Terns Pharmaceuticals surges on Merck’s reported $6 billion takeover bid as Keytruda patent clock ticks

NEW YORK, March 25, 2026 — Terns Pharmaceuticals (NASDAQ: TERN) is the sharpest premarket mover of Wednesday’s session, climbing approximately 12% to around $55.97 in overnight trading after the Financial Times reported that Merck & Co. (NYSE: MRK) is nearing an approximately $6 billion all-cash acquisition of the clinical-stage oncology biotech. The stock closed Tuesday’s regular session at $50.00 — already carrying a market capitalisation of approximately $5.3–5.4 billion — and the overnight move reflects the market pricing in a meaningful acquisition premium. According to Bloomberg, a formal announcement could arrive as soon as Wednesday, making this the session’s single most time-sensitive catalyst.

TERN’s 12% premarket surge — what is driving the Merck acquisition bid

The strategic rationale behind Merck’s pursuit of Terns Pharmaceuticals is well-established: Keytruda, Merck’s blockbuster PD-1 cancer immunotherapy, generates approximately $30 billion in annual revenue and faces the loss of patent exclusivity as early as 2028. That revenue cliff has forced Merck into one of the most aggressive dealmaking campaigns in the pharmaceutical sector. In 2025 alone, the company acquired respiratory drugmaker Verona Pharma for $10 billion and flu-prevention biotech Cidara Therapeutics for $9.2 billion. The Terns deal, if completed, would represent the third major acquisition in under twelve months — a pace that reflects the urgency Merck management has communicated around the post-Keytruda pipeline.

Terns Pharmaceuticals’ primary oncology asset is TERN-701, a small-molecule inhibitor currently in a Phase 1 clinical trial — the CARDINAL study — for the treatment of relapsed and refractory chronic myeloid leukemia (CML). CML is a rare haematological malignancy driven by the BCR-ABL1 fusion gene, and while first-line tyrosine kinase inhibitors have transformed the disease’s management, patients who develop resistance or intolerance to existing treatments face limited options. TERN-701’s mechanism is designed to address that unmet need, and positive early-stage data announced last year positioned Terns as an attractive bolt-on for a large pharma seeking oncology pipeline depth.

Deal valuation — reading the premium embedded in TERN’s overnight move

Terns Pharmaceuticals’ market capitalisation at Tuesday’s close was approximately $5.3–5.4 billion. The reported deal value of approximately $6 billion implies a premium of roughly 10–13% to that closing price — a relatively modest acquisition premium by pharma M&A standards, where deals frequently carry 30–50% premiums to pre-announcement trading levels. That gap matters for traders assessing Tuesday’s overnight move: the 12% jump to ~$55.97 has absorbed most — but not necessarily all — of the reported deal value. If the transaction is formally announced at $6 billion or above, the remaining upside is limited. However, if the final agreed price exceeds the initial FT figure, there could be additional movement at the open.

It is worth noting that the FT report describes talks as being “at an advanced stage,” not as a completed transaction. Negotiations remain active, and either party could modify terms or, in a less likely scenario, disengage. Bloomberg’s reporting adds specificity, citing sources who suggest an announcement could come as soon as Wednesday — meaning the premarket session is running in parallel with live deal-finalisation activity. Merck shares gained 0.5% in overnight trading, now indicated at approximately $116.99, reflecting the market’s broadly constructive view of the acquisition as a sensible strategic deployment of capital rather than an overpriced premium transaction.

Sector read-through — what the Merck-Terns deal signals for oncology M&A

The reported Merck-Terns deal lands within a broader context of accelerating pharmaceutical consolidation, as large-cap drug companies with patent cliff exposure compete to acquire late-stage or early-commercial oncology assets before they are fully priced into the market. Merck is not alone in this posture. Pfizer, AstraZeneca, and AbbVie have each signalled active deal pipelines. The specific signal from a Merck-Terns deal is more granular: it suggests that clinical-stage oncology companies with differentiated mechanisms in haematological cancers — where the competitive bar is lower than in more crowded solid tumour indications — carry premium strategic value to large-cap acquirers.

For investors tracking the broader healthcare sector, the Terns deal adds a specific layer of attention to other clinical-stage CML and haematology-focused names. It also reinforces the dynamic that SEC filings and deal disclosures remain one of the most time-sensitive data sources for premarket traders in the biotech and pharma space.

What to watch at the open — deal confirmation, spread, and risk factors for TERN

The primary variable heading into Wednesday’s open is straightforward: whether a formal deal announcement arrives before the 9:30 AM ET bell. If an announcement is made overnight or in early premarket, TERN will trade as a deal stock — meaning the spread between the current price and the final deal value will narrow, and volatility will compress. If no announcement comes before the open, the stock will trade on ongoing speculation, which introduces higher intraday volatility and the risk of a partial giveback if deal fatigue sets in among short-term holders.

Secondary risks worth monitoring include: regulatory review — pharma M&A at this scale typically requires FTC or DOJ review, which adds timeline uncertainty; the possibility that a competing bidder emerges, which could push the final price above $6 billion; and Merck’s own share price reaction, which will serve as a real-time signal of whether institutional investors view the deal as capital-efficient. Merck’s overnight gain of 0.5% suggests the initial read is constructive, but formal M&A announcements frequently trigger a more definitive re-rating in either direction. Readers seeking context on how major deals like this move through premarket trading mechanics will find relevant framework in PreMarket Daily’s education series.

What the market is pricing in — and where the risk lies

The market is pricing TERN as a near-certain deal at approximately $6 billion, with the overnight move having absorbed the bulk of the reported premium. The residual risk is binary: formal confirmation at or above the reported figure would validate the overnight trade and likely stabilise the stock near current levels or slightly higher; a deal at a lower price or a deal break would produce a sharp reversal toward pre-announcement levels. For Merck, the deal is consistent with its stated strategic priority of replacing Keytruda revenue — but the Street will watch whether the company’s acquisition cadence is sustainable from a balance sheet perspective, and whether each successive deal is adding incremental pipeline value or simply consuming capital at an accelerating pace.