Merck Slashes Terns Pharma Bid on Trial Data Review

Merck & Co. has reduced its offer to acquire Terns Pharmaceuticals. The new deal values Terns at $53 per share, down from an initial non-binding proposal of $61 per share submitted in February. This price adjustment followed Merck's review of updated clinical data from Terns' ongoing CARDINAL trial for its lead drug candidate, TERN-701, a treatment for Chronic Myeloid Leukemia (CML).

The SEC filings reveal that Merck received the updated data, which was generated under Terns' agreement with its Chinese partner, Hansoh Pharmaceutical. The data, presented at a medical conference in December 2025, showed that the MMR (Major Molecular Response) achievement rate for TERN-701 was lower than before.

A key concern noted in the filings was that the lower rate was potentially due to more patients in the trial having been pre-treated with a competing drug called asciminib, which is marketed by Novartis under the name Scemblix. While the new rate stayed within Terns' previously disclosed confidence interval, it did not overlap with the interval for asciminib, suggesting it may not be clearly superior.

Complicating matters, another large pharmaceutical company, referred to as 'Party C,' withdrew from the bidding process entirely. Party C had offered up to $70 per share but backed out, stating the updated data was 'more nuanced' and that TERN-701 was not 'sufficiently differentiated or sufficiently de-risked.'

In response to the data and the loss of a competing bidder, Merck lowered its offer to $50 per share before the parties eventually settled on the final price of $53 per share, representing an approximate $6.7 billion equity value.

This news matters because it highlights the high-stakes, data-driven nature of biopharma M&A. A drug's perceived clinical profile can change dramatically with new data, directly impacting its valuation by billions of dollars overnight. For Terns, the lower MMR rate directly translated to a 13% cut in its takeover price.

The development is a clear win for Novartis. The perceived strength of its drug, asciminib (Scemblix), as a prior treatment appears to have dampened the efficacy results for TERN-701. This strengthens Novartis's competitive moat in the CML treatment landscape, as potential new entrants now face a higher clinical bar to prove superiority.

For Merck, the lower price suggests a more cautious, value-focused approach. While the company maintained that the data was still 'compelling relative to asciminib,' its decision to drive a harder bargain indicates it sees increased risk or a narrower commercial opportunity than initially hoped. This could be seen as prudent capital allocation or a sign of diminished enthusiasm.

The withdrawal of 'Party C' is a major red flag for Terns' standalone prospects. Losing a competing bidder removes leverage in negotiations and signals to the market that top-tier strategic buyers have serious doubts about the drug's differentiation and commercial potential beyond Merck.

Ultimately, the fact that a deal is still proceeding at $6.7 billion indicates both parties see value. For Terns shareholders, it's a definitive exit, albeit at a lower price than once hoped. For the sector, it's a reminder that late-stage clinical data remains the ultimate valuation driver.