Merck (NYSE: MRK) announced Tuesday it has entered into a definitive agreement to acquire Terns Pharmaceuticals (Nasdaq: TERN), a clinical-stage oncology company, for $53.00 per share in cash — representing an approximate equity value of $6.7 billion, or roughly $5.7 billion net of acquired cash. The deal carries a 31% premium to Terns’ 60-day volume-weighted average price and a 42% premium to its 90-day VWAP as of March 24, 2026.
The acquisition is a textbook small-cap-to-acquisition story. Less than 18 months ago, Terns was trading below $2 per share with a market cap well under $200 million. By the end of 2025, the stock had surged more than 770% year-to-date on the back of compelling Phase 1 clinical data. As of Tuesday’s announcement, shareholders who held through the volatility are looking at a $53 payday — a return that underscores exactly why early-stage biotech remains one of the most asymmetric bets in the small and microcap universe.
At the center of this deal is TERN-701, an investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor (TKI) currently being evaluated in the Phase 1/2 CARDINAL trial for patients with Philadelphia chromosome-positive (Ph+) chronic phase chronic myeloid leukemia (CML). Specifically, the drug targets patients who have already received at least one prior TKI and experienced treatment failure, suboptimal response, or intolerance.
What separates TERN-701 from existing CML therapies is its mechanism and early efficacy signal. The drug is designed to bind to the ABL myristoyl pocket — a distinct binding site from most approved TKIs — giving it the potential to work in patients who have already failed other therapies, including those with difficult resistance mutations like T315I. In clinical data presented through the CARDINAL trial, 64% of efficacy-evaluable patients achieved major molecular response by 24 weeks, with 75% achieving MMR among those treated at doses above 320mg. The safety profile has also been notably clean, with low rates of severe adverse events, minimal blood pressure changes, and low lipase elevation — a meaningful differentiator given the side-effect profiles associated with several competing agents.
The FDA recognized the drug’s potential in March 2024, granting TERN-701 Orphan Drug Designation for the treatment of CML. Merck is now betting that designation translates into a commercially viable, potentially best-in-class therapy within its growing hematology portfolio — which already includes three Phase 3 candidates across leukemias, lymphomas, and myeloproliferative neoplasms.
Merck expects to account for the transaction as an asset acquisition, with the deal expected to close in the second quarter of 2026, pending a successful tender offer and Hart-Scott-Rodino antitrust clearance. The charge will be approximately $5.8 billion, or roughly $2.35 per share, reflected in both Q2 and full-year 2026 results.
For the small and microcap investor community, this deal is more than just a pharma headline. It’s a reminder that the path from sub-$2 clinical-stage company to a multi-billion-dollar buyout target is very much alive — and that the CARDINAL data milestones many overlooked in 2024 were the signals that mattered most.