behind TERN-701. The investigational therapy was granted Breakthrough Therapy Designation by the U.S. Food and Drug Administration, a status designed to expedite the development and review of drugs intended to treat serious or life-threatening conditions where preliminary clinical evidence suggests substantial improvement over existing therapies. In this case, the designation applies to adult patients with Philadelphia chromosome-positive CML in the chronic phase who do not harbor the T315I mutation and who have previously been treated with two or more TKIs.
This designation is based on encouraging data from the ongoing Phase 1/2 CARDINAL trial, which is evaluating the safety, tolerability, and efficacy of TERN-701 in heavily pretreated patient populations. The Breakthrough Therapy Designation not only validates the therapeutic potential of the drug but also provides Merck with opportunities for more frequent regulatory interactions and potential accelerated approval pathways, which could significantly shorten the timeline to market if clinical results continue to be favorable.
From a transaction standpoint, Merck executed the acquisition through a cash tender offer conducted by a wholly owned subsidiary. Under the terms of the offer, shareholders of Terns received $53.00 per share in cash, without interest and subject to applicable tax withholding. The tender offer expired shortly after 11:59 p.m. Eastern Time on May 4, 2026, at which point approximately 100.1 million shares had been validly tendered and not withdrawn. This represented about 86.36% of Terns’ total outstanding shares, exceeding the threshold required to proceed with the merger.
Following the successful completion of the tender offer, Merck finalized the acquisition through a merger in which its subsidiary was combined with Terns. As a result of this merger, Terns continues as the surviving entity but is now a wholly owned subsidiary of Merck. All remaining outstanding shares of Terns common stock were converted into the right to receive the same $53.00 per share cash consideration. With the transaction complete, Terns’ shares have been delisted from the Nasdaq Global Select Market, effectively transitioning the company from a publicly traded entity to a fully integrated part of Merck’s operations.
Financially, the acquisition is expected to have a notable impact on Merck’s 2026 results. The company indicated that the transaction will be accounted for as an asset acquisition rather than a traditional business combination. This accounting treatment will result in a one-time charge to research and development expenses of approximately $5.8 billion, equivalent to about $2.35 per share. This charge will be reflected in both the second quarter and full-year 2026 GAAP and non-GAAP financial results.
In addition to the upfront accounting impact, Merck anticipates a modest ongoing effect on earnings per share (EPS). Specifically, both GAAP and non-GAAP EPS are expected to be reduced by approximately $0.12 per share in 2026. This dilution is primarily attributed to the costs associated with advancing the clinical development of TERN-701, as well as financing-related expenses tied to the acquisition.
Despite these near-term financial impacts, the strategic importance of the acquisition lies in its potential to generate long-term value. Chronic myeloid leukemia has seen significant therapeutic advances over the past two decades, largely driven by the development of TKIs. However, resistance and intolerance to existing therapies remain persistent challenges, particularly for patients who have undergone multiple lines of treatment. By targeting this specific patient population, TERN-701 could fill an important gap in the treatment landscape.
Moreover, the addition of TERN-701 complements Merck’s broader oncology strategy, which includes a strong focus on targeted therapies and precision medicine approaches. The company has consistently demonstrated its ability to successfully develop and commercialize innovative cancer treatments, and the integration of Terns’ pipeline assets could further enhance its competitive position in the oncology market.
In summary, the completion of Merck’s acquisition of Terns Pharmaceuticals represents a strategically significant move aimed at strengthening its oncology pipeline and accelerating the development of a promising new therapy for chronic myeloid leukemia. While the transaction introduces short-term financial headwinds, it reflects Merck’s continued commitment to investing in high-impact scientific innovation. As TERN-701 progresses through clinical development, it has the potential to offer a new treatment option for patients with limited alternatives, aligning with Merck’s broader mission to improve outcomes for individuals facing serious and life-threatening diseases.
About TERN-701
TERN-701 is a novel investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor (TKI) designed to bind to the ABL myristoyl pocket, with a potentially best-in-disease profile that could improve upon existing treatments for certain patients with chronic myeloid leukemia (CML).
About chronic myeloid leukemia
Chronic myeloid leukemia (CML) is a slow growing type of blood cancer that leads to an overproduction of white blood cells that accumulate in the blood and bone marrow, disrupting the production of healthy blood cells. CML is commonly associated with the Philadelphia chromosome, a translocation between chromosomes 9 and 22 that results in constitutive activation of the BCR::ABL1 fusion protein, which fuels cancer growth.
About Merck in hematology
Merck is advancing a pipeline of hematology candidates targeting a diverse range of targets across leukemias, lymphomas and myeloproliferative neoplasms. Candidates in Phase 3 development include: bomedemstat (MK-3543), an investigational, orally available lysine-specific demethylase 1 (LSD1) inhibitor; nemtabrutinib (MK-1026), an investigational, non-covalent Bruton’s tyrosine kinase (BTK) inhibitor; and zilovertamab vedotin (MK-2140), an investigational antibody-drug conjugate (ADC) that targets receptor tyrosine kinase-like orphan receptor 1 (ROR1). Additionally, MK-1045, an investigational CD19xCD3 T-cell engager, is currently being evaluated in a Phase 1b/2 trial.
About Merck
At Merck, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities.
