Novo Nordisk (NVO) kicked off a new battle with Pfizer (PFE) on Thursday by making an unsolicited $6.5 billion bid for obesity-focused takeover target, Metsera (MTSR).
The bid sent shock waves through Wall Street.
“You wouldn’t have expected a GLP-1 incumbent to be bidding here,” Evercore ISI analyst Umer Raffat said in a report to clients. “But you know what the bigger surprise is? That Novo is basically offering a 50% termination fee.”
Pfizer agreed to pay $4.9 billion to acquire Metsera in a deal announced last month. Metsera is working on a drug that mimics the GLP-1 hormone and could be given as a monthly shot. That compares to Novo’s Wegovy, a weekly injection that also targets GLP-1.
On today’s stock market, Metsera stock rocketed 22.1% to 63.73. Shares went public in January at 18. Novo Nordisk stock slumped 2.6% to 50.04, while Pfizer shares rose a fraction to 24.29.
Can Metsera Help Novo?
The proposed deal comes as Novo Nordisk faces significant challenges.
Compounders continue to knock off its biggest drug, semaglutide, the chemical backbone behind Wegovy and diabetes drug Ozempic.
The Centers for Medicare and Medicaid Services will soon to negotiate the price of Ozempic under the Inflation Reduction Act, a law that allows the agency to cut the price tags of a basket of high-priced drugs every year. Meanwhile, drug-pricing efforts are underway with President Donald Trump’s Most Favored Nation executive order. And Novo has yet to strike a deal.
“White House feels very strongly about the price disconnect between U.S. and Europe on Ozempic … and this has been called out multiple times in various press conferences (including by the President himself),” Raffat said.
Novo agreed to pay $56.50 per share of Metsera stock, vs. Pfizer’s bid for $47.50 a share. Novo’s proposal also includes a contingent value right worth up to $21.25 per share. Similarly, Pfizer tied a CVR to its deal that will pay out $22.50 a share upon the achievement of specific milestones.
For Pfizer, acquiring Metsera would bolster its obesity pipeline, which has faced numerous setbacks and is now trailing leaders Novo and Eli Lilly (LLY).
But Novo Nordisk agreed to pay 50% of its cash consideration up front. It also agreed to pay the $190 million breakup fee for Metsera with Pfizer, Raffat said.
‘Suppress Competition’
Pfizer says Novo Nordisk is trying to “suppress competition in violation of law by taking over an emerging American competitor.”
“It is also structured in a way to circumvent antitrust laws and carries substantial regulatory and executional risk,” the company said in a written statement. “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.”
Evercore’s Raffat notes the current political environment is “very sensitive to some of these themes.” It’s important to note, Pfizer was the first company to sign a Most Favored Nation deal with the Trump administration.
Raffat rates Metsera stock an outperform. Its relative strength line recently hit a record high and the move on Thursday pushed shares into a breakout from a flat base.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
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