Merck to buy Terns Pharmaceuticals for $6.7 billion to boost cancer pipeline

Pharma giant Merck is buying U.S.

biotech firm Terns Pharmaceuticals for $6.7 billion to boost its oncology pipeline, the company said Wednesday.

This is the third multibillion-dollar acquisition for Merck over the past year as the company looks to bulk up its portfolio before its best-selling cancer drug Keytruda loses key patent protection in 2028.

Terns is developing a medicine for a type of leukemia that analysts see as a multibillion-dollar drug that could eventually rival Novartis ' Scemblix.

Since the early 2000s, new drugs have turned chronic myeloid leukemia into a condition that can be managed over time.

Novartis has been a longtime leader in the field with its drugs Scemblix and Gleevec.

But Merck said as many as 40% of patients treated with a class of drugs known as tyrosine kinase inhibitors, which includes the Novartis treatments, switch within five years and people don't see durable responses as they try more drugs.

The company said that creates an opportunity for new entrants that can deliver more consistent effects and better tolerability.

Terns' stock has skyrocketed in recent months as investor excitement built over the experimental drug, which showed promising results in an early trial late last year.

The deal is "strategically sound and incrementally positive as MRK prepares for Keytruda's patent cliff and demonstrates its willingness to pursue differentiated oncology assets early," said analysts at RBC.

Merck has been on a dealmaking spree as its cancer drug Keytruda, the best-selling prescription drug in the world, is set to face generic competition from 2028.

With more than $30 billion in annual sales, Keytruda accounts for nearly half of Merck's sales.

The company snapped up Cidara Therapeutics and its experimental flu drug for $9.2 billion as well as respiratory drugmaker Verona Pharma for $10 billion last year, in an attempt to reduce dependence on its blockbuster cancer treatment.