Investing.com -- Pharmaceutical giant Merck announced Wednesday that it will acquire clinical-stage oncology company Terns Pharmaceuticals for $53.00 per share in cash, representing an approximate equity value of $6.7 billion. The deal equates to approximately $5.7 billion net of acquired cash and represents a premium of 31% to the 60-day and 42% to the 90-day volume-weighted average stock price on Tuesday.

The acquisition centers on Terns' lead candidate, TERN-701, a novel investigational oral allosteric BCR::ABL1 tyrosine kinase inhibitor currently being evaluated in the Phase 1/2 CARDINAL trial for patients with Philadelphia chromosome-positive, chronic phase chronic myeloid leukemia previously treated with at least one prior TKI and who experienced treatment failure, suboptimal response or treatment intolerance. In March 2024, the FDA granted Orphan Drug Designation for TERN-701 for the treatment of CML.

"The acquisition of Terns builds on our growing presence in hematology with TERN-701, a potential best-in-class candidate for the treatment of certain patients with chronic myeloid leukemia," said Robert M. Davis, chairman and chief executive officer at Merck. "This transaction further diversifies and strengthens our position in oncology as we continue to look for opportunities to broaden our portfolio into other therapeutic areas."

In clinical trials to date, TERN-701 has shown promising activity, with encouraging rates of major molecular response and deep molecular response observed by week 24.

Amy Burroughs, chief executive officer at Terns, said the acquisition reflects the team's deep commitment to innovation in oncology and developing high impact medicines. "By working together, we will advance TERN-701, leveraging the deep expertise and significant resources at Merck, a global biopharmaceutical leader with a proven track record of delivering cancer breakthroughs for patients who need them most," Burroughs said.

The transaction has been approved by both Merck's and Terns' Boards of Directors. The acquisition is subject to a majority of Terns' stockholders tendering their shares in a tender offer that will be initiated by a subsidiary of Merck. The closing of the proposed transaction will be subject to certain conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

The transaction is expected to be accounted for as an asset acquisition and close in the second quarter of 2026, resulting in a charge of approximately $5.8 billion, or approximately $2.35 per MRK share, included in both second quarter and full year 2026 GAAP and non-GAAP results.

Shares of Terns, which closed at $50.00 on Tuesday, gained over 5% in pre-market trading Wednesday. MRK rose 0.4% in pre-market trading following the announcement.