Pfizer Lawsuits Allege Novo Nordisk’s Bid to Buy Obesity Biotech Metsera is Anticompetitive, Illegal

Pfizer now has the required regulatory approval for its $4.9 billion acquisition of obesity drug developer Metsera, but whether and when that deal closes may hinge on the outcome of two lawsuits the pharmaceutical giant has filed in opposition to Novo Nordisk’s eleventh hour submission of a competing offer.

The Federal Trade Commission on Friday granted early clearance for Pfizer’s proposed acquisition of Metsera, underscoring a key point in the company’s lawsuit against Metsera and Novo Nordisk alleging breach of contract. Pfizer said its acquisition proposal offered the likelihood of a faster deal close because the pharma giant’s small presence in metabolic medicines was less likely to spark antitrust concerns. Notably, Pfizer’s effort to develop an oral obesity drug flamed out earlier this year due to a safety signal in a Phase 1 study. 

By contrast, Novo’s weekly-injectable GLP-1 drug Wegovy is currently the top-selling obesity medication and the Denmark-based drugmaker has a broad pipeline of additional obesity drugs in various stages of development — many from other business deals. Last week, Novo Nordisk made an unsolicited $6.5 billion bid for Metsera, whose lead program is a longer-acting GLP-1 agonist with the potential for once-monthly dosing. Metsera said it would accept Novo’s offer, which it claims is a superior proposal.

Pfizer argues that Novo’s offer cannot qualify as superior under the terms of its merger deal with the biotech due to the significant antitrust risk. Metsera’s regulatory filings regarding Pfizer’s agreement noted that regulatory review of a Novo acquisition could take up to two years and the deal may not close at all. Pfizer said in its suit that these risks led Metsera’s board to turn down a previous Novo offer and those risks remain unchanged.

The Pfizer suit was filed Friday in the Delaware Court of Chancery. Besides breach of contract, Pfizer alleges Metsera’s acceptance of Novo’s offer constitutes breach of fiduciary duty and tortious interference in a contract. Pfizer claims Novo’s offer represents a dominant obesity drug company’s attempt to suppress competition. The pharma giant also contends Novo’s deal is structured to deliberately evade antitrust review.

Per deal terms, Novo would pay $56.50 for each Metsera share, amounting to $6.5 billion. This payment would not require regulatory approval of the deal and would come before any FTC action. In exchange for the payment, Metsera would issue Novo non-voting stock representing 50% of the company’s shares, according to the agreement. Ten days later, Metsera would issue its shareholders a $56.50 per share dividend. Pfizer said this special dividend violates Delaware law, adding that Metsera’s directors have breached their fiduciary duties by “securing a self-interested indemnification provision from Novo Nordisk designed to cover their unlawful conduct.”

Pfizer expands on its anti-trust allegations in a second lawsuit filed Monday in U.S. District Court for the District of Delaware. This suit argues that Novo’s Metsera bid violates Section 7 of the Clayton Antitrust Act, which bars M&A activity in instances where the effect lessens competition or creates a monopoly. Pfizer said a Novo acquisition of Metsera would have anticompetitive effects in the GLP-1 drug market.

The pharma giant also argues that Novo’s deal with Metsera amounts to a conspiracy that leads to a restraint of trade in violation of Section 1 of the Sherman Act. Pfizer further alleges the deal is an attempted monopolization and conspiracy in violation of Section 2 of the act. The suit claims Metsera’s controlling stockholders — Validae Health, Population Health Partners, and funds of Arch Venture Partners— are part of this anticompetitive conspiracy.

In its announcement of the federal lawsuit, Pfizer said it “is taking this action to preserve and enhance competition in this important therapeutic area and to stop Novo Nordisk from illegally paying off Metsera and its controlling stockholders to gain control of, and impair and potentially kill, an emerging U.S. competitor. Metsera’s and its controlling stockholders’ actions, as well as those of Novo Nordisk, are in clear violation of the antitrust laws.”

Metsera issued a brief statement late Friday saying it disagreed with Pfizer’s allegations in the first suit and would address them in court. The company elaborated slightly in a Monday statement issued in response to the federal suit.

“Pfizer is trying to litigate its way to buying Metsera for a lower price than Novo Nordisk,” Metsera said. “Metsera’s Board of Directors will continue to stand firm on behalf of shareholders and patients. Pfizer’s litigation arguments are nonsense, and Metsera will address them in court.”

Meanwhile, merger deadlines are looming. Pfizer’s merger agreement with Metsera states that notification of a superior offer gives the pharma giant four business days to revise its offer. That deadline is the close of business Tuesday. Metsera’s announcement of Novo’s bid noted that the Pfizer agreement remains in full effect, and the biotech’s board of directors reaffirms its recommendation that shareholders approve adoption of this agreement. Metsera had scheduled a Nov. 13 special meeting for shareholders to vote on the Pfizer proposal.

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