FELLOWS DAVID A 4
Research Summary
AI-generated summary
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.