In September, the competition for acquiring the metabolic medicines biotech company Metsera heated up, ultimately narrowing down to two major pharmaceutical players. Despite a higher bid from Novo Nordisk, Pfizer clinched the deal with a $4.9 billion offer, largely due to regulatory and financial uncertainties associated with a potential merger with the Danish firm. However, Novo has returned with a fresh unsolicited offer. This latest proposal mirrors the previous one but promises significantly more upfront cash for Metsera’s shareholders.
Recently, Metsera announced its readiness to depart from the Pfizer deal, stating that it has determined Novo’s new offer to be more advantageous. Novo’s plan involves a cash payment of $56.50 for each Metsera share, totaling around $6.5 billion. This price represents a remarkable 69% premium compared to Metsera’s stock price on September 19, the last trading day prior to Pfizer’s acquisition announcement. Additional payments are linked to the achievement of specified milestones.
Although Pfizer is contesting Novo’s offer, it is not doing so with a higher monetary value. The New York-based pharmaceutical company claims that Novo’s proposal does not meet the criteria of a superior offer as defined in its acquisition agreement with Metsera. Pfizer insists it will uphold its legal entitlements under this agreement.
Metsera is in the process of developing innovative obesity drugs that fall within the same category of medications as Novo Nordisk’s Wegovy, a peptide-based treatment that simulates gut hormones to induce metabolic changes conducive to weight loss. However, Metsera’s GLP-1 drugs may provide advantages in dosing and manufacturing over both Wegovy and Eli Lilly’s Zepbound, which currently dominate the market. Furthermore, the biotech is exploring pill formulations and targeting additional obesity-related objectives. In an increasingly competitive obesity treatment landscape, Metsera’s initiatives could distinguish themselves, making them appealing to any firm eager to establish a footprint in the metabolic medicines sector.
According to regulatory filings connected to the Pfizer acquisition agreement, Novo was one of as many as eight companies that engaged with Metsera over the past year regarding a possible deal. Known as “Party 1,” Novo demonstrated early and consistent interest. However, Metsera expressed concerns about the regulatory risks associated with a potential alliance with Novo, specifically that the merger might not pass the scrutiny of antitrust regulators. Due to this risk, the company articulated that “Metsera would need to be significantly compensated if it could agree to a transaction with such risks at all,” as indicated in the filings.
Novo’s latest offer is structured in two phases. The initial payment of $56.50 in cash for each Metsera share would be made immediately upon signing a definitive agreement, prior to any regulatory approval. In return, Metsera would issue Novo non-voting preferred stock representing 50% of its share capital. Subsequently, Metsera would declare a cash dividend of $56.50 per share to shareholders within ten days following the agreement.
Once both shareholder and regulatory approvals are obtained, the acquisition would move to the second phase. Metsera shareholders would be eligible for a contingent value right (CVR) that could yield up to $21.25 per share in cash, based on specific development and regulatory approval milestones. Novo would then acquire the remaining outstanding shares of Metsera. The milestones outlined for the CVR are akin to those in the Pfizer agreement and could potentially add around $2.5 billion to the overall deal if all targets are achieved. Although the proposed up to $21.25 per share from Novo is significantly lower than the up to $37 CVR payment suggested in September, it aligns more closely with Pfizer’s CVR terms.
Aside from financial figures, Novo’s new proposal is fundamentally similar to the deal that Metsera’s board previously rejected in September. The board acknowledged that this deal structure offered greater value to the company’s shareholders than a standard termination fee that would be payable should the deal fall through due to regulatory challenges. Nevertheless, Metsera’s board opted against Novo’s September offer, citing concerns that regulatory hurdles could delay deal closure by as much as two years, with CVR payments only being made after an extended period, if they occur at all.
Factors influencing the board’s preference for Pfizer’s offer included the certainty of the financial terms provided by Pfizer and the anticipated speed of the deal’s completion. Pfizer projected that the transaction would close in the fourth quarter of this year. Ultimately, Metsera’s board voted to accept Pfizer’s offer of $47.50 per share, totaling approximately $4.9 billion.
In a research note released on Thursday, analyst David Risinger from Leerink Partners pointed out the uncertainty surrounding Novo’s confidence that antitrust regulators would approve its acquisition of Metsera, considering Novo and Lilly’s dominance in the market for metabolic drugs that mimic gut hormones. Additionally, the Trump administration’s “America First” policies may also influence regulatory scrutiny of a potential Novo deal for Metsera.
In its statement responding to Novo’s new offer for Metsera, Pfizer characterized the proposal as an attempt by a dominant market player to suppress competition through the acquisition of an American competitor. Pfizer argues that the structure of the deal appears designed to circumvent antitrust regulations and comes with associated regulatory and execution 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,” stated the pharmaceutical giant.
Like many mergers and acquisitions, Pfizer’s agreement with Metsera contains a clause prohibiting the biotech from soliciting other offers. However, the agreement allows Metsera to respond to unsolicited higher bids. In addition to providing greater value to shareholders, the agreement characterizes a superior company proposal as one that considers all terms and conditions, including all financial, regulatory, financing, conditionality, legal, and other terms.
Currently, Pfizer’s agreement with Metsera remains active. However, Metsera’s notification of its intent to enter a definitive agreement with a superior offer grants Pfizer four business days to modify its deal terms. Should Metsera terminate the Pfizer agreement to accept Novo’s proposal, the agreement stipulates that the biotech must pay a termination fee of $190 million to the pharmaceutical company.
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