Merck is choosing up a giant new piece for its most cancers drug pipeline with a $6.7 billion deal to purchase Terns Prescribed drugs, an organization whose lead program may rival a blockbuster product from Novartis.
The acquisition introduced Wednesday is vital for Merck, which has been scooping up promising medication with huge gross sales potential to assist offset the income decline coming as its prime vendor, the most cancers immunotherapy Keytruda, drops off the patent cliff. However as lofty because the Terns buy worth is, Merck should have to additional enhance the provide.
The Terns drug, TERN-701, is in medical improvement for power myeloid leukemia (CML), a blood most cancers that begins in bone marrow cells. The drug particularly addresses CML that’s Philadelphia chromosome-positive and within the power section, one in all three phases for the illness. Customary CML remedy consists of medication that block proteins that drive the uncontrolled white blood cell manufacturing attribute of leukemias. However for some sufferers, the most cancers doesn’t reply to those older medication, referred to as tyrosine kinase inhibitors. In different circumstances, the most cancers can develop resistance to those therapies.
TERN-701 was developed to beat limitations of these older medication. This oral small molecule can be a tyrosine kinase inhibitor, but it surely binds to a distinct web site on the goal protein to assist keep away from drug resistance. Novartis’s Scemblix, awarded accelerated FDA approval in 2021 and European Fee approval in 2022, works in an analogous manner. This product accounted for practically $1.3 billion in international gross sales in 2025, an 87% enhance in comparison with the prior 12 months. Novartis attributed the rise to development in all markets, notably the enlargement of the drug to earlier traces of remedy within the U.S. and Japan. However Terns’s drug may very well be higher.
Scemblix is taken twice each day and sufferers should keep away from meals two hours earlier than and one hour after dosing. The Terns drug is a once-daily capsule that could be taken with or with out meals. The benefits transcend affected person comfort. In the course of the annual assembly of the American Society of Hematology (ASH) in December, Terns reported Part 1 outcomes exhibiting efficacy measures that had some analysts calling TERNS-701 greatest in school.
Up to date Part 1 outcomes are anticipated within the second half of this 12 months. In a analysis word, Leerink Companions analyst Andrew Berens stated he believes Merck has doubtless seen up to date knowledge forward of its bid for the corporate, suggesting that TERNS-701 is more likely to preserve its best-in-class profile. Berens stated that even when the efficacy measures average, the decrease finish of the disclosed outcomes stays above the historic benchmarks for Scemblix within the second-line setting, putting a long way from the Novartis product.
The monetary phrases of the acquisition name for Merck to pay $53 in money for every share of Terns. Whereas that’s only a 6% premium to the inventory’s Tuesday closing worth, Terns shares had been climbing for the reason that ASH presentation on hypothesis of an acquisition. The acquisition worth is a 31% premium to Terns’s common inventory worth for 60 days previous to Merck’s acquisition announcement and a 42% premium to the inventory’s common worth for the previous 90 days. Minus the money that Terns already has, Merck’s monetary outlay will likely be about $5.7 billion.
Prior to now 12 months, Merck has agreed to pay $9.2 billion to purchase influenza drug developer Cidara Therapeutics and $10 billion to amass respiratory medication biotech Verona Pharma. Within the Terns acquisition announcement, Merck CEO Robert Davis stated this deal builds on his firm’s rising presence in hematology with a possible best-in-class CML drug.
“This transaction additional diversifies and strengthens our place in oncology as we proceed to search for alternatives to broaden our portfolio into different therapeutic areas,” he stated
In a Wednesday analysis word, William Blair Andy Hsieh stated TERNS-701 has demonstrated unequivocal enchancment in each security and efficacy together with higher dosing comfort, positioning the drug to “disrupt the remedy paradigm of CML” and problem Scemblix’s dominance within the indication. Berens stated the acquisition worth for Terns “vastly underestimates” the potential for TERN-701. On a per share foundation, the worth continues to be under Leerink’s $58 per share worth goal. The financial institution tasks the Terns drug may obtain blockbuster gross sales by 2032 and attain peak gross sales of about $6.2 billion by 2040. Given the drug’s potential, Berens stated some Terns shareholders might demand a better worth or one other bidder might are available to attempt to prime Merck’s provide.
The acquisition nonetheless requires the vast majority of Terns stockholders to tender their shares. The businesses count on to finish the transaction within the second quarter of this 12 months. But when one other bidder steps in with a superior provide, Terns should pay Merck a $235 million termination price, in keeping with phrases of the acquisition settlement.
Photograph: Christopher Occhicone/Bloomberg, through Getty Photographs
