Merck pays $6.7B for Terns Pharma to plug its Keytruda gap
What's the deal? MerckDealroom has a profile for this one. Try Dealroom → is buying Terns Pharmaceuticals for $6.7 billion — $53 per share in cash, a roughly 31% premium to Terns' recent share price. The deal centres on TERN-701, Terns' experimental pill for chronic myeloid leukaemia (CML), a slow-growing blood and bone marrow cancer. It is expected to close in the second quarter of 2026.
Terns, a roughly 60-person Foster City, California biotech, pivoted to CML in October 2025 after its obesity drug failed a mid-stage trial. Early Phase I/II data presented in December 2025 showed a 64% major molecular response rate at 24 weeks in Philadelphia chromosome-positive CML patients — results that sent Terns' stock up nearly fivefold.
Why now? Merck's blockbuster immunotherapy Keytruda generated $31.7 billion in sales in 2025, but faces patent expiry as soon as 2028. The New Jersey drugmaker has been racing to replace that revenue, having already spent $10 billion on Verona Pharma and $9 billion on Cidara Therapeutics in 2025.
TERN-701 targets the same CML market as NovartisDealroom has a profile for this one. Try Dealroom →' Scemblix — currently the best-in-class treatment, with peak sales projections raised to $4 billion in 2025. Truist Securities estimates TERN-701 could reach $2.3 billion in peak annual sales.
What could go wrong? TERN-701 remains in early-stage trials. Late-stage trials aren't expected to begin until late 2026 or early 2027, leaving years of clinical and regulatory risk ahead. Merck is paying a steep premium on relatively thin data.
There's also a licensing wrinkle: Terns had previously licensed TERN-701 to China's Hansoh PharmaceuticalDealroom has a profile for this one. Try Dealroom → for the Chinese market, renegotiating that deal in January 2026 — paying $1 million and promising royalties of 0.75%–1.25% on net sales.
The signal: Merck has emerged as the pharmaceutical industry's most aggressive acquirer as an estimated $320 billion in industry revenues face patent cliffs between now and 2030. This deal is part of a broader biotech M&A surge — GileadDealroom has a profile for this one. Try Dealroom → struck a $7.8 billion deal for oncology biotech Arcellx earlier in 2026.
The broader biotech sector index is up 34% since March 2025. For smaller biotechs, Terns' trajectory — from failed drug to multibillion-dollar exit in under six months — shows what strong early oncology data can still fetch.
Sources:
Terns Pharmaceuticals
Merck
CNBC
Reuters
Fierce Biotech
Business Journals
The Wall Street Journal
Bloomberg
The Financial Times
Stat News
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Merck
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