One executive’s patent cliff is another executive’s lucrative exit.

German pharmaceutical giant Merck revealed Wednesday that it’s paying $6.7 billion for Terns Pharmaceuticals, as it tries to bridge a multibillion-dollar gap when its bestselling Keytruda comes off patent.

Patent Drop

The key patent protections on Keytruda, a Spielberg-level blockbuster immunotherapy treatment that outsold all other prescription drugs last year, end in 2028. As a result, some $31.7 billion in sales, or nearly half of Merck’s $65 billion total revenue in 2025, is at risk in the next few years.

That one-two punch of federal drug pricing and cheaper knockoff biosimilars defines the potential exposure. But, keen not to end up a relic on the pharmacy shelf, executives have gone on an aggressive shopping spree for new drugs. Last year, Merck earmarked $9.2 billion to acquire Cidara Therapeutics, which is developing a treatment that provides long-lasting passive immunity against the flu. In an even bigger deal, executives spent $10 billion to acquire respiratory drugmaker Verona Pharma. The deal for Terns, which is developing a best-in-class treatment for a type of leukemia in a market worth potentially billions, is seen by some analysts as too good to be true:

• Merck’s offer of $53 per share is only a 6% premium over Terns’ Tuesday closing value, which BMO analysts wrote would make it “one of the best deals the company has made since its spree began.”
• In fact, RBC Capital Markets analysts wrote that it’s such a sweet deal that competitors like AbbVie and Bristol Myers Squibb may look at it and throw their hat in the ring: “We think the premium of only 6% opens the door for competing bids from other potential acquirers.”

Doctor-Tested, Bull-Approved: Pharmatech company DeepCeutix, citing US patent data, estimates over $300 billion in prescription drug revenues will lose patent exclusivity in the run-up to 2030. That’s roughly one-sixth of the pharmaceutical industry’s total revenue. Of the 10 largest firms in the industry, half have more than 50% revenue exposure, prompting an industry-wide M&A bonanza to develop new revenue sources. Investors are so far bullish on the acquisition spree: Merck’s shares are up 35% in the past 12 months, and the State Street SPDR S&P Biotech ETF is up 42%.

Arm’s stock flexed more than 16% on Wednesday after the chip designer decided to take chip-making into its own hands. The 35-year-old company previously made money mostly by licensing its designs to other players in the chip ecosystem, including Qualcomm and Nvidia, and then scooping up royalties from their sales. Now, Arm wants to make its own chip built to support agentic AI.

Arm already has its first customer queued up: Meta, which is collaborating with Arm to help develop the new “AGI CPU” (Artificial General Intelligence Central Processing Unit). OpenAI and Cerebras also plan to use Arm’s new chip, Arm said.

SoftBank, which bought Arm in 2016 for $32 billion, saw its shares jump about 8% in Tokyo yesterday. Arm is among SoftBank’s many big bets on AI companies.

35, Flirty, and Thriving

Demand has surged for chips that can support agentic AI, the kind of AI that acts as a personal assistant by automatically reading and responding to emails, buying weekly groceries and so on. Making a chip that can meet that demand is Arm’s latest move to boost profits as the tech sector shifts its focus to AI:

• Arm’s current CEO, Rene Haas, took the helm four years ago and has switched the company’s focus from smartphone chips to data center semiconductors, which sell at significantly higher prices. The transition to chip-making, rather than relying on licensing intellectual property, is also a play for money. Haas expects the new chip to generate about $15 billion in annual revenue within five years, accounting for the bulk of its anticipated $25 billion in total sales. The rest is expected to come from its still-growing (but not as much) IP business.
• Under Haas, Arm’s revenue has surged more than 20% a year, with annual sales breaking past $4 billion last year. Arm’s gross margin last quarter was a super-high 98%, but making its own CPUs is expected to bring it closer to its peers’ levels.

More is Merrier: Powering AI requires tapping millions of high-end chips of different kinds that work together. Arm’s new chip is made to work with Nvidia chips. And while Arm said its chip is more power-efficient than rival tech from Intel and AMD, booming demand could mean there’s room for multiple competitors making similar chips. Shares in Arm’s soon-to-be rivals, Intel and AMD, climbed about 5% and 6%, respectively, yesterday.

Is American Express, described as a victim of the “Ghost GDP” apocalypse in the viral Citrini report on AI’s hypothetical economic fallout, the ultimate doomsday play?

In his annual letter to shareholders published Wednesday, AmEx CEO Stephen Squeri promised the company can thrive in the now-arriving and likely disruptive age of agentic artificial intelligence commerce. Better yet, Squeri says strong fundamentals and a banner 2025 couldn’t have placed the company in a better position at the dawn of the new era.

It’s Business, and It’s Personal

Squeri touted the continued appeal of fee-based membership cards for both business and personal users. On Wednesday, AmEx also launched a refreshed version of its Graphite cash-back card for businesses. The company said that certain business cardholders will receive a new perk: a $300 credit toward ChatGPT Business subscriptions.

On the personal side, AmEx’s Platinum rewards cards remain a boon for business. Net card fee revenue has now grown by double digits for 30 consecutive quarters, reaching a record $10 billion last year, the CEO wrote. A full 70% of the 12.5 million new credit card accounts opened last year were for fee-paying products, with Gen Z, millennial and international clients driving the growth.

In other words, the only thing standing in the way of AI commerce agents ushering in a stablecoin-based future that destabilizes the credit card ecosystem as we know it, as theorized by Citrini, is the little dopamine rush millennials get when they book a “free” flight to Bali.

AmEx, however, says it’s elbowing its way into a key seat at the table in the agentic future:

• In the letter, Squeri announced that the company would launch its American Express Agentic Commerce Experiences (ACE) developer kit next month, enabling select partners to “seamlessly integrate our payment capabilities into their agentic experiences.”
• Meanwhile, the company is working to make its many membership perks, such as hotel or restaurant bookings, “discoverable” and “actionable” by AI agents. If you feel like you know how to game the points system, wait and see what your AI shopping agent can do.

Checked Out: “It’s going to be a bit of a journey” before we arrive at that eventual future, Squeri said in an interview with Bloomberg on Wednesday, noting how most users will still ultimately give a final sign-off on any AI-driven transaction. Recent hiccups in the AI commerce ecosystem back him up. For instance, OpenAI this month began to sunset ChatGPT’s Instant Checkout feature, which it launched in September with retail partners including Walmart and Shopify. Instant Checkout largely failed to attract users, and analysts told CNBC that OpenAI underestimated the difficulty of completing transactions. So, sure, agentic shopping may be the future of commerce. Then again, everyone said the same thing about Alexa when Amazon first launched the home-pod assistant a decade ago.