Merck & Co (MRK) investor relations material

Deal rationale and strategic fit

• Acquisition expands and strengthens the hematology and oncology pipeline, supporting diversification and a science-driven growth strategy focused on chronic myeloid leukemia (CML).

• TERN-701, a next-generation allosteric BCR-ABL TKI, offers high selectivity, improved efficacy, safety, and tolerability, addressing significant unmet needs in CML.

• The deal leverages expertise, resources, and existing infrastructure to advance TERN-701 and maximize value creation.

• TERN-701 is expected to be a multi-billion dollar commercial opportunity and a key growth driver through the 2030s.

• The acquisition aligns with a commitment to innovation and long-term shareholder value.

Financial terms and conditions

• Acquisition price is $53 per share in cash, valuing the transaction at approximately $6.7 billion, or $5.7 billion net of cash and securities.

• Represents a 31% premium to the 60-day and 42% premium to the 90-day volume-weighted average stock price as of March 24, 2026.

• Transaction will be financed primarily through new debt, with no expected impact on credit rating.

• The deal will be accounted for as an asset acquisition, resulting in a $5.8 billion R&D charge in 2026 and a $0.17 EPS impact in the first 12 months.

• Expected to close in Q2 2026, subject to majority tender and regulatory approvals.

Synergies and expected cost savings

• TERN-701 complements the existing hematology and oncology pipeline, enabling launch synergies and leveraging commercial scale.

• Patent exclusivity for TERN-701 in the U.S. anticipated to extend into the 2040s, supporting durable revenue streams.

• Integration of Terns’ team and expertise is expected to accelerate development and maximize clinical and commercial impact.

• TERN-701 is expected to improve efficacy, safety, and convenience over existing CML treatments, potentially offering a differentiated therapeutic option.