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US pharmaceutical company pfizer Signed $10 billion deal with obesity drug developer Mezzalaa fierce biotech bidding war between the New York-based pharmaceutical giant and Danish rival Novo Nordisk has come to an end. novo nordisk.
Mezzala late Friday accepted a softer offer from Pfizer, citing U.S. antitrust risks in Novo’s bid, which it had previously claimed was better. The Danish obesity drug giant announced on Saturday that it was withdrawing from the race.
Even if Metsala’s treatment is still years away from hitting the market, the bidding war gives Pfizer an entry into the lucrative obesity drug market. This is a blow to Novo, which is trying to regain lost ground against U.S. rival Eli Lilly.
Biotechnology bidding war with twists and turns
Pfizer appeared to close the deal in September before Novo swooped in with an unsolicited offer last week, sparking a fight for coveted assets in the growing weight-loss market. Pfizer is trying to gain a foothold in the fight against obesity, overcoming past internal setbacks in developing weight-loss drugs.
Pfizer agreed to pay $86.25 per share in cash, representing a 3.69% premium to Metsala’s Friday closing price, according to a statement from Metsala. The offer includes $65.60 in cash per share and a contingent value right that entitles holders to additional payments of up to $20.65 per share in cash.
Novo Nordisk announced on Saturday that it would not propose an increase.
“After a competitive process and after careful consideration, Novo Nordisk does not intend to increase its offer to acquire Metzer,” the Danish drugmaker said in a statement.
Novo added that it is advancing its own pipeline of obesity treatment options and “continues to evaluate business development and acquisition opportunities to advance our strategic objectives.”
A person close to Novo said the previous unsuccessful bid was Metsala’s “best value” and that the company remained confident in its obesity drug pipeline. For Novo, this deal was never a “do or die” deal.
“This has always been a bolt-on acquisition for Novo,” the person said.
“Unacceptably high legal and regulatory risks”
Metsala’s stock price soared last week as the M&A game intensifies. From just before Novo made the deal to the close of trading on Friday, Mezzala shares rose nearly 60%, giving it a market value of $8.75 billion.
For a while, it looked like Novo was in control of the inside track. Novo is trying to regain its former leading position in obesity drugs, which it lost to Eli Lilly.
Mezzala said in a statement Friday that Novo’s proposal poses “unacceptably high legal and regulatory risks” compared to the proposed merger with Pfizer, citing a request from the U.S. Federal Trade Commission to discuss the risks of a deal with Novo. Regulators sent a letter to Novo and Mezzala earlier this week saying their proposed deal risks violating U.S. antitrust laws.
Novo said in a statement that it believes the structure of its proposal is “antitrust compliant.”
Pfizer said in a statement that it is pleased to have reached an amended agreement with Metsala and expects to complete the merger immediately after the Metsala shareholders’ meeting on November 13.
“Game of Thrones”-style battle for metsä
Bernstein analyst Courtney Breen said the $10 billion price was based on optimistic assumptions about Mezzala’s future performance, and that Pfizer should assume revenue of $11 billion by 2040, nearly double Mezzala’s current projections. He noted growing skepticism about long-term GLP-1 pricing, which could compress margins.
Metsala’s board of directors recommended that shareholders approve Pfizer’s amended offer. The biotech company is currently losing money, and analysts expect further losses to occur while the drug is still in development.
A bidding war between Pfizer and Novo raised the price from the $7.3 billion Pfizer offered in September. John Lamatina, Pfizer’s former head of research and development, told Reuters the battle was reminiscent of Pfizer’s $90 billion hostile takeover of Warner-Lambert in 2000 to gain control of the cholesterol-lowering drug Lipitor.
“Although this is a small deal, Pfizer must believe the Mezzala pipeline is key to its future,” he said.
Analysts and investors have pointed to an unusually intense race to take control of Mezzala. The company’s early-stage obesity treatments are still unproven, but could be key to a market that some analysts estimate will reach $150 billion by early next year.
“This is a Game of Thrones level game,” Peter Korchinsky, managing partner at RA Capital, one of Mezzara’s top 20 shareholders, said before the final bids were accepted.
Metsala’s experimental obesity treatment, MET-097i, an injectable GLP-1 drug, and MET-233i, which mimics the pancreatic hormone amylin, are expected to have combined peak sales of $5 billion, said Leerink Partners analyst David Reisinger.
