Pfizer lawsuit says Novo Nordisk's bid to buy obesity biotech Metsera is anti-competitive and illegal
Pfizer Inc. has received the required regulatory approval for its $4.9 billion deal to acquire obesity drug developer Metsera, but whether and when the deal closes could depend on the outcome of two lawsuits filed by the pharmaceutical giant against a last-minute competing offer submitted by Novo Nordisk.
The Federal Trade Commission on Friday gave early approval to Pfizer's proposed acquisition of Metsera, highlighting a key point in the company's lawsuit against Metsera and Novo Nordisk over alleged contract violations. Pfizer said its takeover offer offered the possibility of closing the deal more quickly because the pharmaceutical giant has a smaller business in metabolic drugs and is less likely to raise antitrust concerns.
By comparison, Novo's once-weekly injectable GLP-1 drug Wegovy is currently the best-selling obesity drug, and the Denmark-based drugmaker has a slew of other obesity drugs in various stages of development, many from other commercial deals. Last week, Novo Nordisk made an unsolicited $6.5 billion bid to acquire Metsera, whose lead program is a long-acting GLP-1 agonist that may be administered once a month. Metsera said it would accept Novo's proposal, claiming it was a better offer.
Pfizer argued that Novo's offer could not be considered a preferred offer under the terms of its merger agreement with the biotech because of significant antitrust risks. Metsera's regulatory filing on the Pfizer deal noted that regulatory review of the Novo acquisition could take up to two years and that the deal may not close at all. Pfizer said in the lawsuit that these risks led Metsera's board to reject Novo's previous offer and that these risks remain unchanged.
Pfizer's lawsuit was filed Friday in Delaware Chancery Court. In addition to breach of contract, Pfizer alleges that Metsera's acceptance of Novo's offer constituted breach of fiduciary duty and tortious interference with contract. Pfizer claims Novo's offer represents an attempt by a dominant obesity drug company to stifle competition. The pharmaceutical giant also argued that Novo's deal was designed to intentionally evade antitrust scrutiny.
Under the terms of the deal, Novo will pay $56.50 per Metsera share, for a total of $6.5 billion. The payment does not require regulatory approval of the deal and will be made before any action by the Federal Trade Commission. Under the terms of the deal, in exchange for the payment, Metsera will issue Novo non-voting shares representing 50% of the company. Ten days later, Metsera will pay shareholders a dividend of $56.50 per share. Pfizer said the special dividend violated Delaware law, adding that Metsera's directors breached their fiduciary duties by “obtaining self-serving indemnification provisions from Novo Nordisk designed to conceal its unlawful conduct.”
Pfizer expanded its antitrust claims in a second lawsuit filed Monday in U.S. District Court for the District of Delaware. The lawsuit contends that Novo's acquisition of Metsera violated Section 7 of the Clayton Antitrust Act, which prohibits mergers and acquisitions that would reduce competition or create a monopoly. Pfizer said Novo's acquisition of Metsera would have anti-competitive effects on the GLP-1 drug market.
The pharmaceutical giant also argued that Novo's deal with Metsera constituted a conspiracy to cause trade restrictions in violation of Section 1 of the Sherman Act. Pfizer further alleged that the transaction constituted an attempt to monopolize and colluded, in violation of Section 2 of the Act. The lawsuit alleges that Metsera's controlling shareholders — funds from Validae Health, Population Health Partners and Arch Venture Partners — were part of the anticompetitive conspiracy.
“This action is being taken to preserve and enhance competition in this important therapeutic area and to prevent Novo Nordisk from paying illegal bribes to Metsera and its controlling shareholders in order to control, weaken, and potentially kill emerging U.S. competitors,” Pfizer said in announcing the federal lawsuit. “The conduct of Metsera, its controlling shareholders, and Novo Nordisk is a clear violation of antitrust laws.”
Metsera issued a brief statement late Friday saying it disagreed with Pfizer's allegations in the first lawsuit and would respond in court. The company elaborated a bit in a statement released Monday in response to the federal lawsuit.
“Pfizer is trying to acquire Metsera through litigation at a lower price than Novo Nordisk,” Metsera said. “The Metsera board of directors will continue to stand firm on behalf of shareholders and patients. Pfizer's litigation arguments are baseless and Metsera will address them in court.”
Meanwhile, the merger deadline is approaching. Pfizer's merger agreement with Metsera stipulates that notification of a higher bid gives the pharmaceutical giant four business days to revise its offer. The deadline is Tuesday at close of business. In its announcement of the Novo acquisition, Metsera noted that the Pfizer agreement remains in full force and effect, and the biotech company's board of directors reiterated its recommendation that shareholders approve the agreement. Metsera plans to hold a special meeting of shareholders on November 13 to vote on Pfizer's proposal.
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