Pfizer’s $10 billion sweeter bid beats Novo Nordisk in bidding war for obesity biotech Metsera

Novo Nordisk’s CEO challenged Pfizer to make a higher offer if it wanted obesity drug developer Metsera so badly. That’s what Pfizer did, with a $10 billion offer that exceeded 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 drugs. Metsera accepted Pfizer’s sweetened offer, ending a bidding war that spiraled into lawsuits challenging the legality of Novo’s deal structure as well as growing concern among antitrust regulators about the risks of the proposed acquisition.

Metsera’s board of directors determined that Pfizer’s revised offer was best for shareholders, both in terms of financial value and certainty of closing the transaction, the New York-based biotechnology company said Friday. The Federal Trade Commission had already approved Pfizer’s takeover of Metsera, but the deal still requires approval from Metsera shareholders. The extraordinary shareholder meeting that Metsera had scheduled for November 13 will go ahead as planned, during which the Pfizer acquisition will be put to a vote. The companies expect to complete the transaction shortly thereafter.

Novo Nordisk already has a strong presence in the weight-loss drug market with the weekly GLP-1 injectable drug Wegovy, which, along with Eli Lilly’s Zepbound, are currently the best-selling obesity drugs. Pfizer has no commercially available obesity drugs, and while its pipeline has some prospects, 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 IPO’d earlier this year at $18 per share, checks all of those boxes.

Pfizer’s winning bid was worth $10 billion, or $86.25 per share. The financial terms are $65.60 in cash upfront 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 reaches certain milestones. The Pfizer offer accepted by Metsera in September was valued at around $7.3 billion, representing $4.9 billion upfront and a CVR that could fetch up to $2.4 billion.

Novo Nordisk restarted the bidding war late last month with a higher unsolicited offer. Pfizer filed a lawsuit, alleging breach of contract. But the new bidding war has prompted both companies to improve their offers. Pfizer’s counteroffer was for approximately $8.1 billion in total transaction value; Novo increased its proposal to around $10 billion.

Novo’s upgraded offer was for $86.20 per share, but under an unusual deal structure. The Danish pharmaceutical giant would pay $62.20 in cash for each Metsera share in exchange for non-voting preferred shares representing half of the biotech’s shares. Ten days later, Metsera would declare a dividend of $62.20 per share to be paid to its shareholders. These measures would take place even before the agreement is approved by the FTC. Following this regulatory approval, Metsera shareholders would receive a CVR of up to $24 per share and Novo would acquire the remaining Metsera shares.

The deal structure is the same as Novo offered in previous deals, but with more money attached. In a lawsuit filed last week in Delaware Chancery Court, Pfizer alleged that Novo’s proposed special dividend violated Delaware state law. Another complaint filed in federal court alleged that an acquisition of Metsera by Novo Nordisk, already a giant in obesity drugs, would violate antitrust laws.

Novo Nordisk CEO Mike Doustdar briefly addressed the issue last Thursday during an Oval Office press conference whose main topic was making GLP-1 drugs available to Medicare and Medicaid beneficiaries at lower prices. Asked about the bidding war with Pfizer, he said that as of today, Novo’s bid was the winner.

“Our message to Pfizer is that if they want to buy the company, then put your hand in your pocket and bid higher,” Doustdar said. It’s a free market, and in the end it basically comes down to what price the seller sells to its shareholders and what the buyer is willing to pay for it. This has nothing to do with the FTC or anything else. »

Nonetheless, signs emerged that the FTC was leaning in favor of Pfizer’s position. Metsera acknowledged that the regulator had called the company about potential antitrust risks related to implementing Novo Nordisk’s proposed transaction structure. In Friday’s press release, Metsera said its board of directors had determined that Novo’s offer presented “unacceptably high legal and regulatory risks to Metsera and its shareholders relative to the proposed merger with Pfizer, including the risk that the initial dividend may never be paid or may subsequently be challenged or canceled.”

Novo Nordisk continues to believe that the structure of its proposed deal complies with antitrust laws, it said in a separate statement released Saturday. But the company added that it would not increase its offer for Metsera “in line with its commitment to financial discipline and shareholder value.” However, the metabolic drugs giant is not done with mergers and acquisitions. Novo said it would continue to evaluate business development and acquisition opportunities.

Photo: Dominick Reuter/AFP, via Getty Images