Merck's $6.7 Billion Terns Pharmaceuticals Acquisition May Face Rival Interest: Analyst

Merck & Co Inc. (NYSE:MRK) on Wednesday agreed to acquire Terns Pharmaceuticals Inc. (NASDAQ:TERN), as the U.S. drugmaker accelerates efforts to offset looming revenue risks tied to its blockbuster cancer immunotherapy Keytruda. The deal consideration is $53.00 per share in cash for an approximate equity value of $6.7 billion. The Financial Times was the first to report the deal. Pipeline Pressure Mounts Ahead Of Keytruda Expiry The deal reflects Merck's broader strategy to replenish its pipeline ahead of Keytruda's expected patent expiry as early as 2028. Keytruda, a cancer immunotherapy, generates about $30 billion annually, making it central to the company's growth trajectory. Merck has been among the most aggressive acquirers in biotech, striking major deals in recent months. In 2025, Merck acquired Verona Pharma plc for approximately $10 billion, gaining access to a respiratory disease drug. In November 2025, Merck acquired influenza drug maker Cidara Therapeutics Inc. for $221.50 per share in cash, for a total transaction value of approximately $9.2 billion. Terns Acquisition Signals Oncology Focus The acquisition would center on Terns' early-stage treatment for chronic myeloid leukemia (CML), a rare blood and bone marrow cancer caused by genetic mutations. Terns is expected to begin late-stage clinical trials by late 2026 or early 2027, positioning the asset as a longer-term growth opportunity. In 2025, the company shared data at the American Society of Hematology, from the ongoing CARDINAL trial of TERN-701 for previously treated CML patients. The Phase 1 data showed 64% major molecular response (MMR) achievement by 24 weeks in a refractory patient population. Competitive Landscape And Market Opportunity William Blair on Wednesday wrote that Merck's offer does not fully capture the potential of TERN-701. "TERN-701 is well-positioned to disrupt the treatment paradigm of CML and challenge the dominance of Novartis' AG's (NYSE:NVS) Scemblix franchise," analyst Andy Hsieh added in an investor note. Hsieh noted that the offer leaves room for another potential bidder with a more attractive offer. Dealmaking Momentum Across Biotech Merck's acquisition push comes as the pharmaceutical industry faces an estimated $320 billion in revenue losses through 2030 due to patent expirations. Chief Executive Officer Rob Davis has indicated a preference for deals under $15 billion but remains open to larger transactions. Earlier, Merck reportedly ended discussions to acquire cancer drug developer Revolution Medicines, Inc. (NASDAQ:RVMD) after the two sides disagreed on valuation. Earlier in January, the Financial Times reported that Merck is reportedly in talks to acquire Revolution Medicines in a deal potentially valued at between $28 billion and $32 billion. The transaction is expected to close in the second quarter of 2026, resulting in a charge of approximately $5.8 billion, or approximately $2.35 per share to Merck, included in both the second quarter and full year 2026 GAAP and non-GAAP results. Price Action: Merck & Co shares were up 2.23% at $118.97 and Terns Pharma shares were up 5.53% at $52.76 at the time of publication on Wednesday, according to Benzinga Pro data. Image via Shutterstock