(Bloomberg) — Novo Nordisk () CEO Mike Doustdar may have lost out to Pfizer () in the $10 billion bid to acquire obesity drug developer Metsera, but don’t expect him to give up on deals anytime soon as the Danish company seeks to make up lost ground in the booming weight-loss market.
Novo, which owns Wegovy and Ozempic, will continue to pursue opportunities in obesity, diabetes and their associated comorbidities, according to people familiar with the situation. The company viewed Metsera as a complementary transaction rather than a transformational acquisition, these people said.
In the end, the Danish pharmaceutical company decided to withdraw from the dispute this Saturday morning (8), after Pfizer matched its last offer in a bidding war that raised the price to impressive levels. To complicate matters further, Metsera reported that it received a call from the US Federal Trade Commission (FTC) pointing out potential regulatory risks in the structure of the deal it had proposed.
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For Pfizer, the transaction was something that CEO Albert Bourla could not miss, as the American pharmaceutical giant races to gain market share. The real winner was Metsera, as competition for its — as yet unproven — assets inflated its valuation.
“We will get back to work and focus on our own promising pipeline, accelerating everything while continuing to pursue any complementary development businesses within diabetes and obesity that we see fit,” Doustdar said Saturday in an email to his executive team that was seen by Bloomberg.
This is the first major setback for the executive, who took over as CEO in August, replacing Lars Fruergaard Jorgensen, who was removed after failing to maintain Novo’s initial leadership in the obesity market. Doustdar immediately accelerated plans, including cutting 11% of the workforce and implementing what he called a “performance culture.”
The stock has lost 53% of its value so far this year after the company, which pioneered the revolutionary wave of weight-loss drugs, lost its leadership position to Eli Lilly & Co. A host of other drugmakers — including Pfizer, which previously failed in its own effort to develop an obesity drug — are now entering the market with a vengeance.
Novo’s portfolio
Doustdar’s aggressive pursuit of Metsera has raised questions about the strength of Novo’s portfolio. Still, these concerns may be eased by the relief of not shelling out $10 billion for a startup that hasn’t yet brought a product to market.
Novo insisted the structure of its proposal was “in compliance with antitrust laws” but said the decision to withdraw was driven by a desire to maintain financial discipline and shareholder value.
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In the future, Novo “will evaluate business development and acquisition opportunities that meet its return and capital allocation criteria and that advance its strategic objectives,” it said in a statement.
Even before the result on Metsera was known, Doustdar already indicated that Novo would continue its search for business. The company “will look at all assets regardless of where they were created and who they are being created by,” he said in an interview following the company’s earnings release this week.
“I don’t start by thinking about the size of the business. I start by thinking about whether we can benefit from these assets in combination with what we’re doing,” he said.
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The company now plans to cast a wide net for potential targets as it defines its future M&A strategy, according to a person familiar with the matter. It will not just limit itself to developers of weight loss drugs, but will also look for opportunities to treat diseases associated with obesity, so-called comorbidities, the source said.
Novo already took a step in that direction last month with a $5.2 billion deal for Akero Therapeutics, developer of an experimental treatment for MASH, a liver disease linked to obesity.
Reduction of projections
As Novo’s Wegovy loses market share to Lilly’s Zepbound, the Danish company has cut its financial guidance for the fourth time this year. A deal with the Trump administration to reduce the price of weight-loss drugs in the U.S. also weighed on shares.
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This increases pressure on Novo’s next-generation products. The company has several treatments in development, including a high-dose version of the Wegovy shot, which Novo says offers the same weight loss potential as Lilly’s Zepbound. But its next-generation injectable obesity treatment, CagriSema, has disappointed so far, with lower-than-expected weight loss.
Novo has submitted a tablet version of semaglutide — the main ingredient in Ozempic and Wegovy — for evaluation by the U.S. Food and Drug Administration (FDA). There is also another experimental obesity drug in development called amycretin, which can be formulated as an injection or tablet.
Despite Lilly’s recent setbacks, Novo has a potential game-changer, even if it’s a gamble: two studies testing a tablet version of semaglutide as a possible treatment for mild Alzheimer’s. The results of these studies are expected by the end of the year.
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And although Novo lost the race for Metsera, Doustdar may have managed to change the perception of the company as conservative and slow, according to analysts. His approach, including the job cuts, has caused some discomfort in Denmark.
“New era”
“It’s a new era at Novo, and they have to act according to the markets they are in,” said Frederik Aakard, a consultant at Danish firm Dema Partners, a specialist in pharmaceutical acquisitions. “It’s a different game they’re playing now. They’re playing it in a much more American way, with a different cultural approach than they had before.”
His financial discipline could also be a positive, as some investors were concerned that Doustdar overpaid in his efforts to regain leadership in the battle against obesity.
“Acting quickly needs to be accompanied by precision, as simply breaking things is a recipe for disaster,” BMO Capital Markets analyst Evan David Seigerman said in a note ahead of the Metsera decision. “Novo cannot afford to be reckless and must act strategically to correct the course that is so far off course.”
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