FELLOWS DAVID A 4
4 · Terns Pharmaceuticals, Inc. · Filed May 5, 2026
Research Summary
AI-generated summary of this filing
Terns (TERN) Director David A. Fellows Surrenders Options in $53/Share Merger
What Happened
David A. Fellows, a director of Terns Pharmaceuticals (TERN), had multiple option-derived holdings cancelled and converted into the right to receive cash in connection with the company's merger with Merck. On 2026-05-05 he disposed (to the issuer) of a total of 221,136 option-based shares (individual lots: 32,000; 45,000; 18,650; 8,183; 32,000; 28,475; 22,000; 32,000; 2,828). Under the Merger Agreement, each cancelled option with an exercise price below the merger consideration was converted into the right to receive the excess of the $53.00 per‑share Merger Consideration over the option exercise price (net of withholding). The Form 4 lists the transaction price as N/A because the actual cash payout depends on each option’s exercise price; the maximum gross amount if there were no exercise prices would be about $11.72 million (221,136 × $53), but actual proceeds will be reduced by exercise-price offsets and applicable taxes.
Key Details
- Transaction date: 2026-05-05 (reported 2026-05-05) — filing appears timely.
- Transaction type/code: Disposition to issuer (D); derivative transactions converting options into cash rights per merger.
- Aggregate shares affected: 221,136 option-derived shares (see lot breakdown above).
- Price/value: Form shows N/A; payout = $53.00 minus each option’s exercise price, net of withholding (see footnotes F1 & F2).
- Shares owned after transaction: Not disclosed in the provided Form 4 data.
- Footnotes: F1 explains cancelled options were converted into cash rights for the excess of Merger Consideration over exercise price; F2 confirms Merck tender/merger at $53.00 per share.
Context
These are not open-market sales; they reflect the contractual cash-out of outstanding options under the merger terms. Such transactions are routine in acquisitions and settle equity awards rather than signaling a director’s independent view on the company’s future. The actual cash received by Fellows will depend on the exercise prices of the cancelled options and applicable tax withholdings.
Insider Transaction Report
- Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−32,000→ 0 totalExercise: $1.82→ Common Stock (32,000 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−45,000→ 0 totalExercise: $4.10→ Common Stock (45,000 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−18,650→ 0 totalExercise: $4.46→ Common Stock (18,650 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−8,183→ 0 totalExercise: $6.85→ Common Stock (8,183 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−32,000→ 0 totalExercise: $6.99→ Common Stock (32,000 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−28,475→ 0 totalExercise: $9.24→ Common Stock (28,475 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−22,000→ 0 totalExercise: $10.72→ Common Stock (22,000 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−32,000→ 0 totalExercise: $12.05→ Common Stock (32,000 underlying) - Disposition to Issuer
Stock Option (Right to Buy)
[F1][F2]2026-05-05−2,828→ 0 totalExercise: $34.60→ Common Stock (2,828 underlying)
Footnotes (2)
- [F1]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.
- [F2]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.