U.S.-based Merck & Co. (MRK) announced $5.75 billion all-cash deal to acquire biotech company Terns Pharmaceuticals (TERN) as part of its plan to strengthen its drug pipeline ahead of Keytruda’s patent expiration in 2028. Notably, Keytruda (pembrolizumab) is Merck’s blockbuster immunotherapy drug and one of the world’s best-selling medicines, widely used to treat various types of cancers. TERN stock is up 5% at market open after deal report, MRK edges up 2%.
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For context, Merck develops medicines, vaccines, and biologics, with a focus on oncology and hospital products. Meanwhile, Terns Pharmaceuticals is a biotech company working on new medicines for liver disease (NASH), obesity, and cancer.
More Details About the Deal
According to the terms, Merck will acquire Terns for $53 per share in cash, a 31% premium over the biotech’s average price in the past 60 days. The deal values Terns’ equity at $6.7 billion, and after accounting for its $1 billion cash reserve, the company’s enterprise value comes to $5.7 billion.
Yesterday, The Financial Times reported that the talks are at an advanced stage and could close in the coming days.
Merck Aims to Protect Oncology Revenue
Merck leads the global oncology segment and is best known for Keytruda, which drives nearly half of the company’s sales. In 2025, Keytruda generated around $31.7 billion in sales, marking 7% year-over-year growth. However, the latest report indicates that Keytruda could face loss of exclusivity as early as 2028.
To prepare for the upcoming Keytruda patent expiration, Merck is pursuing deals to strengthen and diversify its cancer drug pipeline, with CEO Rob Davis leading the strategy. The acquisition of Terns Pharmaceuticals is the latest step in this plan. Terns’ lead drug targets chronic myeloid leukemia (CML), a rare cancer affecting the blood and bone marrow. By adding such early-stage assets, Merck aims to bolster its oncology pipeline and ensure long-term growth.
Last month, the company announced that it will create a separate division for its cancer business, centered on its top-selling drug Keytruda to prepare for the upcoming patent expiration.
Is MRK Stock a Good Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on MRK stock based on 13 Buys and six Holds assigned in the past three months. The average Merck price target of $131.42 per share implies a 13% upside potential.
