Pfizer (PFE) Doubles Down on Obesity Market-But Will It Pay Off?

Pfizer Inc. (NYSE:PFE) is one of the best value stocks in Goldman Sachs’ portfolio. The company appears to have seized an opportunity that may help it strengthen its portfolio with newer therapies in the face of looming patent expiries for some of its key drugs, which could reduce revenue by $15 billion by the end of this decade.

On Monday, September 22, Bloomberg reported that Pfizer is acquiring Metsera Inc. (NASDAQ:MTSR), a clinical-stage biotech company that develops therapies for obesity and related diseases. The company is paying an enterprise value of $4.9 billion in cash for the deal, with the potential deal value rising to $7.3 billion if regulatory milestones are met.

The purchase price is at a substantial 43% premium to Metsera’s last closing price, which indicates Pfizer’s determination (or some may call it desperation) to gain a stronger position in the fast-growing obesity market. The deal comes after Pfizer’s own obesity pill program was stopped earlier this year due to safety concerns, leaving it behind rivals Novo Nordisk and Eli Lilly.

The obesity therapies market is already growing rapidly and is expected to reach $100 billion by 2030.

By acquiring Metsera, Pfizer gains access to a robust pipeline of innovative weight-loss drugs. This includes its under-development amylin-based drug, MET-233i, which has shown encouraging results in weight loss tests. Amylin drugs are seen as a potential alternative to GLP-1 treatments, offering the possibility of fewer side effects.

Mizuho Securities analyst Jared Holz called the deal a smart move and expects Pfizer to receive a much-needed head start in a large growth market.

Metsera, founded in 2022, had a relatively short journey as a publicly listed company, as it was listed in January of this year with an IPO price of $18.

Pfizer Inc. (NYSE:PFE) is an American multinational pharmaceutical and biotechnology company that develops and manufactures medications and vaccines for immunology, oncology, cardiology, endocrinology, and neurology.

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Disclosure: None. This article is originally published at Insider Monkey.