Merck and Terns Pharmaceuticals have agreed to a $6.7 billion all-cash buyout that delivers a prized leukemia asset to the New Jersey Big Pharma.
The crown jewel of the deal is TERN-701, an oral treatment that demonstrated encouraging efficacy and safety signals in a recent trial while also offering greater convenience for patients with chronic myeloid leukemia (CML), a rare cancer of the blood and bone marrow caused by a genetic mutation.
Merck will acquire Terns for $53 a share, a 6% premium over Tuesday’s closing price, according to a March 25 release. The deal values the biotech at $5.7 billion when factoring in its $1 billion in cash holdings.
A note from William Blair analysts said the deal undervalues TERN-701, which the team believes is poised to disrupt the CML treatment paradigm and challenge Novartis’ Scemblix franchise. The agreement, expected to close in the second quarter of this year, will help Merck replenish its oncology pipeline as Keytruda approaches its loss of exclusivity in 2028.
TERN-701 is a novel oral allosteric BCR::ABL tyrosine kinase inhibitor (TKI) currently being evaluated in a phase 1/2 trial in patients with Philadelphia chromosome-positive (Ph+) chronic-phase CML who were previously treated with one TKI and experienced treatment failure. In March 2025, TERN-701 received orphan drug designation from the FDA.
In a presentation at the American Society of Hematology late last year, TERN-701 reduced the number of diseased white blood cells in patients’ bloodstreams. Although the study was primarily designed to assess safety, Terns described the results as “unprecedented” among CML treatments.
TERN-701 has shown promising rates of major molecular response and deep molecular response by week 24, including in patients with high disease burden who had received multiple prior lines of therapy, according to the biotech. Most treatment-emergent adverse events recorded in the study were low grade, with a low incidence of severe adverse events and discontinuations. No meaningful changes in blood pressure were observed, and rates of lipase elevation were low.
Terns is preparing to launch late-stage trials toward the end of the year or in early 2027. According to the American Cancer Society, CML accounts for 15% of all new leukemia cases, with about 9,650 people expected to be diagnosed this year.
The data prompted bullish reactions from analysts, who noted that Novartis recently raised its peak global sales guidance for Scemblix from $3 billion to $4 billion. First approved for third-line treatment, Scemblix has since been cleared by the FDA for patients with newly diagnosed Ph+ CML. A note from BMO Capital Markets predicts that TERN-701 could achieve unadjusted peak sales of more than $4 billion.
The deal is a boost for Terns, which abandoned its oral GLP-1 obesity candidate last year after a phase 2 trial fell short of expectations and showed signs of liver injury. While the company initially planned to seek a partner to advance the asset, the data ultimately ended its development.
Merck’s Keytruda LOE positioning
Merck, which remained pharma’s top R&D spender in 2025, has been on an acquisition streak. Last July, it acquired Verona for $10 billion to bolster its respiratory portfolio with potential chronic obstructive pulmonary disease blockbuster Ohtuvayre. In November, Merck spent $9.2 billion on Cidara Therapeutics, targeting its lead influenza antiviral, which had previously been abandoned by Johnson & Johnson in 2024.
As part of last month’s full-year earnings presentation, Merck CEO Robert Davis said the Cidara and Verona acquisitions will help drive the company toward more than $70 billion in annual revenue opportunities by the “mid-2030s.” Merck reported $65 billion in revenue in 2025, up 1% from 2024, with Keytruda accounting for $31.7 billion in sales.
Wednesday, Davis said in a statement that the Terns acquisition allows Merck to add a potential best-in-class candidate for patients with CML as the company continues “to look for opportunities to broaden our portfolio into other therapeutic areas.”
