Novo Chairman Blames Board Dropout on Former Employer Pfizer
(Bloomberg) — Lars Rebien Sorensen says Danish drugmaker and U.S. nemesis Pfizer Inc. He returned as chairman of Novo Nordisk A/S after a shareholder meeting that revealed the depth of the rivalry between
The executive who launched Novo’s first weight-loss drug was forced to spend part of the meeting explaining why proposed board member Mikael Dolsten, 67, had withdrawn just the day before due to “an issue with his former employer.”
Sorensen did not name the company, but Dolsten announced the acquisition of obesity biotech Metsera Inc. less than a week ago. The former chief scientific officer of Pfizer Inc., which beat Novo in a $10 billion bidding war for Pfizer Inc.
“We were looking forward to working with Mikael Dolsten,” said Sorensen. “We hope he can return at a later time. We are always welcome in the Novo family.”
Pfizer’s acquisition of Metsera was completed on Thursday, making Novo and its U.S. rival a clear contender in the hottest and fastest-growing pharmaceutical market. Pfizer did not immediately return a request for comment.
Friday’s meeting capped a turbulent few weeks for Novo after a dispute over the pace of change between blockbuster drugs maker Ozempic and Wegovy led to the resignation of more than half of its supervisory board last month. The outcome was inevitable, as Sorensen, who has led Novo for 16 years, also heads the Novo Nordisk Foundation, the controlling shareholder that holds 77% of the company’s voting rights.
Sorensen was approved to lead the supervisory board after winning more than 93% of proxy and mail-in votes. Dolsten’s withdrawal eliminates the board’s obligation to nominate two more candidates at its next shareholder meeting in March.
Some of Novo’s leading minority investors have said they will reject the renewal, including Norway’s sovereign wealth fund and CalSTRS, a pension fund for California educators. Influential proxy adviser Institutional Shareholder Services Inc. recommended that shareholders abstain, saying the revision showed “limited transparency and accountability to minority shareholders.”
Sorensen said he would seek a new chairman for the foundation and also asked Novo’s board to “fire myself as quickly as possible.”
Minority investors must now wait to see whether Sorensen’s decision to vacate the board and pin Novo’s recovery plan on himself and his aggressive and ambitious new CEO, Mike Doustdar, was the right one.
The Sorensen-Doustdar duo have demonstrated their appetite for risk so far with their high-profile but ultimately unsuccessful attempt to disrupt Pfizer’s deal to acquire Metsera. The debate spilled into the Oval Office, where Doustdar challenged Pfizer CEO Albert Bourla to increase his offer.
“We hired a warrior as CEO of the company,” Sorensen said in a statement Friday. “I think that’s what he called himself in interviews, and we certainly don’t feel the lack of activity at the company.”
This kind of intimidation may be exactly what investors don’t want.
Markus Manns, portfolio manager at Union Investment in Frankfurt, said Novo should consider future deals more carefully in its pursuit of Metsera and “certainly take much less risk than they did”. Manns said the company now needs to find a “robust and sustainable” strategy to regain market share from archrival Eli Lilly & Co. and diversify its portfolio.
“What I don’t want are bold actions or risky deals,” he said.
Novo faces an uphill climb in the obesity market after losing its lead to Lilly and disappointing with its next-generation experimental drug CallSema. As rivals continue to move forward with new compounds, Novo’s next offerings will be reworked versions of its existing drugs that pack Wegovy into a pill or a higher-dose vaccine.
Sorensen’s elevation almost a decade after he left the CEO post gives him a second chance to reshape the drugmaker.
During his 16 years at the helm, Sorensen delivered a 400% sales increase as well as the launch of Wegovy’s predecessor, Saxenda. But by the end of his tenure, Novo was facing an insulin price squeeze that affected both its profits and its share price. His successor, Lars Fruergaard Jorgensen, led the introduction of Novo’s coffers with Ozempic and Wegovy into the top ranks of global pharmaceutical manufacturers.
The company has failed to capitalize on first-mover advantage and is struggling to regain leadership after a brutal board restructuring that clashed with Novo’s often consensual culture.
“I think it’s a good thing,” said Sebastien Malafosse, portfolio manager at Edmond de Rothschild Asset Management. Sorensen was previously “a very successful CEO” of Novo.
In the weeks since Doustdar and Sorensen took the reins, Novo has announced layoffs of 11% of the company, canceled long-gestating pet projects such as an effort to treat diabetes using stem cells, and launched a bidding war with Pfizer.
“The velvet gloves are out,” said Danish author Hanne Sindbaek, who has written three books about Novo, referring to the Pfizer bidding war. “They now realize it’s a tough market and we need to play hard.”
–With help from Madison Muller.
(Updated with details of the extraordinary meeting and management comments.)
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