Form 4: Terns Pharmaceuticals CEO Reports Merger-Related Transactions

Amy L. Burroughs, CEO of Terns Pharmaceuticals, reported transactions related to the company's merger with Merck Sharp & Dohme LLC, detailing the conversion of stock options and restricted stock units.

Summary

• Amy L. Burroughs, Chief Executive Officer and Director of Terns Pharmaceuticals, Inc., filed a Form 4 detailing transactions on May 5, 2026.
• These transactions are related to the previously announced Agreement and Plan of Merger between Terns Pharmaceuticals and Merck Sharp & Dohme LLC.
• The filing indicates the conversion of stock options and restricted stock units (RSUs) into cash payments as part of the merger consideration.
• Specifically, outstanding stock options with an exercise price below the merger consideration of $53.00 per share were cancelled and converted into a right to receive the difference.
• Similarly, outstanding RSUs were cancelled and converted into the right to receive cash equal to the merger consideration per share.
• Burroughs also reported acquiring additional shares under the Issuer's 2021 Employee Stock Purchase Plan and indirectly owns shares through a trust.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a neutral to slightly positive filing, as it confirms the execution of a merger with a clear cash payout for insiders, reflecting the agreed-upon value of the company.

Positives

• The merger agreement with Merck Sharp & Dohme LLC provides a cash consideration of $53.00 per share, offering a clear exit value for shareholders.
• All outstanding stock options with an exercise price below the merger consideration are being converted into cash, realizing value for option holders.
• Restricted stock units are also being converted into cash, ensuring value realization for RSU holders.
• Amy L. Burroughs, as CEO, is directly involved in the merger process, indicating alignment with the transaction's execution.

Negatives

• The filing primarily details the mechanics of the merger's financial implications for the reporting person, rather than operational performance.
• The cancellation of stock options and RSUs, while resulting in cash, means the loss of potential future equity upside if the company were to continue independently.

Risks

• Potential for applicable withholding taxes on cash payments received from the conversion of stock options and RSUs.
• The merger is subject to the terms and conditions of the Agreement and Plan of Merger, with potential for unforeseen complications during the closing process.

Future Outlook

The filing does not contain forward-looking statements or guidance in the traditional sense, but rather details the financial outcomes of a completed merger transaction for the reporting person.

Management Comments

• "Includes 7,638 shares acquired under the Issuer's 2021 Employee Stock Purchase Plan since the reporting person's Form 4 filed on March 17, 2026."
• "Pursuant to the Merger Agreement, each Issuer restricted stock unit ('RSU') award then outstanding, whether or not vested, was cancelled and converted into the right to receive an amount in cash..."
• "Pursuant to the Merger Agreement, at the Effective Time, each option to purchase the Issuer's Shares that was outstanding and unexercised immediately prior to the Effective Time... was cancelled and converted into the right to receive... the excess of the Merger Consideration over the per share exercise price."

Industry Context

StockSavvy.ai notes that this Form 4 filing is a standard disclosure following a significant corporate event, in this case, a merger. Such filings are crucial for understanding the financial implications for key insiders and confirming the execution of merger terms, particularly the cash-out of equity awards.

Comparison to Industry Standards

• In the biopharmaceutical sector, mergers and acquisitions are common, often involving the cash-out of executive stock options and RSUs at a premium to their grant price or current market value.
• The $53.00 per share cash consideration is a key metric for comparison, indicating the valuation Merck Sharp & Dohme placed on Terns Pharmaceuticals.
• The conversion of options and RSUs into cash is a standard practice in such acquisition scenarios, ensuring that executives and employees benefit from the transaction.

Stakeholder Impact

• Shareholders: Will receive $53.00 per share in cash, realizing their investment value.
• Employees (including management): Stock options and RSUs are converted to cash, providing financial benefit from the merger.
• Management (Amy L. Burroughs): As CEO and Director, directly benefits from the merger through the conversion of her equity awards and potential ownership of shares.

Next Steps

• Completion of the merger between Terns Pharmaceuticals and Merck Sharp & Dohme LLC.
• Shareholders receiving the $53.00 per share cash consideration.
• Terns Pharmaceuticals will cease to be a publicly traded entity following the merger's completion.

Key Dates

Keywords

Terns Pharmaceuticals, Form 4, SEC Filing, Merger, Amy L. Burroughs, Stock Options, Restricted Stock Units, Merck Sharp & Dohme, Beneficial Ownership, Insider Trading