Form 4: Terns CFO Gengos Disposes Shares, Options in Merck Merger

Terns Pharmaceuticals' CFO Andrew Gengos reported the disposition of common stock and stock options following the company's merger with Merck Sharp & Dohme LLC at $53 per share.

Summary

• Andrew Gengos, Chief Financial Officer of Terns Pharmaceuticals, Inc., reported changes in his beneficial ownership.
• The changes are a direct result of the Agreement and Plan of Merger between Terns Pharmaceuticals, Inc. and Merck Sharp & Dohme LLC, which completed a tender offer for Terns shares.
• Shareholders received $53.00 per share in cash for their common stock.
• Gengos disposed of 68,750 shares of common stock at $53.00 per share.
• He also disposed of 750,000 stock options with an exercise price of $3.73 and 137,500 stock options with an exercise price of $37.18.
• These options were cancelled and converted into cash equal to the difference between the $53.00 merger consideration and their respective exercise prices.
• The filing also notes the acquisition of 40,503 shares, including 7,465 shares from the Issuer's 2021 Employee Stock Purchase Plan, which were subsequently disposed of as part of the merger.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive event for the reporting person, as it confirms the successful completion of the merger and the realization of significant cash value from their equity holdings. For Terns shareholders, it represents the successful conclusion of an acquisition at a defined premium.

Positives

• The reporting person realized significant cash proceeds from the disposition of common stock and the cancellation of in-the-money stock options due to the merger.
• The merger consideration of $53.00 per share represents a clear valuation for Terns Pharmaceuticals' equity.

Negatives

• The reporting person no longer holds common stock or stock options in Terns Pharmaceuticals, Inc., indicating a loss of future upside potential from Terns as an independent entity.

Future Outlook

NA

Industry Context

StockSavvy.ai notes that the completion of the Terns Pharmaceuticals acquisition by Merck Sharp & Dohme LLC signifies continued consolidation within the biotechnology and pharmaceutical sectors, particularly for companies with promising drug pipelines. This trend often sees larger pharmaceutical companies acquiring smaller biotechs to bolster their R&D portfolios and gain access to innovative therapies, reflecting a strategic move by Merck to enhance its therapeutic offerings.

Stakeholder Impact

• Shareholders: Terns Pharmaceuticals shareholders received $53.00 per share in cash, providing a clear exit and liquidity.
• Employees: Employees holding RSUs and stock options, like the CFO, had their equity awards converted to cash, providing a financial benefit.
• Company (Terns): Terns Pharmaceuticals, Inc. is now a wholly-owned subsidiary of Merck, ceasing to be an independent publicly traded entity.

Next Steps

• The merger has been completed, so the next steps for the reporting person regarding Terns Pharmaceuticals equity are concluded.
• The company Terns Pharmaceuticals, Inc. is now a wholly-owned subsidiary of Merck.

Key Dates

Keywords

Terns Pharmaceuticals, TERN, Merck, Merger, Acquisition, Tender Offer, Andrew Gengos, CFO, Stock Options, Common Stock, Beneficial Ownership, SEC Form 4, Biotechnology, Pharmaceuticals