Pfizer to buy Metsera for $13 billion, capping bidding war

NEW YORK – Pfizer has agreed to buy Metsera in a US$10 billion (S$13 billion) deal, following a tumultuous bidding war with Novo Nordisk for the weight loss drug start-up.

Metsera said late on Nov 7 that Pfizer will pay up to US$86.25 a share, including US$65.60 a share in cash initially, plus potential additional payments of up to US$20.65 a share for hitting certain milestones. 

The announcement puts Pfizer in position to cap a remarkable bidding war between two of the world’s biggest pharma companies, each eyeing Metsera as an antidote to larger problems plaguing their businesses.

Novo, which had made an unsolicited offer for Metsera in October, has been trying to keep up with rival Eli Lilly and Co. and boost its languishing stock price, while Pfizer has been searching for a viable way into the red-hot obesity business after several false starts with weight-loss drugs.

In the end, it was the US government that played the biggest role in determining which company would prevail. 

A purchase by Novo would have presented “unacceptably high legal and regulatory risks to Metsera and its stockholders” due to US antitrust concerns, Metsera said in a statement on Nov 7, noting a call from the US Federal Trade Commission (FTC) regarding potential risks from proceeding with the proposed Novo deal structure.

For its part, Pfizer had already secured FTC clearance for its bid.

Metsera’s board determined, according to the statement, the new Pfizer bid was “the best transaction for shareholders, both from the perspective of value and certainty of closing”. Novo did not immediately respond to a request for comment.

In a separate statement, Pfizer said it was “pleased that we and Metsera have agreed to these revised terms, which will provide immediate and certain value to Metsera’s shareholders”. It said it expects to close the transaction shortly following the Metsera shareholder meeting on Nov 13.

Pfizer chief executive Albert Bourla, an aggressive dealmaker, does not like to lose and has long coveted an obesity drug that could deliver a big win and replace dwindling sales from its Covid-19 business.

With patent expirations expected to erode sales by more than US$15 billion through the end of the decade, he has been under pressure to replenish Pfizer’s pipeline. 

The company’s shares have fallen precipitously from their pandemic peak and multiple attempts to develop obesity pills from Pfizer’s own pipeline fell flat in trials. 

The Metsera deal is about winning the next generation of obesity drugs in a market that is expected to reach US$100 billion by 2030.

The next round of medicines are expected to have the same or better efficacy as Lilly’s weekly shot Zepbound, but could be injected less frequently or have lower rates of nausea and vomiting. A drugmaker that could offer these types of incremental but practical improvements could grab a significant chunk of the market in the long run.

Metsera, which was founded in 2022, has three drugs in the early- to mid-stages of development, including medicines that may have fewer side effects or last longer than existing drugs like Novo’s Wegovy. 

Bidding war

Pfizer initially agreed to buy New York-based Metsera for US$70 a share in September, before Novo shocked Wall Street with a higher bid for the company.

Pfizer, which failed to win a court order blocking Novo’s bid, raised its offer on Nov 3, only to have Novo better its proposal.

While Pfizer and Novo continued to up the ante, Metsera’s stock soared.

Metsera’s shares have gained about 150 per cent since before the original sale deal to Pfizer. The shares rose 2 per cent to US$83.18 in New York trading on Nov 7, giving the company a market value of about US$8.75 billion. 

In Delaware Chancery Court, Pfizer had argued that the Novo’s offer violated the terms of its original agreement because it did not qualify as a “superior” proposal.

A judge denied Pfizer’s request to temporarily block Novo’s bid. Pfizer also sued Novo on antitrust grounds in federal court in Delaware, in arguments Metsera called “nonsense”.

Bloomberg News earlier on Nov 7 reported that Pfizer had upped its bid, which came in 5 cents a share higher than the company’s previous proposal.

The announced price of US$86.25 a share represents a premium of 159 per cent to the US$33.32 Metasera’s shares closed at on the last day of trading before the Pfizer deal was announced on Sept 22.

Pfizer’s saving grace came via the FTC, which raised concerns that Novo’s proposed bid “may violate the procedural provisions” of the law that requires a premerger review. The FTC has said it had no issues with Pfizer’s bid for Metsera. BLOOMBERG