Due to the litigation Pfizer filed Friday and Monday against Metsera, Novo Nordisk and the biotech’s lead shareholder, CEO Albert Bourla was limited in what he could say. But he said Pfizer was the best fit for Metsera.
Minutes before Pfizer was set to report earnings on Tuesday, Novo Nordisk threw a curveball. The Danish pharma outbid Pfizer again for obesity biotech Metsera, further escalating an explosive bidding war that has already landed in the courts.
“We don’t see how Novo’s deal can be superior. It is an illegal attempt by a foreign company to do an end run around antitrust laws, taking advantage of the government’s shutdown,” CEO Alberta Bourla said on the earnings call.
Novo is attempting not to buy and advance Metsera’s products, but to “catch and kill” a competitor, the CEO said. Moreover, Novo’s acquisition is unlikely to clear given the competition concerns, Bourla said.
Novo upped its bid to $10 billion, beating a revised proposal from Pfizer of $8.1 billion that was sent in on Monday, according to a Tuesday press release from Metsera.
Bourla also defended Pfizer’s continued pursuit of Metsera, as TD Cowen analyst Steve Scala suggested that Metsera’s medicines have yielded data on par with assets in development by other obesity biotechs. “Nothing in all this justifies a bidding war or even a protracted legal battle,” Scala said.
“I know what we are getting,” Bourla asserted, insisting that Pfizer was well informed in its decision to pursue Metsera.
“We have seen the data, we did extensive due diligence, and we priced the asset into a price that we thought offers tremendous value to the shareholders of Metsera and to shareholders of Pfizer,,” Bourla said.
The CEO noted that the U.S. Federal Trade Commission had already granted early termination of the Hart-Scott-Rodino waiting period—which requires companies to wait for the government’s initial okay to proceed with a large merger. This occurred despite the ongoing federal government shutdown, signaling to Bourla that the deal was on the way to closure once Metsera’s shareholders vote on November 13.
Due to the litigation filed Friday and Monday against Metsera, Novo Nordisk and the biotech’s lead shareholders, Bourla said he was limited in what he could say; but he nevertheless defended Pfizer as the best fit for Metsera.
“What I can say it is that our belief in the promise of Pfizer and [the] material combination is strong and unwavering,” Bourla said. “We are confident it will create substantial value for shareholders and advance innovation to bring important medicines to patients in the high growth therapeutic area of obesity.”
Bourla also said that Pfizer has “distinct advantages” in the commercial business and R&D infrastructure. The company does not currently have an obesity asset in development, after several internally developed programs failed to meet expectations in the clinic. But Bourla said the company does have adjacent experience in cardiovascular with Eliquis and Vyndaqel.
“We plan to execute in a similar way with Metsera as we reinvigorate Pfizer’s cardiometabolic presence,” Bourla promised.
A Wild Four Days
Heading into earnings, Metsera was already expected to be the headline. But the last-minute bombshell significantly changed the tune of those discussions.
Pfizer’s original offer to buy Metsera came in September: about $4.9 billion upfront plus a contingent value right (CVR) that brought the potential total to $7.27 billion. The deal seemed to be full speed ahead before Novo stepped in last Thursday with a rival bid that totaled $8.5 billion.
The matter quickly turned sour, as Pfizer fired back that Novo’s unsolicited proposal was “reckless and unprecedented.” Pfizer filed litigation against Metsera and Novo on Friday afternoon alleging “tortious interference,” followed by another suit on Monday morning that pulled in Metsera’s lead investors.
After being notified of the counteroffer, Pfizer was given four days to come up with a better offer or cede Metsera to Novo Nordisk. Pfizer responded with an $8.1 billion offer on Monday, which was quickly topped by Novo’s $10 billion bid on Tuesday.
Metsera has deemed Novo’s new offer superior, giving Pfizer two days to respond.
Back to That Earnings Report
While the Metsera drama waylaid Pfizer’s executives, the company did, in fact, report solid third-quarter results. The company notched another $16.65 billion in revenue thanks to Eliquis, Comirnaty and Xeljanz.
Earnings per share were 87 cents for the quarter, landing 38% above consensus, Leerink Partners said in a note to investors Tuesday morning. This was thanks to lower costs and a surprisingly low tax rate, the firm noted. Pfizer has increased EPS guidance for the year from $3 to $3.08.
Pfizer has been undergoing a massive cost-cutting initiative and is on track to achieve net cost savings of $7.2 billion by 2027, according to the earnings report.
The performance was driven by Pfizer’s oncology portfolio but slightly offset by declines in revenue from COVID therapeutic Paxlovid, which brought in just $1.2 billion—9% lower than consensus and 55% lower operationally. Pfizer’s COVID vaccine Comirnaty, however, beat expectations by 8%, with revenue of $1.2 billion for the quarter.
COVID was a major headline for analysts given recent regulatory developments. The FDA approved Pfizer’s and other’s updated COVID vaccines but only for older and at-risk younger age classes. Then, CDC’s Advisory Committee on Immunization Practices (ACIP) voted in October to narrow vaccine guidelines to a risk-based recommendation—a change that BMO Capital Markets called “largely unsubstantive.” Nevertheless, investors will be keenly watching Pfizer’s COVID franchise to see if sales decline over the next few quarters.
On a more positive note for Pfizer, blood thinner Eliquis experienced “outperformance,” according to BMO, with growth of 22% for $2 billion worldwide.
Overall, however, Guggenheim noted that much of the revenue beat was driven by products that investors are less focused on. They would have preferred to see better performance from newer assets like the heart disease medicine Vyndaqel and legacy Seagen bladder cancer drug Padcev, which both underperformed.
The Vyndaqel family, which includes the older medicine Vyndaqel as well as newer formulation Vyndamax, booked $1.6 billion worldwide for the quarter, a 10% change versus the same period a year earlier. Padcev, meanwhile, took in just $464 million.
