Acquiring Terns for $6.7 billion! Merck & Co., Inc. (MRK.US) increases investment in cancer pipeline in response to Keytruda patent expiration.

Merck & Co., Inc. (MRK.US) announced on Wednesday that it will acquire biotechnology company Terns Pharmaceuticals (TERN.US) for $6.7 billion. Currently, the pharmaceutical giant is expanding its cancer drug product line to address the impending patent expiration of its blockbuster therapy Keytruda. The American pharmaceutical company is set to lose patent protection for Keytruda later in this decade and may face government-led price negotiations as early as next year. Since 2021, Merck & Co., Inc. has nearly doubled the size of its late-stage research pipeline through internal development and large acquisitions, including the $1.15 billion purchase of Acceleron, which owns the pulmonary arterial hypertension drug Winrevair. This acquisition will give Merck & Co., Inc. access to Terns' experimental drug TERN-701, which is being tested for the treatment of chronic myelogenous leukemia - a cancer that originates in the bone marrow and causes uncontrolled proliferation of leukemia cells. Merck & Co., Inc. has offered to acquire Terns for $53 per share, a 6% premium over its latest closing price. As of the time of writing, Terns' stock price has risen over 5% in pre-market trading. In an early study, TERN-701 showed a 75% major biological response rate in leukemia patients who had previously been treated. Analysts believe that this result could position it as a potential alternative to Novartis AG Sponsored ADR's leukemia drug Scemblix. In March 2024, the U.S. Food and Drug Administration granted orphan drug status to TERN-701 for the treatment of chronic myelogenous leukemia. The transaction is expected to be completed in the second quarter of this year, generating approximately $5.8 billion in expenses (approximately $2.35 per share), which will be accounted for in quarterly and annual financial performance. Robert M. Davis, Chairman and CEO of Merck & Co., Inc., said: "The acquisition of Terns and TERN-701 further strengthens our presence in the field of hematology. TERN-701 could become the best candidate drug for treating specific chronic myelogenous leukemia patients. This transaction not only expands and strengthens our presence in oncology, but we will also continue to seek opportunities to expand our product portfolio into other treatment areas." Keytruda, Merck & Co., Inc.'s primary growth engine, is approved for the treatment of multiple cancers and is the world's top-selling prescription drug. The therapy achieved sales of over $30 billion in 2025, accounting for nearly half of the company's total revenue. Last month, Merck & Co., Inc. announced plans to spin off its oncology business into a separate division.