Bidding to buy metabolic medicines biotech Metsera in September came down to two pharmaceutical giants, with Novo Nordisk’s higher offer losing out to Pfizer’s $4.9 billion price in part due to regulatory and financial risks tied to a potential deal with the Danish company. Those risks remain, but Novo is back with a new unsolicited bid. It’s a similar deal as before, but Metsera shareholders will get substantially more guaranteed money up front.
Metsera is now prepared to walk away from Pfizer, saying Thursday it has concluded the new Novo offer is superior. Novo is proposing to pay $56.50 in cash for each Metsera share, amounting to about $6.5 billion. That price is a more than 69% premium to Metsera’s closing stock price on Sept. 19, the last trading day before the Pfizer acquisition was announced. Additional payouts are contingent on achieving milestones.
Pfizer is challenging Novo’s offer, but not with more money. The New York-based pharma giant said Novo’s offer cannot qualify as a superior proposal under the terms of its acquisition agreement with Metsera. Pfizer said it will enforce its legal rights under this agreement.
Metsera is developing obesity drugs in the same class of medicines as Novo Nordisk’s Wegovy, a peptide drug that mimics gut hormones to spark metabolic effects that lead to weight loss. But Metsera’s GLP-1 drugs could offer dosing and manufacturing advantages over Wegovy and Eli Lilly’s Zepbound, the current market leaders. The biotech is also developing pill formulations and pursuing additional obesity targets. In an obesity market that is becoming increasingly competitive, Metsera’s programs could stand out in the field, making them attractive to any company looking to make its mark in metabolic medicines.
Novo was among as many as eight companies that talked with Metsera in the past year about a potential deal, according to regulatory filings related to the Pfizer acquisition agreement. “Party 1,” now known to be Novo, expressed early and consistent interest. But among Metsera’s concerns about a deal with Novo was the regulatory risk that this proposed tie-up would not pass muster with antitrust regulators. For this risk, “Metsera would need to be significantly compensated, if it could agree to a transaction with such risks at all,” the company said in the filing.
Novo’s new offer comes in two steps. Payment of $56.50 in cash for each Metsera share would come immediately following the signing of a definitive agreement — before regulators even sign off on the deal. In exchange, Metsera would issue Novo non-voting preferred stock representing 50% of its share capital. Metsera would then declare a dividend of $56.50 per share in cash to be paid to shareholders 10 days later.
Following shareholder and regulatory approvals, the acquisition would proceed to the second step. Metsera shareholders would receive a contingent value right (CVR) that could pay out up to $21.25 per share in cash based on development and regulatory approval milestones and Novo would acquire the remaining outstanding shares of Metsera. The milestones for the CVR are similar to those in the Pfizer agreement and would tack on about $2.5 billion to the deal if all are met. The up to $21.25 per share that Novo is proposing to pay now is substantially less than the up to $37 CVR payment proposed in September, but is in line with Pfizer’s CVR.
Aside from the dollar amounts, Novo’s new proposal is essentially the same deal that Metsera’s board turned down in September. According to the filing, Metsera’s board acknowledged this deal structure provided greater value to the company’s shareholders than a traditional termination fee payable if the deal does not go through due to regulatory issues. But Metsera’s board decided against Novo’s September offer, noting that regulatory risks could delay the closing of a deal by up to two years and the CVR would be paid out only after a long period of time, if it’s paid at all.
The board’s reasons for choosing Pfizer’s offer include the certainty of that company’s financial terms and a faster deal close. Pfizer expected to complete the transaction in the fourth quarter of this year. Metsera’s board voted to accept Pfizer’s offer of $47.50 per share, or about $4.9 billion.
In a Thursday research note, Leerink Partners analyst David Risinger said it’s unclear why Novo has confidence antitrust regulators would support its acquisition of Metsera given that Novo along with Lilly dominate the market for metabolic drugs that mimic gut hormones. Furthermore, the Trump administration’s “America First” policies could play a role in regulatory oversight of a Novo deal for Metsera.
Pfizer’s statement issued in response to Novo’s new Metsera offer characterizes the deal as an attempt by a company with a dominant market position to suppress competition by taking over an American challenger. Pfizer contends the deal is structured in a way that circumvents antitrust laws and comes with regulatory and executional risks.
“The proposal is illusory and cannot qualify as a superior proposal under Pfizer’s agreement with Metsera, and Pfizer is prepared to pursue all legal avenues to enforce its rights under its agreement,” the pharma giant said.
Like many M&A deals, Pfizer’s agreement with Metsera includes a provision barring the biotech from seeking other offers. But the agreement permits Metsera to respond to unsolicited higher offers. Beyond more value to shareholders, the agreement defines a superior company proposal as one that takes into account all terms and conditions, “including all financial, regulatory, financing, conditionality, legal and other terms and conditions.”
Pfizer’s agreement with Metsera remains in effect for now. But the biotech’s notification that it plans to enter a definitive agreement with a superior offer gives Pfizer four business days to revise its deal terms. If Metsera terminates the Pfizer agreement to accept Novo’s offer, the pact requires the biotech to pay the pharma giant a $190 million termination fee.
Photo: Liselotte Sabroe/Scanpix Denmark/AFP, via Getty Images
