Why Pfizer can still prevail in the obesity fight with Novo Nordisk

The maker of Ozempic has been losing ground to Eli Lilly and a crop of copycat GLP-1 makers such as Hims & Hers Health. Novo’s new chief executive, Mike Doustdar, deserves credit for shaking up a once-stodgy Danish pharma with a move fast and break things mindset. He inherited a company rapidly ceding share, and his response has been urgent: layoffs to free up cash for reinvestment, and a dealmaking spree that included the acquisition of Akero Therapeutics, a company with a liver-disease treatment, for up to $5.2 billion.

Now, Novo’s bid to regain its footing has taken a form unthinkable under past leadership: an unsolicited $9 billion offer to pry Metsera, the developer of a monthly injection, away from Pfizer, which had agreed to buy it in a deal valued at up to $7.3 billion. It is a bold move for a company that mostly shied away from dealmaking under past leadership.

In this case it also looks like a move born of frustration, one that is now making Novo investors uneasy. The stock skidded Thursday and Friday as investors questioned how confident the pharma company is in its own obesity-drug pipeline, said Will Sevush, a healthcare strategist at Jefferies.

On Friday, Pfizer sued Novo and Metsera, alleging that under the terms of the Pfizer-Metsera agreement, the offer from Novo can’t qualify as superior. Pfizer might have a point

According to Metsera’s proxy statement on its merger with Pfizer, Metsera held talks with seven potential acquirers between 2024 and September 2025. Novo Nordisk, identified as Party 1 in the filing, was the first suitor.

During the negotiation process, Novo offered the same unconventional two-step structure it is offering now, a plan in which it would first pay Metsera upon signing in exchange for nonvoting shares, after which Metsera would distribute that cash to shareholders as a dividend. Full ownership would be transferred only after regulatory approval. Novo’s workaround was meant to sidestep any regulatory concerns, letting Metsera shareholders walk away with immediate cash no matter what. But Metsera’s board ultimately opted to proceed with Pfizer, citing regulatory uncertainty to closing a deal with Novo, likely given its leading position in the GLP-1 market.

If Novo’s bid is truly superior, why didn’t Metsera accept a similar one the first time? Why did the Metsera board, as the proxy statement shows, prod Pfizer to sweeten its deal? Under the merger agreement, the definition of “Superior Company Proposal" refers to a weighing of not just price but also regulatory, financing, timing, and legal risks. While shareholders might get more money under Novo’s proposal, Pfizer’s argument that Metsera can’t pay out the dividend under Delaware law and Pfizer’s request for a temporary restraining order to block the merger’s termination already have made Novo’s offer, in essence, riskier.

A Novo spokesperson said that Metsera assets are highly complementary to Novo’s products and pipeline, and that the Danish company “is uniquely positioned to bring its expertise in product development and manufacturing to accelerate the successful commercialisation of the Metsera assets."

Pfizer on Thursday cast Novo’s move as a threat to competition and even invoked nationalist undertones. In a statement, the company called Novo’s bid “an attempt by a company with a dominant market position to suppress competition in violation of law by taking over an emerging American challenger." And Chief Executive Albert Bourla, who was the first to appear at the White House alongside President Trump for a drug-pricing deal, is clearly ready for a political fight as much as a corporate one.

Even so, Pfizer—which had recently been fending off an activist investor as patents on key drugs expire and Covid revenue fades—still has time to decide it is better to negotiate than fight. Metsera seems to be using Novo’s offer as leverage to extract a sweeter deal, and under the merger terms, Pfizer has until Tuesday to counterbid. Given how valuable GLP-1 drugs have become, a small bump in price could be worth it.

Last quarter, Eli Lilly made more than $10 billion in revenue from Zepbound and Mounjaro, its flagship obesity and diabetes treatments. Metsera’s obesity portfolio, which includes a long-acting injection that would require fewer shots than Lilly’s drugs, clearly has potential to compete in that category.

If Pfizer wants a foothold in the obesity race, swallowing a higher price for Metsera might be the cost of admission.

Write to David Wainer at david.wainer@wsj.com