Merck & Co. has completed its acquisition of Terns Pharmaceuticals, bringing the biotech firm's independent trading to a close. Terns' common stock was delisted from the Nasdaq Global Select Market as of May 5, 2026, after Merck's tender offer was successfully concluded. The final quoted price for Terns shares was $52.95, just a hair below the $53-per-share cash offer.
Deal Mechanics and Shareholder Response
Investors tendered approximately 100.1 million shares, representing about 86.36% of Terns' outstanding stock as of the May 4 deadline. This allowed Merck to proceed with the back-end merger without requiring an additional shareholder vote. The remaining shares were automatically converted into the right to receive $53 in cash each, effectively ending any trading spread.
The transaction, first announced in March 2026, pegged Terns' equity value at $6.7 billion, or roughly $5.7 billion after accounting for the cash on Terns' balance sheet. That represented a 31% premium over Terns' 60-day volume-weighted average price and a 42% premium over the 90-day average.
Strategic Rationale: TERN-701
Merck's primary target was TERN-701, an oral allosteric BCR::ABL1 tyrosine kinase inhibitor designed for chronic myeloid leukemia. Unlike older drugs that target the active site of the BCR::ABL1 protein, TERN-701 binds to a regulatory pocket, potentially overcoming resistance that develops with long-term use of first-line therapies.
In late April, the U.S. Food and Drug Administration granted Breakthrough Therapy Designation to TERN-701 for adults with Philadelphia chromosome-positive chronic-phase CML who have tried at least two prior TKIs and lack the T315I mutation. This designation is meant to expedite development and review but does not guarantee approval.
Clinical Data and Due Diligence
Early results from the CARDINAL trial showed promise: 75% of evaluable patients achieved major molecular response at 24 weeks on the recommended Phase 2 dose. However, updated data reviewed during Merck's due diligence reportedly raised some concerns. According to sources, Merck's initial bid of $61 per share was cut to $50 before settling at $53. An unnamed rival bidder walked away after reviewing the new numbers, citing insufficient differentiation or de-risking of TERN-701 versus existing therapies.
During the acquisition call, Merck's research chief Dean Li noted internal analyses suggesting TERN-701 could deliver approximately two times the MMR rate of approved TKIs and two to three times the deep molecular response rate. He emphasized that Merck plans to validate this potential through a rigorous clinical program.
Financial Implications for Merck
Merck will record a research and development charge of approximately $5.8 billion, or about $2.35 per share, related to the acquisition. Additionally, the company expects a $0.12 per share drag on 2026 earnings per share from TERN-701 pipeline costs and associated financing. The deal is seen as a late-stage oncology bet that still awaits regulatory approval.
Market Context and Competitive Landscape
TERN-701 will primarily compete with Novartis' Scemblix, the only approved allosteric CML drug, rather than the obesity pipeline that once defined Terns' narrative. RBC analyst Trung Huynh described the deal as "strategically sound and incrementally positive" for Merck, though he noted the modest premium might have left room for rival bidders like AbbVie or Bristol Myers Squibb to make a move before closing.
For former Terns shareholders, the market's verdict was clear: the stock was valued as a done deal, with future upside and development risks now sitting with Merck. Bulls saw Merck's acquisition as a stamp of approval for TERN-701's potential, while bears pointed to the $53 ceiling as evidence that buyers with full data saw limited upside. Either way, Terns shares have served their purpose.
