Novo Nordisk’s CEO dared Pfizer to bid more if it wanted obesity drug developer Metsera so badly. So Pfizer did, with a $10 billion bid that edges out what the Danish pharmaceutical giant was willing to pay for drug candidates and platform technologies that could pave the way for the next generation of obesity medications. Metsera accepted Pfizer’s sweetened offer, ending a bidding war that was escalating to lawsuits challenging the legality of Novo’s deal structure as well as growing concern from antitrust regulators about the risks tied to that proposed acquisition.
Metsera’s board of directors determined that Pfizer’s revised offer is best for shareholders, from the standpoint of both financial value and the certainty of deal closing, the New York-based biotech said late Friday. The Federal Trade Commission had already signed off on Pfizer’s buyout of Metsera, but the deal still needs Metsera shareholder approval. The special shareholder meeting that Metsera had scheduled for Nov. 13 will proceed as planned, where the Pfizer acquisition will be put to a vote. The companies expect to close the transaction soon afterward.
Novo Nordisk already has a strong presence in the weight loss drug market with the weekly injectable GLP-1 drug Wegovy, which along with Eli Lilly’s Zepbound are currently the top-selling obesity medications. Pfizer has no commercially available obesity drugs and though it has some prospects in its pipeline, the pharmaceutical giant’s most advanced weight loss drugs have failed in clinical trials. The race is on to develop next-generation obesity drugs with advantages: less frequent dosing, lower manufacturing costs, oral formulations, and additional targets beyond GLP-1. Metsera, which went public early this year at $18 per share, checks off all of those boxes.
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Pfizer’s winning offer is up to $10 billion, or up to $86.25 per share. The financial terms break down to $65.60 in cash up front for each share of Metsera and a contingent value right (CVR) that could pay up to an additional $20.65 in cash per share if the biotech achieves certain milestones. The Pfizer bid that Metsera accepted in September was valued at about $7.3 billion — $4.9 billion up front and a CVR that could pay out up to $2.4 billion.
Novo Nordisk reignited the bidding war late last month with a higher unsolicited bid. Pfizer sued, alleging breach of contract. But the new bidding war prompted both companies to improve their offers. Pfizer’s counteroffer amounted to about $8.1 billion in total deal value; Novo boosted its proposal to about $10 billion.
The improved Novo offer amounted to up to $86.20 per share, but in an unusual deal structure. The Danish pharma giant would pay $62.20 in cash for each Metsera share in exchange for non-voting preferred stock representing half of the biotech’s shares. Ten days later, Metsera would declare a $62.20 per share dividend to be paid to its shareholders. These moves would happen even before FTC approval of the deal. Following that regulatory approval, Metsera shareholders would receive the CVR of up to $24 per share and Novo would acquire the remaining Metsera shares.
The deal structure is the same as what Novo proposed in prior offers, but with more money attached. In a lawsuit filed in the Delaware Court of Chancery last week, Pfizer alleged that the special dividend Novo proposed violates Delaware state law. A separate suit filed in federal court alleged that an acquisition of Metsera by Novo Nordisk, already a giant in obesity medicines, would violate antitrust laws.
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Novo Nordisk CEO Mike Doustdar briefly addressed the matter last Thursday during an Oval Office news conference whose main topic was making GLP-1 medications available to Medicare and Medicaid recipients at lower prices. Asked about the bidding war with Pfizer, he said that as of that day, Novo’s bid was winning.
“Our message to Pfizer is that if they would like to buy the company, then put your hand in the pocket and bid higher,” Doustdar said. “It’s a free market, and at the end of it, it has to do with basically the price that the seller is selling for their shareholders, and the buyer is willing to pay for it. This has nothing to do with the FTC, has nothing to do with anything else.”
Nevertheless, signs emerged that the FTC was leaning toward Pfizer’s position. Metsera acknowledged that the regulator called the company about the potential antitrust risks of moving forward with the deal structure proposed by Novo Nordisk. In Friday’s news release, Metsera said its board determined that Novo’s offer presents “unacceptably high legal and regulatory risks to Metsera and its stockholders compared to the proposed merger with Pfizer, including risks that the initial dividend may never be paid or may be subsequently challenged or rescinded.”
Novo Nordisk continues to believes the structure of its proposed deal complies with antitrust laws, it said in a separate statement issued Saturday. But the company added that it will not increase its offer for Metsera “consistent with its commitment to financial discipline and shareholder value.” Even so, the metabolic medicines giant is not done with M&A. Novo said it will continue to assess opportunities for business development and acquisitions.
Photo: Dominick Reuter/AFP, via Getty Images