Betting on the liver disease treatment sector, Novo Nordisk AS spent $5.2 billion to acquire Akero Therapeutics

Novo Nordisk has agreed to acquire the American biotechnology company Akero Therapeutics for up to $5.2 billion, aiming to obtain a promising liver disease drug from the latter, thereby intensifying its layout in the treatment of obesity-related metabolic diseases to cope with increasingly fierce market competition.

On Thursday, the Danish pharmaceutical giant announced that it will acquire Akero for a cash upfront payment of $54 per share, which represents a premium of about 16% over Akero's closing price of $46.49 on Wednesday. According to the agreement, if the drug receives full approval in the United States for relevant indications by June 30, 2031, Novo Nordisk will also pay Akero shareholders an additional $6 per share, known as a contingent value right (CVR).

This is the first major deal for Novo Nordisk's new CEO Mike Doustdar since he took office in July, highlighting his determination to boost sales growth and withstand pressure from U.S. competitor Eli Lilly. Following the announcement of the deal, the market reacted quickly: Akero's stock price surged over 19% in pre-market trading, while Novo Nordisk's stock price fell nearly 2%.

Mike Doustdar stated in a press release that Akero's investigational drug has the potential to become a "cornerstone" therapy for treating metabolic dysfunction-associated steatotic liver disease (MASH), which can be used alone or in combination with Novo Nordisk's blockbuster weight-loss drug Wegovy.

Locking in the Promising Liver Disease Market

The core asset of this acquisition is Akero's experimental drug efruxifermin, which is currently in late-stage clinical trials for patients with severe liver scarring (i.e., cirrhosis) caused by MASH (a disease caused by excessive fat accumulation in the liver).

Novo Nordisk believes that efruxifermin has the potential to be the first therapy capable of reversing MASH-related end-stage liver damage. MASH is closely related to obesity, making the drug's positioning highly strategically synergistic with Novo Nordisk's existing product line. Reports indicate that some of Novo Nordisk's investors have recently been hoping for the company to increase its R&D investment to build a future drug pipeline and boost investor confidence through new growth stories.

Novo Nordisk's acquisition also highlights that MASH has become an increasingly important field and is a key battleground in the competitive obesity drug market. Recently, there have been frequent transactions in this field, with pharmaceutical giants strengthening their positions through mergers and acquisitions.

Just last month, Roche agreed to acquire 89Bio Inc. for up to $3.5 billion to expand its portfolio in this disease area. Additionally, GlaxoSmithKline also acquired a potential MASH treatment drug earlier this year for up to $2 billion.

Strategic Layout of the New CEO

For Mike Doustdar, who just took over as CEO of Novo Nordisk in July this year, this acquisition is a key step in responding to growth and competitive pressures. Just last month, the company announced the layoff of 9,000 employees.

This move comes as Novo Nordisk faces fierce competition in the obesity treatment field from rivals such as Eli Lilly. According to Bloomberg data, Novo Nordisk's stock price has fallen about 53% over the past 12 months due to investor concerns about its competitiveness in the obesity sector.

Mike Doustdar previously stated that the company would focus on developing next-generation efficient obesity and diabetes drugs that can simultaneously treat related cardiometabolic diseases like MASH, rather than expanding into other disease areas. This acquisition aligns closely with that strategy