Pfizer Wins Obesity Drug Battle, With Assist By Trump’s FTC

(Bloomberg) — Pfizer Inc. Chief Executive Albert Bourla had long searched for an obesity drug to make up for dwindling sales of the pharma company’s aging blockbusters. Late Friday, after a dramatic bidding war, he learned he’d finally claimed his prize.

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Bourla found out at around 9 p.m. that evening, according to people familiar with the matter, that the board of Metsera Inc., a three-year-old biotech startup developing a new generation of weight-loss drugs, had voted unanimously to accept Pfizer’s takeover offer of as much as $10 billion.

It was the climax of a Wall Street duel that had pitted Pfizer against the Danish pharmaceutical giant Novo Nordisk A/S – and a deal that is poised to set the global drug industry’s pecking order for years to come.

The fight for Metsera reverberated all the way to the White House, where last week, standing alongside President Donald Trump, Novo CEO Mike Doustdar challenged Pfizer to top its bid. “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 on Thursday.

Pfizer promptly did so, submitting a sweetened bid Friday that was first reported by Bloomberg News, and matched a revised offer from Novo. Pfizer was prepared for the bidding to go through the weekend, according to people familiar with Pfizer’s thinking, but at 9:32 p.m. Metsera issued a news release saying that the US drug giant had prevailed.

Metsera indicated that the US government had loomed large in its thinking, citing legal and regulatory factors in its decision-making.

The US Federal Trade Commission called Metsera on Friday to warn the obesity startup that the agency would look unfavorably upon the structure of the Novo deal, according to people familiar with the matter. The call followed a letter the FTC sent to Metsera and Novo earlier in the week that outlined its concerns that part of the deal could evade antitrust scrutiny. The FTC didn’t weigh in on the merits of the deal.

Pfizer put in its winning bid moments later, the people said.

Metsera’s board convened and discussed the FTC opposition, with some board members expressing concerns with proceeding with any Novo offer given the regulator’s warning, the people said. Given those worries, they said Metsera’s board resolved to negotiate a final deal with Pfizer.

The FTC’s move to signal its concern about Novo’s proposed transaction structure during the bidding war was unusual, the people said. It was also the latest example of members of the Trump administration taking an active role in corporate dealmaking.

“This was a routine law enforcement matter and any implication that politics played a role is absurd and baseless,” FTC spokesman Joe Simonson said in a statement.

By Saturday morning, Novo bowed out. “I’m completely fine with this outcome,” said Doustdar, who had just flown back from Washington to Europe, in an interview with Bloomberg News over the weekend. “Not doing a deal is better than doing one with bad returns. We win some, we lose some. Our defeat makes us stronger.”

Metsera declined to comment.

Both Pfizer and Novo Nordisk have much at stake.

Pfizer’s shares have shed about 60% of their value since a pandemic-era peak in late 2021 and Bourla, who has been at the helm since 2019, is hoping to forge a path to Pfizer’s next megahit. Novo, which was a pioneer in the GLP-1 drug field, has been steadily losing ground to rival Eli Lilly & Co., whose blockbuster Zepbound is now the most successful GLP-1 for obesity.

Both Lilly and Novo are also likely to introduce new options for patients. Novo’s Wegovy pill is expected to be approved by the end of the year, while Lilly is expected to roll out its own oral GLP-1 drug for obesity by early next year.

While Novo’s new chief is trying to steer the once-staid seller of insulin into a bold, brash new era, the company’s shares have plunged about 70% since its peak in June of last year.

On Monday, Novo’s shares rose as much as 3.8% in Copenhagen trading. Pfizer’s stock fell by as much as 2.1% as of 12:58 p.m. in New York. Metsera’s shares slumped as much as 15.7%.

The intensity of the Metsera takeover battle underlined just how eager big drug companies are to find new blockbusters, with obesity seen as a key market — and how much pressure the market’s leaders are under to try to keep their crown. It is far from certain that Metsera’s drugs, while promising, will win approval and climb to the top of what is becoming a very competitive field.

“There’s a feeding frenzy out there,” said Richard DiMarchi, an Indiana University professor of chemistry whose research laid the groundwork for drugs like Lilly’s Zepbound. “There is such an economically attractive market that has emerged.”

September Standoff

Pfizer initially believed it had secured control of Metsera in September, when it had outmaneuvered six other suitors, including Novo, to reach an agreement to buy the startup for up to $70 a share. But the way in which that chapter closed had rubbed Doustdar the wrong way, according to people familiar with the matter.

The Novo chief had been told on the evening of Sept. 21 that his bid for Metsera was the best, and he went to bed thinking a deal would be unveiled soon. But he was awoken later by a late-night call saying another party had won the company – and the next morning, he learned of Pfizer’s pact.

By Oct. 30, it was Bourla’s turn to be blindsided, as Novo made a new unsolicited bid for Metsera worth about $9 billion, which was first reported by Bloomberg News. Within days, the Danish company increased its offer to $10 billion — and just days after that, made a bid that increased the cash upfront portion of the offer.

Losing what appeared to be a done deal would have been embarrassing for Bourla, according to Evan Seigerman, an analyst at BMO Capital Markets. “It doesn’t look good when you consummate a deal and then you lose it,” Seigerman said.

Pfizer fought back on multiple fronts, making calls to members of the Trump administration, seeking a restraining order against a Novo-Metsera tie-up in Delaware Chancery Court and filing an antitrust lawsuit in federal court in Delaware. A judge declined to put a restraining order in place, but Pfizer’s lawyers argued that Novo’s deal wouldn’t gain antitrust clearance.

The FTC sent a letter to Metsera and Novo on Nov. 4 saying Novo’s most recent bid “may violate the procedural provisions” of the law that requires a premerger review. Some of the concerns expressed in Pfizer’s antitrust lawsuit were echoed in the letter the agency sent to the companies. Novo has said that it believes the structure of its offer was compliant with US antitrust laws. Metsera’s legal advisers were also the ones who proposed that design, according to a company regulatory filing.

Meanwhile, Pfizer gradually increased its bid for Metsera, even as some investors began to question just how far the company should go to win. Bourla faced pointed questions from some Wall Street analysts during an earnings call on Nov. 4.

“Nothing in all this justifies a bidding war or even a protracted legal battle. Is Pfizer’s determination to persist underpinned by substantial confidential data or simply the desire to be a player in obesity?” Steven Scala, an analyst at TD Cowen, asked Bourla.

Bourla insisted the deal would be worth it. “We did extensive due diligence,” he said, and priced the deal so that it “offers tremendous value to the shareholders of Metsera and to shareholders of Pfizer.”

While the bidding war and legal battle were playing out, Pfizer and Metsera’s integration teams continued to meet to plan how they would combine the two companies, according to a person familiar with the proceedings.

Obesity Pipeline

Bourla had done a series of deals to try to replenish Pfizer’s pipeline, including a $43 billion acquisition of cancer-drug maker Seagen Inc. in late 2023. But those moves haven’t yet produced enough hits. Wall Street analysts projected flat to declining sales for Pfizer through at least 2031, according to data compiled by Bloomberg as of Sunday evening.

The obesity-drug market, which is projected to reach around $100 billion in sales by 2030, is one of the few areas that could provide the kind of growth Pfizer needs. In early 2023, Bourla predicted that obesity pills in Pfizer’s pipeline could reach $10 billion in annual sales. But since then, several of the experimental treatments have fallen short in clinical trials.

Bloomberg Intelligence: Lilly to Outpace Novo as Obesity Sales Hit $100 Billion in 2030

Pfizer killed one obesity pill in June 2023 and abandoned a second in April after a patient developed signs of liver injury. The setbacks meant Bourla would likely have to look outside Pfizer to compete in obesity.

Metsera was one of just a handful of independent companies with promising drugs for obesity in development. It bought a company called Zihipp that had a collection of experimental obesity treatments after it was spun out from Imperial College London.

Metsera is working on obesity drugs that could be taken less frequently or produce fewer unwelcome side effects, such as nausea and vomiting, compared with Lilly’s Zepbound and Novo’s Wegovy. In addition to its own long-acting GLP-1 injectable that it plans to move into late-stage trials this year, Metsera is testing a so-called amylin analog that mimics another digestive hormone and has the potential to be gentler on the stomach.

Amylin drugs like the one Metsera is working on “could potentially become the mainstay for weight loss” and replace the current crop of GLP-1 blockbusters, according to BMO’s Seigerman. Metsera’s drug is competing against multiple other potential entrants, including a promising medicine from Eli Lilly, making obtaining a bigger partner crucial to move the trials along, Seigerman said.

Metsera’s highly potent drugs have the potential to use less active ingredient and fewer self-injector cartridges, which could allow them to be sold at lower prices while still making a profit. Seigerman estimated that Pfizer would have to bring in about $3 billion to $4 billion a year in revenue from Metsera drugs to make the deal worth it.

Still, the market for weight-loss medicines is evolving rapidly. Novo and Lilly cut a deal with the Trump administration to sharply reduce prices of their GLP-1 therapies — a move that could greatly increase uptake of the medications and potentially help tamp down demand for compounded versions the companies have tried to fight.

In spite of losing out on the Metsera deal, Novo said it will continue to invest in its portfolio of next-generation therapies.

“This weekend when I lost, I didn’t feel bad at all, it did not feel like losing,” Doustdar told Bloomberg News. “If anything I felt like Pfizer’s CEO and the board listened to my comment at the White House and they put their hand in their pocket and raised their previous offer and ultimately won fair and square.”

–With assistance from Josh Sisco.

(Updates with statement from Federal Trade Commission representative in 11th paragraph and to reflect recent stock trading in the 18th paragraph.)

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