Novo Nordisk A/S made an unsolicited bid for US biotech firm Metsera Inc., sparking a heated battle with Pfizer Inc. to get their hands on weight-loss treatments that both drugmakers want in order to regain lost ground in the booming market.
Novo offered to buy Metsera Inc. for at least $6.5 billion, seeking to trump an earlier agreed deal with Pfizer. Metsera called the new offer, which Bloomberg News reported earlier on Thursday, superior to the previous one from Pfizer that it had accepted last month.
The US drugmaker criticized the attempt to derail its deal as “reckless” and accused its Danish rival of trying to abuse its dominant market position. The move is an effort “to suppress competition in violation of law by taking over an emerging American challenger,” Pfizer said in a statement.
The tussle follows setbacks for both Novo and Pfizer in an obesity market that’s expected to reach $100 billion by 2030. Eli Lilly & Co. has stolen a march on Novo, saying Thursday in an earnings presentation that it now has about 58% of the market for new weight-loss drugs using so-called GLP-1 technology.
Shares of Pfizer were litte changed as of 10:00 a.m. in New York; Novo’s stock is down 2.6%.
The potential rewards from obesity have prompted large drugmakers to snap up smaller companies like Metsera, which has a handful of experimental weight-loss treatments in development, including a shot that could be taken less often than Novo Nordisk’s Wegovy.
Novo “coming in over the top is something that we have rarely seen in pharma, at least as of late,” said Mizuho health-care specialist Jared Holz.
The jockeying follows a shakeup at the top of Novo, where new Chief Executive Officer Maziar Mike Doustdar is moving aggressively to try to regain the company’s position in an obesity-drug market that it pioneered. Since taking over, he’s announced thousands of job cuts, struck a $5 billion deal for liver disease drugmaker Akero Therapeutics Inc. and said the company needs to execute better on everything it does. The company has also replaced its chairman.
“Novo Nordisk is flexing its muscles,” Per Hansen, an investment economist at Nordnet AB, said by email. “They’re going all in on expanding their pipeline. The consequence is that they’re committing a significant portion of their financial leeway.”
Pfizer Push
If the Danish company reaches a deal for Metsera, it would be a blow for Pfizer’s efforts to rebuild in the aftermath of the pandemic. Demand for Pfizer’s Covid vaccine has fallen sharply, and some of the company’s key drugs are also nearing the end of their patent life. The US pharmaceutical group did have its own obesity pill in development, but it flopped after one patient in a clinical trial developed signs of liver injury.
Under Novo’s offer for Metsera, the purchase price could reach $77.75 per share if certain targets are met, according to a statement. This is 11% higher than Pfizer’s maximum value bid of $70 per share.
Metsera said Pfizer now has four days in which it has the right to negotiate changes to the original proposal. If Metsera then decides Novo’s offer remains better, it would have the right to terminate the Pfizer agreement, according to a statement.
Novo Nordisk’s bid uses an unusual structure allowing Metsera investors to get most of the money upfront when the deal is signed. Shareholders in a company being bought normally receive compensation only once formalities like regulatory approvals are completed, which can add uncertainty if those procedures drag on longer than usual.
The Novo Nordisk bid has the potential for a longer regulatory approval than the Pfizer offer, given the Danish company’s large existing position in the obesity-drug market. Pfizer pointed at the unusual format in its statement, charging that Novo Nordisk’s bid was “structured in a way to circumvent antitrust laws.”
Immediately following the signing of a definitive agreement, Novo Nordisk would pay $56.50 per share to Metsera, which the company would then give to its shareholders through a dividend just days later. While the deal is pending, Novo would own non-voting preferred stock equal to 50% of Metsera. After Metsera shareholders and regulators approve the deal, investors would receive a so-called contingent value right, which gives them the right to future milestone payments of up to $21.25 per share if targets are hit.
Shares of Novo Nordisk fell as much as 3.4% in Copenhagen trading.
Shares of Metsera have nearly tripled this year to $52.21, giving the company a market value of about $5.5 billion at Wednesday’s close. The stock jumped as much as 21% in pre-market New York trading Thursday, while Pfizer was little changed.
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