(Bloomberg) — Lars Rebien Sorensen is back as chairman of Novo Nordisk A/S following a shareholder meeting that exposed the depth of rivalry between the Danish drugmaker and US arch nemesis Pfizer Inc.
The executive, who brought Novo’s first weight-loss shot to market, had to spend part of the meeting explaining why proposed board member, Mikael Dolsten, 67, withdrew just a day ago because of an “issue with a former employer.”
Sorensen didn’t name the company, but Dolsten is the former chief scientific officer at Pfizer Inc., which beat Novo less than a week ago in a $10 billion bidding war over obesity biotech Metsera Inc.
“We had very much looked forward to working together with Mikael Dolsten,” Sorensen said. “We hope that he might return at a later point in time. He’s welcome any time in the Novo family.”
Pfizer’s acquisition of Metsera closed on Thursday making Novo and its US rival clear competitors in the hottest and fastest-growing pharmaceutical market. Pfizer didn’t immediately return a request for comment.
The meeting on Friday capped a tumultuous few weeks for Novo after a dispute over the pace of change at the struggling maker of the blockbuster drugs Ozempic and Wegovy led to more than half the supervisory board resigning last month. The outcome was a foregone conclusion as Sorensen, who ran 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 based on winning more than 93% of the proxy and postal votes. Dolsten’s withdrawal leaves the board needing to nominate two additional candidates at the next shareholder meeting in March.
Some of Novo’s prominent minority investors said they were would reject the revamp, including Norway’s sovereign wealth fund and CalSTRS, the pension fund for California educators. Influential proxy adviser Institutional Shareholder Services Inc. recommended that holders abstain, saying the overhaul shows “limited transparency and accountability to minority shareholders.”
Sorensen said he would seek a new chairman for the foundation and would also “like to make myself redundant as quickly as possible” on the Novo board.
Minority investors must now wait to see if Sorensen’s decision to gut the board and pin Novo’s recovery plan on himself and his aggressive and ambitious new chief executive officer, Mike Doustdar, is the right one.
The Sorensen-Doustdar duo has already shown an appetite for risk so far with their high-profile, but ultimately unsuccessful, attempt to gatecrash Pfizer’s deal to buy Metsera. The tussle went all the way to the Oval Office, where Doustdar challenged Pfizer CEO Albert Bourla to raise his bid.
“We have gotten a warrior as a CEO for the company,” Sorensen said Friday. “I think that is what he called himself in interviews and certainly we have not been lacking in activity in the company.”
That kind of brinkmanship may be exactly what investors don’t want.
Novo needs to evaluate future deals more carefully “and definitely take much less risk than they did” with the Metsera pursuit, said Markus Manns, a portfolio manager at Union Investment in Frankfurt. The company now needs to come up with a “sound and sustainable” strategy for regaining market share from arch rival Eli Lilly & Co. and diversifying its portfolio, said Manns.
“What I don’t want are bold actions or risky deals,” he said.
Novo is facing an uphill climb in the obesity market after losing its lead to Lilly and disappointing with its next-generation experimental drug CagriSema. While rivals are moving forward with novel compounds, Novo’s next offerings are reworked versions of its existing drugs, putting Wegovy in a pill or in a higher-dose shot.
Sorensen’s elevation, almost a decade after he left the CEO job, gives him a second chance to reshape the drugmaker.
During his 16 years at the helm, Sorensen oversaw a 400% sales boost as well as the introduction of Saxenda, the precursor to Wegovy. But by the end of his tenure, Novo was facing an insulin price squeeze that hit both its profits and share price. His successor, Lars Fruergaard Jorgensen, captained the introduction of Ozempic and Wegovy and Novo’s vault into the top ranks of global drugmakers.
The company failed to capitalize on its first-mover advantage and is now grappling to regain the lead following a brutal board restructuring that clashed with Novo’s usually consensual culture.
“I think it’s a good thing,” said Sebastien Malafosse, a portfolio manager at Edmond de Rothschild Asset Management. Sorensen was a “very successful CEO” of Novo before.
In the weeks since Doustdar and Sorensen took the reins, Novo has announced layoffs for 11% of the company, axed longtime pet projects such as an effort to cure diabetes using stem cells, and started the bidding war with Pfizer.
“The velvet gloves are off,” said Hanne Sindbaek, a Danish author who has written three books about Novo, in reference to the Pfizer bidding war. “Now they realize it’s a rough market, and we have to play rough.”
–With assistance from Madison Muller.
(Updates with details and management comments from extraordinary meeting throughout.)
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