In 2023, US biotech Metsera bought a promising weight-loss start-up spun out of an Imperial College London laboratory, and the life’s work of the professor behind it, for up to $114mn.
Two years later, those treatments have thrust Metsera to the centre of a fierce takeover battle, with Ozempic maker Novo Nordisk and Pfizer willing to pay up to $10bn for the company. Both once again sweetened offers for Metsera on Tuesday, with the coveted biotech continuing to view Novo’s bid as “superior”.
At stake is the chance to compete in one of the most lucrative drug classes in the history of the pharmaceutical industry, with the market expected to reach $95bn in annual sales by 2030, and with existing anti-obesity treatments facing competition from a wave of next-generation medicines. The fight has spread from the boardroom to the courtroom to the corridors of Washington, during a sensitive time for industry where drug giants Novo and Eli Lilly are negotiating pricing discounts with the White House, and Pfizer already has.
“It is rare to see a bidding war break out after an acquisition is already announced, but it speaks to the level of demand for high-quality assets in this space,” said Ailsa Craig, portfolio manager at International Biotechnology Trust, which holds Metsera shares.
Metsera is at the vanguard of a promising new obesity treatment, a longer-lasting injection than the weekly doses required by other drugs. Pfizer in September sealed a deal valuing Metsera at up to $7.3bn, after its chief executive Albert Bourla personally courted board members. The offer bested six other suitors entertained by Metsera. Then, a month later, Denmark’s Novo, which was among the parties bidding on Metsera before, emerged from the blue with an unsolicited offer.
Pfizer and Novo have exchanged bids and barbs in equal measure as they vie for Metsera. Pfizer is appealing to the White House by casting the battle as a foreign company raiding US assets. It is also suing to block Novo’s attempt to gatecrash its deal, arguing in two separate lawsuits that it violates the original merger agreement and contravenes antitrust rules.
Morgan Zurn, a Delaware Court judge, on Tuesday delayed a hearing on Pfizer’s attempt to block Novo’s deal by arguing its deal structure was illegal, erring against injecting the court into the middle of an “ongoing topping process”.
The battle over Metsera caps a busy stretch for dealmaking in the biotech sector, which has delivered approaching $120bn worth of acquisitions so far this year, roughly double the whole of last year, according to industry tracker Dealforma.
“This bidding war makes sense to me, especially when you consider that Big Pharma is racing to make up revenues from its portfolio constantly going generic,” said Peter Kolchinsky, managing partner at RA Capital Management, a top 20 shareholder in Metsera.
Behind this acrimony are two pharmaceutical companies in a bind. Under its new chief executive Maziar Mike Doustdar and incoming chair Lars Rebien Sørensen, who formerly ran the company, Novo is scrambling to regain its ascendancy in the weight-loss drug market after being outmanoeuvred by Zepbound-maker Eli Lilly.
Workers at Eli Lilly’s manufacturing plant in Kinsale, Ireland. Metsera bills itself as biotech with a portfolio of next-generation obesity drugs ready to compete with Eli Lilly’s much-awaited pill Orforglipron © Bloomberg
Novo is turning to deals to make up for the ground it lost to Eli Lilly in the US market, as investors question the strength of its pipeline to replace Wegovy and Ozempic, especially after next-generation drug CagriSema disappointed in trials late last year. It struck a $5.2bn deal to buy fatty liver-disease biotech Akero, a close adjacency to obesity. Novo also expressed interest in acquiring obesity start-up Kailera before its recent $600mn funding round, according to people familiar with the matter.
Metsera and Pfizer did not immediately respond to requests for comment. Kailera declined to comment.
The Danish drugmaker said it was “confident in our portfolio of marketed products for obesity, type 2 diabetes and other cardiometabolic diseases, as well as our development pipeline. We want to stay at the forefront of innovation in all the areas we operate in and that requires us to look at both internal and external innovation”.
Pfizer, on the other hand, is seeking a beachhead into the weight-loss drug market, after an obesity drug it was developing in-house flopped in clinical trials earlier this year. Bourla, who in the past year fought off activist investor Starboard Value, is grasping to reinvigorate the pharma giant which has languished since delivering the blockbuster Covid-19 vaccine that helped to end the pandemic.
Metsera, which was founded by veteran biotech investors Arch Venture Partners and Population Health Partners, bills itself as biotech with a portfolio of next-generation obesity drugs, ready to compete with Eli Lilly’s much-awaited pill Orforglipron and more potent treatment Retatrutide.
“Metsera is leading the pack in a crowded market of experimental obesity drugs,” said Kosta Kleyman, a healthcare investor at Columbia Threadneedle. “Both companies’ willingness to duke it out over Metsera point to where they are both at more than anything else.”
Gareth Powell, a healthcare fund manager at Polar Capital, said the interest was spurred by Metsera’s pipeline “ticking two big boxes”: potential new ways to deliver the drugs, as pills or longer-acting injections, and a new method of tackling obesity using the satiety hormone amylin.
But the potential medicines are still in the early stages: Metsera has treated about 900 patients across four different prongs of its clinical trials. Potential acquirers have been given an early look of the safety data on its phase-two trial of a monthly injectable — enough to excite scientists at Novo, the experts in the field. Its amylin-based drug is still in phase 1 trials.
Novo Nordisk’s weight-loss injection pen, Wegovy © Bloomberg
Pfizer’s first hint that its deal with Metsera was about to hit the buffers came on October 25. Three days earlier, Novo had overhauled half its board in a bid to reverse its declining share price. Then it returned with an unsolicited bid.
Novo’s deal deployed a quirky two-step structure, created by Metsera’s lawyers to allay antitrust concerns, which paid the US biotech’s shareholders billions of dollars upfront via a dividend almost immediately upon signing in exchange for a 50 per cent non-voting stake. Those non-voting shares would then convert to a controlling stake once the deal closed.
In the days that followed, Pfizer executives hurried to respond. Eventually, Bourla sent a text to a Metsera director offering to bump up its bid by $3 a share if the biotech gave Novo the cold shoulder. Bourla never received a response to his message. Pfizer then took the legal route.
Bourla has taken the decision to shun Pfizer as a personal affront and was directly involved in the US drugmaker’s charge to get the deal over the line, according to two people familiar with the matter.
In its lawsuits, Pfizer depicted the Ozempic maker as a “massive foreign” company seeking to protect its market share, “recklessly indifferent to the lives and health of tens of millions of Americans”.
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Both companies are entering unknown territory as tensions heighten and the clock ticks towards Pfizer’s next deadline to return with an improved offer by the end of Wednesday. The bidding war “shows a desperation on behalf of both companies”, said John LaMattina, Pfizer’s former head of research and development, as they attempt to boost their drug pipelines.
“Both companies will play their best cards: Pfizer has deep ties with the White House,” said Columbia Threadneedle’s Kleyman, “and Novo has infinite spending capacity”.
“It remains to be seen who triumphs in the bidding war, but whatever happens Metsera will be the ultimate victor.”