Merck has completed its $6.7 billion acquisition of Terns Pharmaceuticals, gaining control of TERN-701, an investigational oral CML treatment that the pharmaceutical giant hopes will become a cornerstone of its expanding cancer portfolio. The deal, which closed on 5 May 2026 after clearing antitrust review, saw Merck pay $53 per share in cash, a price representing roughly a 31 per cent premium to Terns’ 60-day volume-weighted average share price. The transaction values Terns at an approximate equity value of $6.7 billion.
Terns, a California-based clinical-stage oncology company, is now a wholly owned subsidiary of Merck, and its shares have been delisted from Nasdaq. For Merck, the acquisition is the latest move in a sustained dealmaking campaign aimed at diversifying revenue ahead of a looming patent cliff for Keytruda, the company’s blockbuster immunotherapy.
What Makes TERN-701 an Oral CML Treatment Worth Watching
TERN-701 is designed to treat chronic myeloid leukaemia, a slow-growing cancer of the blood and bone marrow that arises from an abnormal genetic fusion known as BCR-ABL1. Taken orally, TERN-701 works as an allosteric inhibitor of BCR-ABL1, meaning it binds to a different site on the protein than most existing therapies. Rather than targeting the ATP-binding site used by most current treatments, it binds to the ABL myristoyl pocket, a site that gives it roughly 10,000 times greater selectivity than active-site tyrosine kinase inhibitors, according to lead investigator Elias Jabbour of MD Anderson Cancer Center.
This distinction matters because, despite real progress in CML care over the past two decades, a substantial share of patients eventually stop responding to standard tyrosine kinase inhibitors or cannot tolerate their side effects. An effective, well-tolerated oral CML treatment built on this alternative mechanism could offer a meaningful option for that group, sparing many from more invasive interventions such as stem cell transplantation.
The Data Behind the Deal
Merck’s interest in Terns was driven largely by early results from the CARDINAL trial, a Phase 1/2 study evaluating TERN-701 in patients with relapsed or refractory CML who had already failed at least one prior tyrosine kinase inhibitor. At the recommended Phase 2 dose, the 24-week major molecular response rate in this group reached 80 per cent among efficacy-evaluable patients, a result investigators described as unusually strong for a heavily pre-treated population. Among patients who entered the study without an existing major molecular response, the rate was 75 per cent, and deep molecular responses were recorded in 36 per cent of evaluable patients. The data were presented in December 2025 at the American Society of Hematology Annual Meeting.
Competing With Scemblix
TERN-701 will not enter an empty field. Novartis already markets Scemblix (asciminib), the first approved drug in this allosteric inhibitor class, with a label now covering both newly diagnosed and previously treated patients. Preclinical data have shown enhanced potency for TERN-701 compared with asciminib against several BCR-ABL resistance mutations, suggesting the newer compound could help patients whose disease has already adapted to existing treatment. Whether that early advantage holds up in later-stage trials, and translates into market share, remains to be seen.
Filling the Keytruda Gap
The acquisition fits a clear pattern. Merck is bulking up its oncology and broader portfolio ahead of Keytruda losing patent protection in 2028, a drug that brings in more than $30 billion in annual sales and accounts for nearly half of the company’s total revenue. Merck has already acquired Cidara Therapeutics and its experimental flu drug for $9.2 billion, along with respiratory specialist Verona Pharma for $10 billion, moves aimed squarely at reducing reliance on its single largest product. The deal adds to record biopharma M&A activity in 2026, much of it driven by the same looming wave of patent expiries across the industry.
Robert Davis, Merck’s Chairman and Chief Executive, framed the Terns deal in similar terms.
“The acquisition of Terns builds on our growing presence in haematology with TERN-701, a potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukaemia,” he said. In the same statement, Davis added that the acquisition “further diversifies and strengthens our position in oncology as we continue to look for opportunities to broaden our portfolio into other therapeutic areas.”
Amy Burroughs, Terns’ Chief Executive, called the deal a validation of years of scientific work, saying it
“reflects our team’s deep commitment to innovation in oncology and developing high-impact medicines.”
Wall Street’s reaction has been broadly favourable, if not unanimous. Analysts at BMO Capital Markets called it one of the best deals Merck has made since its acquisition spree began ahead of the Keytruda patent expiry, while RBC analysts described the transaction as strategically sound and incrementally positive as Merck prepares for the patent cliff. Not everyone agrees the price was generous enough. Several shareholder rights law firms have opened investigations into whether the $53 per share offer represented full value, and some analysts have suggested TERN-701’s commercial potential could have commanded a higher valuation.
What Comes Next
With the acquisition now complete, Terns operates as part of Merck’s expanding haematology and oncology division. The CARDINAL trial remains active, with an estimated primary completion date of November 2029, meaning regulatory filing and approval for TERN-701 are still some years away. Davis has said the broadened pipeline, now spanning oncology, immunology, cardiometabolic health, vaccines and ophthalmology, supports his ambition of reaching $70 billion in annual sales within the next decade.
For patients with CML, the immediate impact of the deal is limited. TERN-701 remains an investigational oral CML treatment, not an approved medicine, with several years of further trial data and regulatory review still ahead. But the acquisition signals that allosteric BCR-ABL inhibition, once a niche mechanism pioneered by a single approved drug, is now viewed by one of the world’s largest pharmaceutical companies as a genuine growth opportunity in a cancer type still searching for better long-term answers.
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