Merck to Acquire Terns Pharmaceuticals for $6.7B to Bolster Oncology Pipeline

Merck’s $6.7 billion acquisition of Terns Pharmaceuticals represents a calculated strike in the high-stakes game of oncology pipeline replenishment. As the pharmaceutical giant prepares for the inevitable revenue erosion of its cornerstone immunotherapy, Keytruda, which faces a massive patent cliff in 2028, the Terns deal provides a much-needed foothold in the hematological malignancy space. The centerpiece of the transaction is TERN-701, an investigational allosteric BCR-ABL inhibitor currently in clinical development for chronic myeloid leukemia (CML).

The strategic logic behind the acquisition is twofold: diversification and technical differentiation. For over a decade, Merck has been heavily reliant on Keytruda, which accounts for more than 40% of its total revenue. By acquiring Terns, Merck is signaling a shift toward targeted oral therapies that can complement its existing injectable biologics. TERN-701 is particularly attractive because it utilizes an allosteric mechanism of action, targeting the myristoyl pocket of the BCR-ABL protein rather than the traditional ATP-binding site. This approach is designed to overcome resistance mutations that often render first- and second-generation tyrosine kinase inhibitors (TKIs) like imatinib ineffective, while also offering a superior safety profile with fewer off-target effects.

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The $6.7 billion price tag, structured as a $53.00 per share cash offer, reflects the high premium Merck is willing to pay for de-risked clinical assets.

This acquisition places Merck in direct competition with Novartis, whose drug Scemblix (asciminib) pioneered the allosteric BCR-ABL inhibitor class. Scemblix has seen rapid uptake in the CML market due to its efficacy in late-line patients and its potential to move into earlier lines of therapy. By bringing TERN-701 into its fold, Merck is betting that it can leverage its massive global commercial infrastructure to challenge Novartis’s dominance in the space. Industry analysts suggest that TERN-701 may offer pharmacokinetic advantages that could make it a best-in-class contender, though clinical data from ongoing trials will be the ultimate arbiter of that claim.