Merck nears $6bn biotech deal to boost cancer drug pipeline
Terns Pharma stock has jumped since promising clinical data on its bone and blood cancer treatment last year
Merck is nearing a roughly $6bn deal to buy Terns Pharma, a US biotech developing treatments for a rare form of blood and bone cancer, in its latest move to replenish its pipeline as blockbuster oncology drug Keytruda comes off patent.
The New Jersey-based drugmaker has been on a dealmaking spree as it tries to get ahead of $30bn-a-year Keytruda’s patent expiry as soon as 2028. It snapped up respiratory drugmaker Verona Pharma for $10bn and flu-prevention biotech Cidara Therapeutics for $9.2bn last year.
Merck has stood out as the most aggressive biotech acquirer, as the wider pharmaceutical industry contends with an estimated $320bn of revenue losses from drug patent protection ending between now and 2030. Investors have rewarded Merck, with its share price up 38 per cent since the Verona acquisition last July, giving it a market value of $287bn as of Tuesday’s close.
Talks between Merck and Terns were at an advanced stage and a deal could be reached in the coming days, said people familiar with the matter. The all-cash deal is expected to value Terns at roughly $6bn, a premium to its market capitalisation of $5.3bn at Tuesday’s close.
An acquisition of Terns would be a bet on the California-based biotech’s early-stage treatment for chronic myeloid leukaemia, or CML — a rare form of cancer affecting the bloodstream and bone marrow, caused by a genetic mutation.
Merck and Terns did not immediately respond to requests for comment.
This treatment could go some way to displacing the current preferred CML drug Scemblix, sold by Merck’s rival Novartis. Novartis last year raised its peak annual sales projections for Scemblix to $4bn, which suggests that treating CML patients could present a lucrative opportunity for Merck.
Terns is set to launch late-stage trials towards the end of this year or in early 2027. The US had roughly 9,560 new CML cases last year. Across G7 nations, about 93,000 patients were treated for the disease in 2024, according to Novartis.
Shares in Terns have increased nearly fivefold since the biotech released positive clinical data last October.
Merck is set for a busy year with several phase-three clinical data readouts and medicines coming to market, and it has already been fishing for other significant deals. Merck in January was in talks to buy cancer biotech Revolution Medicines in a deal that could be valued at up to $32bn, the FT reported. But the drugmaker walked away after weeks of talks, people familiar with the matter said.
At the JPMorgan healthcare conference in January, Rob Davis, Merck’s chief executive, said he was eyeing further deals to unlock scientific innovation, saying that “the area up to $15bn is our sweet spot” but he would be open to even larger acquisitions.
The XBI biotech index is up 34 per cent over the past year as the sector has been buoyed by increased dealmaking activity. This year has already seen Gilead strike a $7.8bn deal to buy oncology biotech Arcellx, with which it had an existing partnership.