Terns Pharmaceuticals (TERN) director options cashed out in $53 Merck deal

Rhea-AI Filing Summary

Terns Pharmaceuticals director David A. Fellows reported nine option dispositions to the company tied to its cash merger with Merck. On May 5, 2026, multiple stock option awards covering shares of Terns common stock were cancelled and converted under the merger terms.

Under the Agreement and Plan of Merger, each unexercised option with an exercise price below the $53.00 per share merger consideration is converted into a right to receive cash equal to the merger price minus the option’s exercise price, subject to withholding taxes. These are non‑market, compensation-related adjustments rather than open‑market trades.

Insights

Equity compensation analyst

Director options are cashed out as part of Merck’s $53 deal.

The Form 4 shows David A. Fellows, a director of Terns Pharmaceuticals, disposing of nine stock option grants back to the issuer. The options have exercise prices ranging from $1.82 to $34.60 and are treated under the merger agreement.

Footnotes state that, at the merger’s effective time, each unexercised option with an exercise price below the $53.00 cash merger consideration is cancelled and converted into a cash right for the spread over the exercise price. Because these dispositions are to the issuer within a completed tender offer structure, they are administrative and compensation-related rather than market trades.

The filing indicates nine derivative transactions and no remaining derivative holdings in the derivative summary. Subsequent filings or closing documents around the merger effective time may give additional detail on final cash amounts paid for these options.

Insider Trade Summary

9 transactions reported

Mixed 9 txns

Insider FELLOWS DAVID A

Role null

Type	Security	Shares	Price	Value
Disposition	Stock Option (Right to Buy)	32,000	$0.00	--
Disposition	Stock Option (Right to Buy)	45,000	$0.00	--
Disposition	Stock Option (Right to Buy)	18,650	$0.00	--
Disposition	Stock Option (Right to Buy)	8,183	$0.00	--
Disposition	Stock Option (Right to Buy)	32,000	$0.00	--
Disposition	Stock Option (Right to Buy)	28,475	$0.00	--
Disposition	Stock Option (Right to Buy)	22,000	$0.00	--
Disposition	Stock Option (Right to Buy)	32,000	$0.00	--
Disposition	Stock Option (Right to Buy)	2,828	$0.00	--

Holdings After Transaction: Stock Option (Right to Buy) — 0 shares (Direct, null)

Footnotes (1)

1. Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each option to purchase the Issuer's Shares that was outstanding and unexercised immediately prior to the Effective Time, whether or not vested, with a per share exercise price that was less than the Merger Consideration was cancelled and converted into the right to receive, without interest thereon and subject to the applicable withholding taxes, the excess of the Merger Consideration over the per share exercise price. On March 24, 2026, Terns Pharmaceuticals, Inc. (the "Issuer") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Merck Sharp & Dohme LLC ("Merck") and Thailand Merger Sub, Inc. (the "Purchaser"), a wholly owned subsidiary of Merck. Pursuant to the Merger Agreement, the Purchaser completed a tender offer for the shares of the Issuer's common stock (the "Shares"). In exchange for each Share, tendering shareholders will receive $53.00 per Share (the "Merger Consideration"), payable in cash, net to the seller, and without interest, subject to any applicable withholding taxes, as described more fully in the Schedule 14D-9 filed by the Issuer on April 7, 2026.

Key Figures

Derivative dispositions: 9 transactions Merger consideration: $53.00 per share Highest option exercise price: $34.60 per share +1 more

4 metrics

Derivative dispositions 9 transactions Form 4 derivativeTransactionCount for options on common stock

Merger consideration $53.00 per share Cash paid per Terns common share in Merck tender offer

Highest option exercise price $34.60 per share Conversion/exercise price for one disposed stock option grant

Example option exercise price $1.82 per share Conversion/exercise price for one lower-priced disposed option grant

Key Terms

Agreement and Plan of Merger, Merger Agreement, tender offer, Merger Consideration, +1 more

5 terms

Agreement and Plan of Merger regulatory

"entered into an Agreement and Plan of Merger (the "Merger Agreement") with Merck Sharp & Dohme LLC"

An Agreement and Plan of Merger is a formal document where two companies agree to combine into one, outlining how the process will happen. It’s like a step-by-step plan for merging, and it matters because it shows both sides have agreed on the details before the official transition takes place.

Merger Agreement regulatory

"Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each option"

A merger agreement is a binding contract that lays out the exact terms for two companies to combine, including the price, what each side will deliver, and the conditions that must be met before the deal is completed. Investors care because it sets the timetable, payouts and risks — like a blueprint or prenup that shows whether the deal is likely to close, how ownership will change, and what could cancel or alter the payout they expect.

tender offer financial

"the Purchaser completed a tender offer for the shares of the Issuer's common stock"

A tender offer is a proposal made by a person or company to buy shares from existing shareholders at a set price, usually higher than the current market value, within a specific time frame. It matters to investors because it can lead to a change in ownership or control of a company, and shareholders must decide whether to sell their shares at the offered price.

Merger Consideration financial

"per share exercise price that was less than the Merger Consideration was cancelled and converted"

Merger consideration is the total payment a company or buyer offers to shareholders of a target company in exchange for combining the two businesses, and can include cash, shares in the surviving company, debt assumption, or a mix of these. Investors care because the form and amount affect the deal’s value, tax consequences, immediate cash received versus future ownership, and the risk and upside of holding new shares — similar to choosing between cash now or stock that could grow later.

Effective Time regulatory

"Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each option"

Form 4 Insider Transactions: What Each Field Means →

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

OMB APPROVAL

OMB Number:			3235-0287
Estimated average burden
hours per response:			0.5

X

Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

Check this box to indicate that a transaction was made pursuant to a contract, instruction or written plan for the purchase or sale of equity securities of the issuer that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). See Instruction 10.

1. Name and Address of Reporting Person^*

FELLOWS DAVID A

(Last) (First) (Middle)

C/O TERNS PHARMACEUTICALS, INC.

1065 EAST HILLSDALE BLVD., SUITE 100

(Street)

FOSTER CITY CALIFORNIA 94404

(City) (State) (Zip)

UNITED STATES

(Country)

2. Issuer Name and Ticker or Trading Symbol
Terns Pharmaceuticals, Inc. [ TERN ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

X	Director		10% Owner
	Officer (give title below)		Other (specify below)

2a. Foreign Trading Symbol

3. Date of Earliest Transaction (Month/Day/Year)
05/05/2026

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

4. If Amendment, Date of Original Filed (Month/Day/Year)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
			Code	V	Amount	(A) or (D)	Price

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
				Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares
Stock Option (Right to Buy)	$1.82	05/05/2026		D			32,000(1)	(1)	(1)	Common Stock	32,000	(2)	0.00	D
Stock Option (Right to Buy)	$4.1	05/05/2026		D			45,000(1)	(1)	(1)	Common Stock	45,000	(2)	0.00	D
Stock Option (Right to Buy)	$4.46	05/05/2026		D			18,650(1)	(1)	(1)	Common Stock	18,650	(2)	0.00	D
Stock Option (Right to Buy)	$6.85	05/05/2026		D			8,183(1)	(1)	(1)	Common Stock	8,183	(2)	0.00	D
Stock Option (Right to Buy)	$6.99	05/05/2026		D			32,000(1)	(1)	(1)	Common Stock	32,000	(2)	0.00	D
Stock Option (Right to Buy)	$9.24	05/05/2026		D			28,475(1)	(1)	(1)	Common Stock	28,475	(2)	0.00	D
Stock Option (Right to Buy)	$10.72	05/05/2026		D			22,000(1)	(1)	(1)	Common Stock	22,000	(2)	0.00	D
Stock Option (Right to Buy)	$12.05	05/05/2026		D			32,000(1)	(1)	(1)	Common Stock	32,000	(2)	0.00	D
Stock Option (Right to Buy)	$34.6	05/05/2026		D			2,828(1)	(1)	(1)	Common Stock	2,828	(2)	0.00	D

Explanation of Responses:

1. Pursuant to the Merger Agreement, at the Effective Time (as defined in the Merger Agreement), each option to purchase the Issuer's Shares that was outstanding and unexercised immediately prior to the Effective Time, whether or not vested, with a per share exercise price that was less than the Merger Consideration was cancelled and converted into the right to receive, without interest thereon and subject to the applicable withholding taxes, the excess of the Merger Consideration over the per share exercise price.

2. On March 24, 2026, Terns Pharmaceuticals, Inc. (the "Issuer") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Merck Sharp & Dohme LLC ("Merck") and Thailand Merger Sub, Inc. (the "Purchaser"), a wholly owned subsidiary of Merck. Pursuant to the Merger Agreement, the Purchaser completed a tender offer for the shares of the Issuer's common stock (the "Shares"). In exchange for each Share, tendering shareholders will receive $53.00 per Share (the "Merger Consideration"), payable in cash, net to the seller, and without interest, subject to any applicable withholding taxes, as described more fully in the Schedule 14D-9 filed by the Issuer on April 7, 2026.

Remarks:

	/s/ David Strauss, as Attorney-in-Fact for David A Fellows	05/05/2026
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.
* Form 4: SEC 1474 (03-26)

FAQ

What insider transaction did Terns Pharmaceuticals (TERN) report for David A. Fellows?

Terns reported that director David A. Fellows disposed of nine stock option awards back to the issuer. These options, covering common shares, were cancelled and converted into cash rights in connection with the company’s merger with Merck under the agreed merger consideration terms.

How are Terns Pharmaceuticals (TERN) stock options treated under the Merck merger?

Under the Merger Agreement, each unexercised option with an exercise price below the merger consideration is cancelled. The holder receives cash equal to the $53.00 merger price minus the option’s per share exercise price, before applicable tax withholding, at the merger’s effective time.

Was there any open-market buying or selling of Terns (TERN) shares in this Form 4?

No open-market buying or selling is shown. The Form 4 records option dispositions coded “D” as dispositions to the issuer, reflecting administrative cancellation and cash-out of options under the merger agreement rather than trades executed in the public market.

What is the cash consideration per share in the Terns Pharmaceuticals (TERN) merger with Merck?

Tendering shareholders receive $53.00 in cash per share of Terns common stock. This merger consideration is paid net to the seller, without interest, and subject to applicable withholding taxes, as described in connection with the completed tender offer and related merger documentation.

How many derivative transactions are reported in this Terns (TERN) Form 4 filing?

The transaction summary shows nine derivative transactions, all coded as dispositions to the issuer. Each entry relates to a stock option on Terns common stock that was cancelled and converted into a cash right under the merger agreement’s option treatment provisions.