Metsera Tumbles After Novo Pulls Out of Bidding War With Pfizer

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1:20Bloomberg Audio Studios. Podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Looking at the news, MetSera shares tumbled after Novo Nordics declined to further raise its offer for the U.S. maker of an experimental weight loss drug, bringing a bidding war with Pfizer to an end. I like a good bidding war being a former banker. Sam Fazelli joins us here, director of research for Global Industries.

1:59He covers all the health care stuff for Bloomberg Intelligence. He's based in London. So how good is this MetSera company, Sam, and their drug? How good is MetSera? Because, boy, it seemed like everybody wanted a piece of it. Yeah, so, Paul, before this last week, sorry, I've been off. And you know what happens to your brain when you're off for a few days? Before last week, which is called, we had the obesity week, right? where my colleague Mike Shaw was at, there was a little bit of confusion around how good their data was, how good their assets were in the obesity space. And some questions about can they really be dosed once a month if people wanted to do that?

2:43Do we really know what the side effect profile is like given the way they've disclosed so far? And of course, last week it cleared most of it up. The side effect profile is the same as most of these GLP ones. you get some nausea. In some tough cases, you get some vomiting. But those are early on and they get out of the way. If you can withstand them, you seem to get the benefit. And it seems to work pretty well as a once-monthly drug. But there's always more wood to be chopped. You know what these things are like. So the acids look great. They're competitive. And Pfizer just stood his ground and put the bid up.

3:20And of course, I think what clinched it was what we'd been going on for ages about for the past 10 days or 20 days about is that the novus deal had a risk of not being able to pass due to competition competition issues fdc issues and it sounds like the fdc had given medsera a call saying look if you go with that there is a risk it won't close so do whatever you think is the right thing for your shareholders and they did in the end and pfizer did up its bit right so novo nordisk won in a way in that pfizer is paying up more does Does that actually work in Nova Nordisk's favor or is it still as desperate as it was before to look for some new catalysts in the obesity market?

4:01I mean, I'm not going to call Nova desperate. I think they have assets in there. I think they wanted to add some more options to their sales reps' bags over time. So I wouldn't call them desperate, but they're obviously by going after this, they did say that we need more assets in our bag. And Lilly wasn't in the game. So it just gives you that flavor that they are. And I think the market's telling you that. Look at the divergence of the share price performance of Lilly versus Novo Nordist. The market's favoring the drugs that Lilly's got on the market today. And to compete, they needed to get some more.

4:43So I think this is not the end for Novo at all in this space. There's lots of other interesting obesity assets coming up with different mechanisms. That's the thing that I think the company is now going to have to think about rather than trying to go after the same mechanism all the time. So, Sam, all these big, big cap pharmaceutical companies that you've covered for decades, I kind of always thought they were big diversified portfolios of lots of different drugs and therapeutics. And, you know, but when I look at your stocks this year, it seems like there's halves and half nots. If you have obesity exposure, the stocks are up.

5:18And if you don't, they're down. Is that kind of how your world's evolved into over the last several years? I would just give you one little caveat to that. AstraZeneca. AstraZeneca, I think, is doing fine. And then they have an obesity asset, but it's not their major game. their big plays in oncology. Cardiovascular is there and they're adding it to it. So yes, obesity has been the talk of this past 2025. I think it will still be the talk of 2026. But there's a lot more going on in pharma. Neuroscience, diseases of the brain, diseases of mental health are getting much more attention. Cardiovascular, aside from obesity, is getting quite a lot of attention and hard to treat hypertension, et cetera.

6:04I have to tell you, I don't think there's an area, perhaps antibiotics set aside, that is not getting a significant amount of progress across some pharma company somewhere. Is what happened with MetSera, No IndoorDisc and Pfizer, an unabashed victory for Eli Lilly? I mean, does it just kind of keep on moving forward or does any of this kind of hurt Eli Lilly's market position? No, I mean, at the end of the day, there'll be multiple players in this space, as there are now two, at least. And I think Eli Lilly is currently very well placed with the assets that they have today to compete. And they're showing that they're competing very, very effectively, and in some cases, winning market share from Novo Nordisk.

6:48Hey, Sam, we've got about 30 seconds left. What's the, you have a little hindsight here, President Trump threatening medical funding at the university level.

6:58What's to be that some universities are getting some reprieve from general funding issues. But medical funding is something that I keep scratching my head on. I don't understand why you would want to cut off funding to research and funding to medicine in general, because that is a major driver of economic boom in the US. And it's not just medicine, it's also STEM. I don't understand it. Stay with us. More from Bloomberg Intelligence coming up after this. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy.

7:36Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio.

8:12All investing and subject to risk, Vanguard Marketing Corporation Distributor. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy.

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9:18you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple carplay and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube mandeep singh just barely made it under the wire to get here to talk to us today then i was going to give him a hard time but then i remember he has like five other jobs he's like senior research analyst covering technology he manages a bunch of people. He's also updating the AI tech guide, that slide that you're always talking about. I know. All right. We'll cut him a break here.

9:53Mindy Singh joins us here. He's our senior tech analyst at Bloomberg Intelligence, managing, it's like herding a group of cats when you're managing research channels because by definition, they don't want to be managed. Taiwan Semiconductor Manufacturing. I usually don't pay attention to this one. It's chips and stuff like that. That's not a lot of fun. But this is interesting. They reported some numbers, slower growth. And I think for those that are concerned about the growth of this AI juggernaut that we've all been on over the couple of years, you're wondering, does slowing growth at Taiwan Semiconductor mean anything for the industry writ large?

10:25Mandip, what do you think when you saw the Taiwan Semiconductor numbers? I mean, Taiwan Semiconductor is unique because they give you monthly numbers. So all of our companies report on a quarterly basis. And when I look at Taiwan Semiconductor's quarterly results, they had over 30 % growth, gave a guide where AI would be growing, you know, almost 50 % plus over the next five years. And so if, you know, this deceleration is happening for a reason, you know, I would attribute it to their diversification of their business, because you have to remember, Apple is more than 20 % of their revenue, Nvidia is close to 20 % now.

11:03And then they also have some autos revenue, some analog business. So what is happening right now is everyone is putting their dollars in AI CapEx, but then they have to take away spending from elsewhere. And so the non-AI piece of the hardware spend, that seems to be slowing down. Although we haven't really seen that even with PC sales, things seem to be steady, but that could be one reason I can think of in terms of why that monthly number was slightly weak. And there could be seasonality as well. I mean, this is a monthly number. Could happen that the next two months actually are above 30%, and then the overall quarter may still look solid.

11:46Very good point. And just to recap the numbers, a 16.9 % increase in October sales, which was on track with analyst estimates, but that is the slowest pace in about 18 months. I keep reading how TSMC is constrained by limited capacity. So if it wanted to, it would want to actually have higher sales. It's just physically limited. Well, limited capacity, again, on the AI side. So, you know, TSMC does$120 billion run rate business in a year. So out of that, AI is still 15%. And so from that perspective, not everything that TSMC manufactures is at the cutting edge. And then you can slice it by leading versus some of the trailing nodes.

12:32So from that perspective, the utilization is far higher in terms of the leading nodes versus some of the other nodes that they manufacture on. And it could happen that because of the lower utilization, they're not seeing as much customer orders flow in. And look, I mean, it's hard to say for sure, given the book of their business and how many customers they have. And for some customers, they're still the only game in town. So TSMC makes custom chips for companies that order it from TSMC. It's a manufacturer overall. We know that all these big tech companies in the U.S. are starting to turn on their own capabilities of making their own chips.

13:16Is that competition or is that out of necessity? I mean, does that take away market share from TSMC down the road? I mean, look, if Intel is successful in terms of reviving itself on the manufacturing side, and that's what everyone is hoping, you know, with the initiative that the government taking a 10 % stake in Intel, that the fab side really gets a lift in terms of other companies using Intel fabs to manufacture chips. That's when you've got to be worried about TSMC. But for now, there is nothing on the horizon where you think an open AI or any of these chip companies is going to go to Intel for manufacturing their chips.

13:54And TSMC, market cap$1.5 trillion, stock up 50%, 5.0 % this year. Maybe I should pay a little more attention to this one. What do you think? In a related story, NVIDIA, again, more Bloomberg news reporting. These people are everywhere. NVIDIA chief executive officer Jensen Wang said he had asked Taiwan Semiconductor Manufacturing for more chip supplies as artificial intelligence demand remains strong. So there you go. I mean, I mean, that's hey, is this thing slowing down? Well, not to Jensen Wang. The Blackwell ramp up is actually accelerating. And if all the hyperscalers are telling you they're raising their CapEx for 2026 and it's going to be another 50 percent plus year, they need more TSMC capacity.

14:37And NVIDIA needs more TSMC allocation because TSMC can allocate to anyone outside of NVIDIA as well. So from that perspective, you can see how much NVIDIA cares about TSMC capacity. Let me ask a dumb question. I used to cover Taiwan equities when I worked in Hong Kong. And there are two big companies in Taiwan, TSMC and UMC, United Microelectronics. And it feels like TSMC just ran away with it. And UMC is kind of a shadow of its former self. Is there anyone, any company within in Taiwan that can really compete or even hope to compete against TSMC? Not right now, and especially when it comes to leading nodes.

15:15I think that's where TSMC talking about two nanometer. I mean, we have seen why Intel has struggled in the last five years because they were not able to make the node transitions, even though they are a leading node manufacturer. So from that perspective, I mean, TSMC feels like they have an unassailable mode. And not just in terms of manufacturing, but also their efficiency when it comes to using these semi-cap equipment tools. Like, they are probably the best in terms of the leverage they have shown in terms of the useful life of these tools that other manufacturing companies haven't been able to show.

15:51All right. Got about a minute and a half left. Instead of me asking a dumb question, why don't I just say, hey, what are you and your team working on? What's the next cool thing we need to be reading about from you guys? I mean, we are in the process of updating our Gen AI numbers, and they are going up for 2026. And also, there's a heavy emphasis on data centers. So our next big report, our dashboard, is going to be on data center utilization, data center capacity additions. Everyone is talking in terms of gigawatts. So OpenAI has said they'll be adding 30 gigawatts over the next five years. Well, we want to track overall gigawatts from all these vendors, Microsoft, all the hyperscalers.

16:29Do we have a utilities analyst? We do. Who is that? Well, I mean, it's covered by multiple people, Rob Barnett. Because now we've got, those guys become front and center, it seems like. I mean, do we have the grid to power all this stuff? I mean, everyone has called out power. In fact, right now, the consensus is power is the biggest constraint, even more so than the GPUs, which was the case for the past three years. It's always going to be something. Yeah. All right. Right. And how many analysts are covering technology broadly defined for BI? We're close to 20 people globally. 20 people globally, right?

17:04They're not just stuck in New York. They're everywhere, right? They're everywhere. You need that. Stay with us. More from Bloomberg Intelligence coming up after this.

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18:35You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's head over now to company news because we do still have companies reporting earnings. And Tyson is the latest to do so. Tyson, of course, reporting results today. And it looks like we had a fourth quarter adjusted earnings per share beat. And Jennifer Bartaschis is joining us now. Jen covers senior. She's their senior retail staples and packaged food analyst for us here at Bloomberg Intelligence.

19:14And Jen, you know, we think about Tyson, I think about chicken right away. And higher demand for chicken certainly was a factor that helped fourth quarter results. But beef is going to be a problem down the road, isn't it? Well, it's an interesting thing because obviously Tyson has been doing very well with the chicken business. They've invested in the last couple of years in improving their operations. And we've seen that come through with a better margin, better operating usage and that sort of thing. But when we look at the guidance for next year, over half of their adjusted operating income is expected to come from chicken.

19:48And for a diversified protein company, that's putting a lot of eggs in one basket, so to speak. And so, you know, it's doing well. There's a lot of momentum behind chicken in general. But Tyson is going to be very dependent on the continued success of that segment to hit its guidance for next year. Talk to us about the cattle herd in this country. How does that work here? I mean, prices are so high. And I thought for like a lot of commodities, when you see a price, you know, move materially higher, it brings on more supply. But I guess it's a little different in the cattle business. What's your understanding?

20:24Yeah, it's a little bit harder in the cattle business. You know, you have to remember that raising cattle is a it's a capital intensive activity. And so there have been a lot of things that have held ranchers back from increasing the size of their herds. We've had high interest rates because a lot of them have to borrow in order to rebuild herds. We've had drought conditions, especially in the West and in the South, which make it difficult to commit to raising more animals if your land can't sustain them. And so those are some of the kind of structural impediments that have really held us back from what we would typically at this point have expected to see some rebuilding of those herds already.

21:03Tyson says they see a couple of indicators in the Upper Midwest that there's some heifer retention coming. That means that cows are not being sent to slaughter, but it's not enough to really move the needle. So from our estimate, we're not looking at a meaningful change in supply until 2028. So expect high beef prices to continue. Yeah, okay, so not great news if you're a hamburger lover, and it's because these consumer beef prices that are at record highs is what prompted President Trump to ask the DOJ to investigate the meatpacking industry. He is blaming majority foreign-owned companies for driving up these beef prices.

21:43Jen, how do you think about this? Well, you know, when we look at this, I mean, this seems like it's more of a political maneuver than actually based on anything from a market perspective at this point. We will see what the DOJ comes up with and what they actually share. But this seems to be looking for a rationalization for high beef prices versus actually understanding what the market fundamentals are. And the other thing you have to remember is that we import a huge amount of beef, especially for ground beef from Brazil. And we have tariffs on that. So part of the, you know, part of the government's own policy is contributing to the higher beef prices.

22:23But that's not part of this investigation at all. All right. So what's next for Tyson? I mean, are these kind of companies, how much do they have in their control? Because they don't have control of herd sizes and bird flus and things like that. The weather. The weather, exactly. How do investors kind of invest in a company like Tyson's? Yeah, you really have to look at how are they controlling what they can control? And so that comes down to their operations. Are they generating the efficiency they need to out of their plants? Are they operating at capacity? Do they still have excess capacity to fill?

23:01It really comes down to operational execution in this kind of backdrop when there are a lot of unknown variables that can impact supply. But ultimately, you know, supply, at least for chicken, does look pretty good. It looks pretty solid. So if all things go well, you know, Tyson should be in a position to be able to hit that guidance. Before we let you go, Jen, what does pricing for turkeys look like as we get closer to Thanksgiving? Yeah, you know, turkey has been hit harder by avian flu than chicken. And so if you're talking about a frozen turkey, you're going to be fine. Those turkeys have been in frozen storage for quite a while.

23:40They'll be ready to go. If you're more interested in the fresh bird, your price is probably going to be a little bit higher this year than it was last year. This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10 a.m. to noon Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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