Merck is making yet another major move in the pharmaceutical world. The New Jersey-based drugmaker has agreed to acquire Terns Pharmaceuticals, a California-based biotech developing a promising treatment for a rare and life-threatening form of blood and bone cancer and the deal is worth $5.7 billion.
The announcement, made Wednesday, signals just how aggressively Merck is working to future-proof its business as its flagship cancer drug faces a fast-approaching patent expiration.
Why Merck is spending big
At the center of Merck’s urgency is Keytruda, its blockbuster oncology drug that currently generates roughly $30 billion in annual revenue. Patent protections on the treatment could expire as soon as 2028, and that looming deadline has prompted the company to pursue a series of high-profile acquisitions in recent years.
Last year alone, Merck picked up respiratory drugmaker Verona Pharma for $10 billion and flu-prevention biotech Cidara Therapeutics for $9.2 billion. With the Terns deal now on the table, the company has firmly established itself as one of the most aggressive acquirers in the biotech sector.
Across the broader pharmaceutical industry, an estimated $320 billion in revenue losses are projected between now and 2030 as drug patents expire. Merck, it appears, is not waiting around to feel that pain.
Investors have taken notice. Since the Verona acquisition last July, Merck’s share price has risen 38%, pushing its market value to approximately $287 billion as of Tuesday’s market close.
What the Terns deal includes
Under the terms of the agreement, Merck will pay $53 per share in cash a 31% premium over Terns’ average share price during the past 60 days. The deal values Terns’ equity at $6.7 billion, but factoring in the biotech’s roughly $1 billion cash reserves, the enterprise value comes to $5.7 billion.
Terns shares had already climbed sharply in recent months, rising at least fivefold since the company released encouraging clinical data last October. The stock jumped another approximately 5% in pre-market trading on Wednesday following confirmation of the deal.
The acquisition is expected to close in the second quarter of 2026.
The treatment at the heart of the deal
Merck’s bet with this acquisition centers on TERN-701, Terns’ lead drug candidate targeting chronic myeloid leukemia, or CML a rare cancer affecting the blood and bone marrow that is caused by a specific genetic mutation. The U.S. recorded roughly 9,560 new CML cases last year, while across G7 nations, approximately 93,000 patients received treatment for the disease in 2024, according to data from Novartis.
TERN-701 is considered a potential rival to Scemblix, the current leading CML treatment sold by Novartis. Analysts at BMO Capital Markets have projected the drug could represent a multi-billion-dollar revenue opportunity for Merck in the latter half of the decade a timeline that conveniently aligns with Keytruda’s patent expiry.
Terns is expected to launch late-stage clinical trials for the treatment by the end of this year or in early 2027.
What comes next for Merck
This deal is just one piece of a larger strategic puzzle. Merck’s chief executive has previously signaled that deals in the range of up to $15 billion represent the company’s preferred range though the door to larger transactions remains open.
Earlier this year, Merck had reportedly been in negotiations to acquire cancer biotech Revolution Medicines in a deal that could have reached $32 billion, but walked away after several weeks of discussions.
With multiple phase-three clinical data readouts expected this year and several new medicines on track to reach the market, Merck is entering a pivotal stretch one in which acquisitions like the Terns deal could prove essential to sustaining its dominance in oncology long after Keytruda’s reign at the top comes to a close.
Source : Financial Times
