Terns’ shares were trading 5.4% higher in premarket trading on Wednesday, while Merck shares rose less than 1%.
Merck has been searching for new growth drivers as it prepares for generic competition and lower prices for its blockbuster cancer therapy Keytruda, which generated more than US$31 billion in 2025 — about half its total sales. The lead drug from Foster City, California-based Terns showed striking promise in an early-stage study for patients with a blood cancer that didn’t respond to initial treatment.
The acquisition by Merck “would be one of the best deals the company has made since its spree began” ahead of Keytruda’s patent expiration, BMO Capital Markets analyst Evan Seigerman said in a note before the deal was official.
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Terns was the talk of the American Society of Haematology annual meeting last year after a trial showed that more than half of patients treated with its investigative therapy for a type of blood cancer that didn’t respond well to previous treatments had a strong improvement in their cancer within 24 weeks. The drug, TERN-701, was tested in patients with chronic myeloid leukaemia. If approved, it would compete with a blockbuster medicine from Novartis AG.
Keytruda’s been driving Merck’s growth for nearly a decade. But as federal drug pricing policies will bring lower-priced competitors into the market within the next few years, it’s undertaken a number of moves to protect itself.
Late last year, Merck agreed to buy Cidara Therapeutics Inc, a biotech developing a flu treatment, in a US$9.2 billion deal. And in July it said it would purchase respiratory drugmaker Verona Pharma plc for about US$10 billion. Additionally, last month, Merck said it would split its main pharmaceutical unit in two in an effort to better highlight the parts of the business that are growing.
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Shares of Rahway, New Jersey-based Merck have gained 11% this year, giving it a market value of US$287.7 billion.
Tern's financial advisers were Centerview Partners LLC and Jefferies LLC, with Freshfields LLP serving as legal adviser.
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