Merck (NYSE: MRK) has completed the acquisition of Terns Pharmaceuticals, a US-based clinical-stage biopharmaceutical company, through an all-cash tender offer at USD 53.00 per share, with the transaction expected to generate an asset acquisition charge of approximately USD 5.8 billion to Merck's research and development expense in the second quarter of 2026. The deal adds TERN-701, an oral allosteric BCR::ABL1 tyrosine kinase inhibitor currently in Phase I/II development for chronic myeloid leukemia (CML), to Merck's hematology pipeline alongside three existing Phase III candidates. The deal was first announced in March this year.
Merck completed the acquisition of Terns through a two-step structure: a cash tender offer executed through a wholly-owned subsidiary, followed by a back-end merger in which Terns became a wholly-owned subsidiary of Merck. As of the tender offer expiration at one minute after 11:59 p.m. Eastern Time on May 4, 2026, 100,091,794 shares of Terns common stock had been validly tendered, representing approximately 86.36% of total issued and outstanding shares. All remaining shares were converted into the right to receive USD 53.00 per share upon merger completion. Terns common stock has been delisted from the Nasdaq Global Select Market.
The transaction is accounted for as an asset acquisition rather than a business combination, resulting in a charge to research and development expense of approximately USD 5.8 billion, or approximately USD 2.35 per share, reflected in both second quarter and full year 2026 GAAP and non-GAAP results. Merck also disclosed an additional negative EPS impact of approximately USD 0.12 per share in 2026, representing costs associated with advancing TERN-701 and financing.
Geographic rights acquired by Merck cover all territories outside Greater China. Terns had previously licensed TERN-701 development and commercialization rights for mainland China, Taiwan, Hong Kong, and Macau to Hansoh Pharma. Prior to the Merck acquisition, Terns amended its original license agreement with Hansoh to convert a non-exclusive, royalty-free license to certain Hansoh patents into an exclusive, sublicensable, royalty-bearing, perpetual worldwide license for all territories outside the Hansoh territory. Merck does not hold Greater China rights to TERN-701.
TERN-701: mechanism and clinical status
TERN-701 is an oral allosteric BCR::ABL1 inhibitor designed to bind to the ABL myristoyl pocket, a site distinct from the ATP-binding site targeted by most approved tyrosine kinase inhibitors in CML. Allosteric binding at the myristoyl pocket locks the ABL kinase in an inactive conformation, a mechanism that may offer activity in patients who have developed resistance to ATP-competitive TKIs, provided the resistance does not involve the T315I gatekeeper mutation.
The US FDA granted TERN-701 Breakthrough Therapy Designation for the treatment of adults with Philadelphia chromosome-positive CML in the chronic phase without the T315I mutation who have been previously treated with two or more tyrosine kinase inhibitors. This designation is based on data from the ongoing Phase I/II CARDINAL trial, which continues to enroll patients across the relevant population.