TLDR
- Novo Nordisk launched an unsolicited $9 billion offer for Metsera, trumping Pfizer’s existing $7.3 billion acquisition agreement.
- Pfizer condemned the move as reckless and pledged to pursue legal action to protect its deal with the weight-loss drug developer.
- The obesity treatment market is expected to reach $72 billion in 2025 and climb to $139 billion by 2030.
- Eli Lilly posted $17.6 billion in third-quarter revenue, up 54%, powered by weight-loss drugs Mounjaro and Zepbound.
- Jim Cramer voiced concerns about Pfizer’s outlook, highlighting its 7% yield but questioning the Seagen acquisition’s value.
The weight-loss drug industry just witnessed an unprecedented corporate showdown. Novo Nordisk submitted a surprise $9 billion bid for Metsera, a biotech startup already under contract with Pfizer.
Pfizer responded with fury. The pharmaceutical company labeled Novo’s offer as reckless and vowed to use every legal tool available.
The New York-based drugmaker accused its Danish competitor of attempting to stifle competition and dodge antitrust regulations. Pfizer insists it will enforce its September agreement with Metsera.
This corporate drama unfolds while Pfizer faces broader challenges. Jim Cramer recently weighed in on the company’s struggles during his Mad Money program.
“The drug stocks are just in a world of hurt, and this one continues to be there,” Cramer told viewers. He acknowledged Pfizer’s 7% dividend but remained skeptical about near-term improvements.
Cramer also questioned the $43 billion Seagen purchase. “Pfizer is being viewed as a company that doesn’t really have anything,” he stated in September.
Why Everyone Wants Metsera
The obesity drug market represents a massive opportunity. Industry analysts project $72 billion in global sales this year.
That figure could double to $139 billion by 2030. Few pharmaceutical categories offer this kind of growth potential.
Metsera caught attention with promising early-stage drug results. The company’s monthly injection could generate over $5 billion in annual sales once approved.
Founded just three years ago, Metsera employs about 100 people and generates no revenue yet. But its experimental treatments showed advantages over existing options.
The drugs require less frequent dosing and potentially cause fewer digestive side effects. Metsera is also developing pill versions.
Pfizer originally agreed to pay up to $7.3 billion for the startup. This followed disappointments in Pfizer’s internal weight-loss research programs.
Novo Nordisk participated in initial bidding but lost to Pfizer. The company decided to make another attempt with better terms.
The Obesity Drug Gold Rush
Novo Nordisk’s revised proposal includes $56.50 per share upfront plus $2.5 billion in milestone payments. Metsera acknowledged the offer exceeds Pfizer’s agreement.
Such hostile bids are unusual in pharmaceutical acquisitions. But Novo Nordisk needs to regain momentum in the weight-loss space.
Eli Lilly demonstrated the category’s strength Thursday. The Indianapolis company reported $17.6 billion in third-quarter sales, jumping 54% year-over-year.
Lilly’s weight-loss medications Mounjaro and Zepbound fueled the growth. The company now holds an $800 billion market value, making it the world’s most valuable pharma firm.
Novo Nordisk once led the obesity drug market with Ozempic and Wegovy. Manufacturing problems and marketing missteps allowed Lilly to surge ahead.
The Danish company also stumbled developing next-generation treatments. Investors now view Lilly as the stronger long-term competitor.
Novo Nordisk recently overhauled its leadership team. The company installed a new CEO and plans to replace multiple board directors.
In September, Novo announced 9,000 job cuts, representing 11% of total staff. This restructuring marks a dramatic shift for a company known for employee loyalty.
New CEO Maziar Mike Doustdar views the Metsera acquisition as critical. Securing the startup would replenish Novo’s research pipeline and restore competitive positioning in the $150 billion obesity treatment market.
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