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If you can’t make it, buy it. Pfizer is following this principle with the zeal of a late convert.
Having failed to bring its own experimental weight-loss pill danuglipron to market, the New York-based drugmaker announced a deal to buy Metsera, a biotech that specialises in next-generation obesity drugs, for as much as $7.3bn.
For investors who have watched Pfizer’s market valuation plummet from a peak of more than $342bn in 2021 to just $141bn, any move is long overdue. Indeed, the drugmaker’s shares rose 1.1 per cent on Monday.
Pfizer has struggled to find sources of growth amid waning demand for its Covid-19 vaccine and treatments. A series of big acquisitions in the cancer drug space has failed to impress Wall Street. The company can only look on wistfully from the sidelines as Eli Lilly and Novo Nordisk — albeit with their own ups and downs — pull ahead in the race to dominate the weight-loss drug market, which is expected to be worth $100bn by the end of the decade.
The problem with playing catch-up in the crowded and hotly competitive field of obesity medicine is that there are few bargains to be found. Under the terms of the deal, Pfizer will initially pay $47.50 a share, or $4.9bn, in cash for Metsera. That is a hefty 42 per cent premium to the company’s closing price on Friday. It is also more than double the $18 at which the company priced its shares when it went public in January. It will pay the remainder if certain clinical trial milestones are met.
But even at this price, Metsera is not a particularly convincing solution for Pfizer’s sales woes. For starters, it has no revenue yet. Its portfolio of weight-loss drugs is mainly in early to mid-stage development. The two that are furthest along are a weekly and a monthly injectable treatment that are in Phase 2 development. And while a monthly injection would be preferable to the once-a-week injection treatments that are available at present, the future for obesity drugs appears increasingly to be in oral treatments.
For good reason. Weight-loss pills are easier and less expensive to make and are more attractive to patients, especially those who don’t like needles. Metsera’s oral treatment is only in pre-clinical trials. By contrast, the US Food and Drug Administration is reviewing an oral version of Novo Nordisk’s GLP-1 obesity drug, while Eli Lilly said it planned to submit its daily GLP-1 pill for regulatory review later this year.
Pfizer’s Metsera deal may be a welcome sign that the drugmaker has finally diagnosed its troubles. But it is a long way from actually providing a cure.
pan.yuk@ft.com
