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MicroStrategy’s Michael Saylor is buying as much of the cryptocurrency as he can. Some big-name investors are going along for the ride.

Michael Saylor’s company doesn’t market any hot products or services. What he and MicroStrategy MSTR 8.04%increase; green up pointing triangle do is sell new shares and debt, at a pace rarely seen in corporate history. Saylor plows all that money into bitcoin, vowing to keep doing it, over and over.

MicroStrategy shares are up about 690% in the past year and the 59-year-old executive chairman’s approximately 10% stake is worth about $9.7 billion, while he personally owns an additional $1.9 billion or so of bitcoin.

Saylor has emerged as the public face of the recent bitcoin craze, with nearly 4 million followers on X. To celebrate bitcoin topping $100,000, Saylor hosted a New Year’s Eve party for several hundred members of the crypto community at his waterfront, Miami-area estate, near his luxury yacht. A half-dozen dancers dressed in gold performed. Celebrities mingled with investing luminaries, including Bill Miller, the former Legg Mason fund manager; Peter Briger, chairman of Fortress Investment Group; and Mark Casey, a key portfolio manager at Capital Group. The event was livestreamed on YouTube to tens of thousands of bitcoin fanatics as Saylor, in a black blazer and a bitcoin T-shirt, presided.

Enthusiasm for Saylor’s company is so rabid it has resulted in a head-scratching situation: MicroStrategy owns about $47 billion of bitcoin, but its shares are worth about $97 billion. It’s as if investors are paying $2 for a $1 bill. Just as surprising: Sophisticated investors have been among the biggest buyers, including mutual-fund power Capital Group, which owned about 8% of the company as of Sept. 30, and Norges Bank Investment Management, Norway’s $1.5 trillion sovereign fund, which owned nearly 1%.

Fans say the premium reflects confidence that Saylor can continue to produce profits betting on bitcoin. Only 21 million coins will be created, a scarcity that boosts its value, they argue. By issuing equity at lofty levels, and selling debt at friendly terms to the company, Saylor can create value for shareholders as he expands MicroStrategy’s bitcoin horde, says Richard Byworth, a partner at SYZ Capital, who personally owns MicroStrategy stock.

“The premium is justified and will always be there,” says Jordi Visser, a Wall Street veteran who worked at Morgan Stanley and recently purchased MicroStrategy shares. “No company can do what he’s done. They own about 2% of bitcoin—who can own more of it?”

There’s serious risk attached to Saylor’s strategy. He rode past investment waves until they crested and then crashed, losing billions of dollars of personal wealth, sometimes in a single day.

Saylor declined to comment for this article.

Saylor, a lifelong bachelor who turns 60 next month, has endured a series of career setbacks and run-ins with financial authorities and others. Last year, he agreed to pay Washington, D.C., $40 million to settle an income tax dispute, after Washington officials alleged that he previously lived in the District, not in Florida or Virginia as he claimed, and should have paid D.C. taxes.

The son of a career Air Force officer, Saylor studied aeronautics and science at Massachusetts Institute of Technology and was part of the Air Force Reserve Officer Training Corps. A few years after graduation, he launched MicroStrategy in 1989 with college friends in Tysons Corner, Va., as a data-mining software company.

MicroStrategy soared during the late-1990s dotcom bubble. Saylor’s stock was worth about $10 billion, more than enough cash for lavish parties and Caribbean cruises for employees and others. Saylor’s company also purchased domain names including Mike.com, Michael.com, Hope.com and Voice.com, which it sold for $30 million.

It all collapsed in 2000 when the internet bubble burst. MicroStrategy was forced to restate its revenues and earnings, as regulators scrutinized how the industry booked revenues. The flameout was so dramatic it drew the attention of tabloids: In March of that year, the New York Daily Newsran a headline: “Lost $6 Billion in a Day” with a photo of a then-35-year-old Saylor, clean shaven and in a suit and tie, a dazed look on his face.

Later that year, Saylor and two other executives, along with the company, paid $11 million to settle accounting-fraud charges filed by the U.S. Securities and Exchange Commission related to the restatements, in which the SEC alleged the company inflated revenue and earnings, showing profits rather than losses, allegations Saylor and the others didn’t admit to or deny.

In July 2002, MicroStrategy shares closed at 45 cents, down from a high of $313 in 2000 as the company dealt with debt problems.

Over lunch in Bridgehampton, N.Y., venture-capitalist Rick Rickertsen commiserated with Saylor Rickertsen asked Saylor if he was worried about losing his business.

“I might,” Saylor said. “But I’ll just start something new.”

Saylor restructured MicroStrategy debt and did a 10-for-1 reverse stock split, averting crisis. For years, Saylor searched for the next big thing. For a while, Saylor made personal profits betting on stocks like Google and Apple but was dismissive of cryptocurrencies, tweeting in 2013 that bitcoin’s “days are numbered.”

By 2020, MicroStrategy shares had barely moved in years and promised little growth. It was worth just $1.5 billion, though it was profitable and boasted approximately $500 million in cash.

Spending time in his Miami estate in 2020 during the Covid-19 pandemic, Saylor tried figuring out what to do with the company’s cash. Worried about a potential surge in inflation, as the government spent money to keep the economy afloat, Saylor studied bitcoin anew. He became a believer. Soon, Saylor was pitching his board on the idea of using the cash to buy bitcoin. They agreed, mostly because there didn’t seem to be any better alternatives for the company. At the least, the bet would draw some useful attention, they figured.

“The company was going nowhere, it had almost no Wall Street following,” says Rickertsen, who had become a board member. “It was bleak.”

That year, Saylor spent half the company’s money, about $250 million, to buy bitcoin at a price of around $11,000. Saylor put over $100 million of his own money in it, too. Right away, bitcoin’s price tumbled to $9,000, costing MicroStrategy about $40 million.

‘Most of us on the board said “Oh my gosh, what have we done, we’re all gonna be sued”,’ Rickertsen says. “Mike was worried too.”

The panic didn’t last long. Bitcoin began climbing, finishing 2020 above $26,000. MicroStrategy borrowed a few billion dollars to purchase even more bitcoin, at one point relying on a $205 million, floating-rate loan at a 8.27% rate, challenging terms at the time.

Then came the collapse of crypto exchange FTX in late 2022. Bitcoin tumbled below $17,000 and MicroStrategy shares fell to about $17. The cost basis of the company’s bitcoin was around $30,000, so it was sitting on paper losses. Rumors spread that the company was in trouble. Saylor and the company doubled down. They took advantage of difficulties at its lender, Silvergate Bank, which was also hurting due to crypto, to pay $161 million to buy back their $205 million loan.

The stock began to soar as Saylor ramped up his strategy of selling shares and debt to buy bitcoin—and as bitcoin climbed. In 2024 alone, MicroStrategy raised $23.2 billion from stock and bond sales, one of the largest hauls by a company in a single year, according to Mark Palmer, an analyst at the Benchmark Company, an investment bank.

Saylor’s pitch can be repetitive and simplistic, and he sometimes speaks in a halting manner. But he’s always evangelical in his belief in bitcoin. He stresses that it has limited supply, unlike the dollar or even gold. That helps bitcoin do a better job protecting against inflation, Saylor argues. He also says bitcoin’s digital nature makes it easier and cheaper for holders to store and use, avoiding the need for intermediaries and making it a “revolutionary” form of money.

Some mutual funds and others have internal guidelines barring them from buying bitcoin or even bitcoin exchange-traded funds, so MicroStrategy shares are a backdoor way for them to place a wager on the currency. Even some big, conservative investors see the stock as a way to potentially gain an edge over competitors more reluctant to dabble in a crypto company.

Saylor has proved adept at creating different kinds of equity and debt investments—rolling out bank loans, convertible bonds, common shares and more—to keep the cash faucet flowing.

“His genius is he’s creating different products for different audiences,” says Brett Messing, an executive of SkyBridge Capital, which manages funds with substantial exposure to bitcoin and advises a fund that holds MicroStrategy shares.

Over the past month or so, Saylor has promoted MicroStrategy and bitcoin on television shows and high-profile podcasts, at industry conferences and elsewhere. “If you are not buying bitcoin at the top, you are leaving money on the table,” he recently tweeted.

“He’s pretty bombastic in public, but more nuanced in private settings,” says Matt Hougan, chief investment officer of crypto asset manager Bitwise, who heard Saylor speak at a dinner for 12 investors last summer. His company manages an ETF that owns MicroStrategy.

If bitcoin keeps rising, the premium to hold MicroStrategy could continue to exist. If bitcoin tumbles, though, MicroStrategy stock likely will follow. Even if the premium dissipates, while bitcoin holds up, shares likely would be hurt. Vehicles that share some similarities, such as closed-end funds, often trade at a discount to their holdings, rather than at a premium, skeptics note.

The company may not face an existential threat, though. MicroStrategy currently has $7.26 billion of unsecured debt, most of which was sold at super-low interest rates. And it holds—or HODLs, in the parlance of bitcoin fans—450,000 bitcoin at an average cost of around $62,000. Bitcoin would have to fall below $16,000 and remain around that level as its debt comes due, for the company’s bitcoin to be worth less than its debt.

Just over a week ago, Saylor unveiled a brand-new way for MicroStrategy to raise money from investors to fuel its bitcoin purchases. He announced that the company will sell $2 billion of “perpetual preferred” shares this quarter. The news sparked Palmer, the analyst, to reiterate his $650 price target for the stock, about 65% higher than current levels.

Early discussions between the miners went nowhere but mega M&A deals are back in vogue

Glencore chief executive Gary Nagle had a clear message at an industry event last October: the mining sector needs fewer, bigger companies in order to stay relevant.

More consolidation is needed, he told a private conference hosted by Goldman Sachs at LME Week. As it happened, Jakob Stausholm, the boss of rival mining company Rio Tinto, was also speaking at the event. Around the same time, Glencore and Rio held tentative talks about combining part or all of their business to create a $160bn mining behemoth.

Glencore’s “bigger is better” mantra has made it one of the most aggressive and ambitious dealmakers in the sector, even if those deal discussions do not always work out.

While discussions with Rio did not progress beyond early stages, megadeals are back in vogue for the mining sector. The question ripping through the industry now is: what will Glencore do next?

The return of big mining M&A was supercharged by BHP’s failed £39bn bid for Anglo American last year, which spurred companies to review their strategic options. But it is also due to structural factors: the 20-year commodity supercycle driven by China has ended, and miners are repositioning themselves for the next phase of growth, in which the energy transition is expected to boost demand for copper and battery metals.

Glencore has dealmaking in its DNA. Founded as a commodity trader in 1974, it built up its mining business almost entirely through acquisitions. Under former chief executive Ivan Glasenberg, a pugnacious South African who ran the company from 2002 to 2021, Glencore went public in 2011, and announced it was merging with Xstrata the following year.

“They are always trying to do deals, more so than the big mining companies,” said Barry Jackson, chief executive of mining consultancy Ascentia Resources. “You hear about Glencore talking with every mining company in the world.”

One of the biggest barriers for Glencore is that other miners are generally more conservative when it comes to mergers and acquisitions. Compared with bigger rivals where the M&A process is very tightly controlled, at Glencore “the freedom to do those kind of initiatives is higher”, Jackson said.

Glasenberg — who still owns 10 per cent of Glencore’s shares — earned a reputation as an enthusiastic dealmaker and his successor Nagle has continued that tradition, holding talks on potential megadeals every year since he became chief executive.

In early 2022, Glencore held preliminary talks with BHP about a deal that would have brought the two companies together and spun out their combined coal businesses, according to four people familiar with the discussions.

The next year, Glencore launched a hostile $23bn bid for Canada’s Teck Resources, proposing a similar structure: merge, then demerge into a metals group and a coal group. That bid failed due to opposition from Teck’s management and controlling shareholders; instead a Glencore-led consortium bought Teck’s steelmaking coal business in a $9bn deal later that year.

Last year, after BHP’s bid for Anglo became public, Glencore examined making a rival bid for Anglo, but did not make an offer. The talks with Rio took place in September and October, but did not progress. Rio previously spurned an approach from Glencore in 2014.

Rio CEO Stausholm has said Rio is interested in deals that boost its growth profile, but stressed that there is no “fear of missing out” at the company, which is guarding against a move that could “derail” the business. 

Rio is under pressure from an activist shareholder campaign to move its primary listing from London to Sydney — as BHP did — which the activists argue will give the miner greater power for share-based deals. Rio, which is listed in both London and Sydney, has not done a share-based transaction since its dual-listing structure was established.

One reason Rio is more conservative than Glencore in terms of deals is because it has been burnt by bad deals in the past, according to advisers. Rio overpaid for its $38bn purchase of Alcan in 2007, which is widely considered one of the worst mining deals ever.

“Glencore is born out of a trading culture, so they are a bit more aggressive in terms of deal flow — like in the way they approached the Teck deal a couple years ago,” said Richard Hatch, analyst at Berenberg.

The company’s dealmaking style is highly opportunistic, he added, pointing out its countercyclical acquisition of the Cerrejón thermal coal mine in 2021, which paid off handsomely when coal prices rocketed the following year.

One handicap for Glencore is that its share price has fallen 17 per cent in the past six months, giving it less financial firepower for any next potential deal.

Earnings have normalised after the bonanza couple of years that followed Russia’s invasion of Ukraine, and lower volatility in commodity prices has reduced trading profits. During the first half of 2024, Glencore reported a loss of $233mn, partly due to a $1bn impairment charge related to its South African coal operations.

With the Rio talks now on ice, analysts believe a Glencore-Anglo combination could make sense. In the wake of BHP’s failed bid, Anglo launched a radical restructuring, which will split off four of its businesses, and leave behind a company focused on coal and copper.

Glencore and Anglo already work closely together at the Collahuasi copper mine in Chile, where each has a 44 per cent stake. But Anglo’s price tag has gone up: its shares have risen 45 per cent in the past year, as shareholders rally behind its restructuring plan.

“There is more to be said for Glencore and Anglo to be doing something, rather than Glencore and Rio,” said Hatch at Berenberg. “But my view is that Anglo does not want to be bought.”

Whether or not this year holds a Glencore-Anglo bid, the cycle of mining consolidation is set to continue, analysts believe.

Kaan Peker, an RBC Capital Markets analyst, wrote in a note: “The M&A parlour games that we saw last year, will undoubtedly start again in earnest.”

TV and film group endures a rocky start to life as a listed group

Canal+, the pay-TV and film production group spun out of French media and telecoms heavyweight Vivendi in mid-December, has not had the smoothest start as a standalone listed company.

The parent business of Paddington producer StudioCanal saw its share price slump more than a fifth on its first trading day, leaving it with a market capitalisation just shy of £2.3bn. Shares have slid by another 14 per cent since.

The spin-off was part of French billionaire Vincent Bolloré’s plan to break up Vivendi and help unwind the conglomerate discount that has weighed on its valuation. Bolloré, Vivendi’s largest shareholder, said Canal+ could be worth close to €7bn (£5.8bn) as a separate entity.

Vivendi, which trades on Euronext Paris, also spun off its advertising company Havas in Amsterdam and its publishing division, Louis Hachette, in Paris. The Bolloré family retains a 30 per cent stake in Canal+.

Taking advantage of the post-IPO slump, Canal+ chief executive Maxime Saada bought £2.2mn worth of shares in the days leading up to Christmas. Louis Hachette boss Jean-Christophe Thiery followed suit, spending a total £172,914 on the shares between the final days of 2024 and January 3. 

Founded 40 years ago, Canal+ operates in more than 50 countries and has 26.8mn subscribers globally. It made an operating profit of €426mn (£353mn) on €6.2bn revenue in 2023, with Europe contributing about three-quarters of this total.

Netcall chiefs cash in

Netcall sells “drag and drop” software which enables customers to build their own products without having much coding experience.

It has not always been a software company. In its earlier iteration, it managed call centre switchboards for its customers. This changed in 2017 when it acquired low-code software provider MatSoft and in the past few years Netcall has been growing at an impressive pace.  

In the year to June 2024, revenue increased by 9 per cent to £39.1mn, driven by a 19 per cent increase in cloud revenue. Meanwhile, total annual contract value (ATV), which is often a better metric for demand, rose 15 per cent.

As Netcall increases its number of recurring cloud-based customers, it has seen an improvement in cash generation. Operating cash flow rose 23 per cent to £13.8mn over the period, which helped it fund two post period acquisitions, including an AI business.

Despite a strong financial performance in the past few years, the market has only recently started pricing Netcall as a software business. Its share price has risen 13 per cent in the last six months, meaning it now trades on a forward price/earnings ratio of 27.

This higher valuation might have contributed to the recent decisions by non-executive director Michael Jackson and non-executive chair Henrik Bang to sell shares to the value of £198,000 and £1.95mn, respectively. The latter cited “estate planning” and “investor demand” as catalysts for the sale.

It can take a while for the market to appreciate a company that has made a fundamental change to its business. Now, however, Netcall has a new problem: how to adapt to a world with AI. Its strong balance sheet gives it flexibility, but it needs to make the right investment decisions to maintain growth.

While negotiations continue between the two certification giants, the British inspection group is pushing to back the French company. As in 2024.

Could the scenario of an XXL merger between the inspection giants Bureau Veritas and SGS be disrupted by a third party? According to our information, one of their competitors, the British Intertek, is trying to interfere in the debates. The latter, which is supported by several advisors, including JP Morgan, is campaigning in favor of a merger with Bureau Veritas, itself assisted by Morgan Stanley while the boutique Zaoui & Co advises its first shareholder, Wendel. Intertek and Bureau Veritas have already very seriously explored this avenue last year, as revealed by the Financial Times. It was after this track was abandoned that the French company was led to explore a deal with SGS (here advised by Goldman Sachs and Citigroup). But, in reality, Intertek has not given up, l’Informé has learned, and is trying to reverse the trend in its favor. “It is not necessarily very smart to try to interfere in a marriage between two players who are talking amicably,” observes a source close to Bureau Veritas.

The scenario of a marriage between Intertek and Bureau Veritas turns out to be significantly different from a union between the latter and SGS. In the first combination, it is the French group that appears as the consolidator: its stock market value amounts to 14 billion euros, while that of its British competitor currently stands at 8 billion. Between Bureau Veritas and SGS, however, the size turns in favor of the Swiss: valued at 17 billion, it would play the role of the absorbing company - in a scheme that could involve a public exchange offer with an acquisition premium as revealed by l'Informé. In this scenario, the center of gravity of the new group would lean more towards Switzerland... While Bureau Veritas has just entered the CAC 40. The specter of the Lafarge-Holcim deal, which, from a marriage between equals ended up leading to a pure and simple absorption of a French flagship by a foreign group, is not very far away.

According to our information, Intertek is trying to plead its case to the State. The British company - whose chairman of the board of directors is a Frenchman, André Lacroix - is particularly targeting Bpifrance. The public investment bank had taken 4.2% of Bureau Veritas' capital in April 2024, at the time when Wendel had chosen to place 9% of the group's capital on the market, thus reducing its stake to 26.5% (and 41% of voting rights). Bpifrance's arrival in the capital took place at a time when negotiations with Intertek had paused. Its stake was acquired through the Lac1 fund, a vehicle set up to stabilize the shareholding of large French groups... and in particular to help them act as a consolidator in their market. This suggests that Bpifrance was indeed aware of the negotiations with Intertek. However, a source close to the public bank informed L'Informé that no contact has been established to date with the British group.

The next fortnight should in any case be decisive for the discussions between Bureau Veritas and SGS. And this is under the watchful eye of the stock market, where SGS shares have eroded by 8% since the talks were made official early on January 15, while Bureau Veritas shares are now up only 1.5% after having risen by 5% in the immediate term. The markets will be particularly attentive to the industrial rationale of a merger, as well as the commercial and cost synergies that they expect to derive from it. They will also have to explain how new savings could be articulated with the slimming cure announced last year by SGS: the group had announced that it wanted to make 100 million Swiss francs (110 million euros) of cuts by the end of 2025. Several sources report 400 to 500 million euros of synergies expected by the parties. For comparison, Bureau Veritas generated revenues of €5.8 billion for adjusted operating profit of €930 million. SGS generated revenues of CHF6.6 billion (€7.1 billion) for profit of CHF971 million (€1 billion).

When contacted, Wendel and Bureau Veritas declined to comment. Intertek had not responded to our requests at the time of publication.

Alors que les négociations se poursuivent entre les deux géants de la certification, le groupe d’inspection britannique pousse pour s’adosser au Français. Comme en 2024.

Le scénario d’un rapprochement XXL entre les géants de l’inspection Bureau Veritas et SGS pourrait-il être bousculé par un troisième larron ? Selon nos informations, l’un de leurs concurrents, le britannique Intertek, tente de s’immiscer dans les débats. Ce dernier, qui est épaulé par plusieurs conseils, dont JP Morgan, milite en faveur d’un rapprochement avec Bureau Veritas, lui-même assisté par Morgan Stanley alors que la boutique Zaoui & Co conseille son premier actionnaire, Wendel. Intertek et Bureau Veritas ont déjà très sérieusement exploré cette piste l’an passé, comme l’a révélé le Financial Times. C’est après l’abandon de cette piste que le Français a été amené à explorer un deal avec SGS (ici conseillé par Goldman Sachs et Citigroup). Mais, en réalité, Intertek n’a pas renoncé, a appris l’Informé, et essaie d’inverser la vapeur en sa faveur. « Ce n’est pas forcément très malin de tenter d’interférer dans un mariage entre deux acteurs qui discutent amicalement », observe cependant une source proche de Bureau Veritas.

Le scénario d’un mariage entre Intertek et Bureau Veritas s’avère sensiblement différent d’une union entre ce dernier et SGS. Dans la première combinaison, c’est le groupe tricolore qui apparaît comme le consolidateur : sa valeur en Bourse s’élève à 14 milliards d’euros, quand celle de son concurrent britannique se chiffre aujourd’hui à 8 milliards. Entre Bureau Veritas et SGS, la taille tourne en revanche en faveur de l’Helvète : valorisé 17 milliards, il jouerait le rôle de la société absorbante - dans un schéma qui pourrait passer par une offre publique d’échange avec une prime d’acquisition comme révélé par l’Informé. Dans ce scenario, le centre de gravité du nouvel ensemble pencherait plutôt vers la Suisse… Alors que Bureau Veritas vient de faire son entrée au CAC 40. Le spectre du deal Lafarge-Holcim, qui, d’un mariage entre égaux a fini par aboutir à une absorption pure et simple d’un fleuron tricolore par un groupe étranger, n’est pas très loin.

Selon nos informations, Intertek essaie de plaider sa cause auprès de l’Etat. Le Britannique - dont le président du conseil d’administration est un Français, André Lacroix - cible particulièrement Bpifrance. La banque publique d’investissement avait pris 4,2 % du capital de Bureau Veritas en avril 2024, au moment où Wendel avait choisi de placer 9 % du capital du groupe sur le marché, réduisant ainsi sa participation à 26,5 % (et 41 % des droits de vote). L’arrivée de Bpifrance au capital s’était réalisée au moment où les négociations avec Intertek avaient marqué une pause. Sa prise de participation s’était réalisée au travers du fonds Lac1, un véhicule constitué pour stabiliser l’actionnariat de grands groupes tricolores… et notamment les aider à agir en consolidateur dans leur marché. Ce qui laisse penser que Bpifrance était bel et bien au courant des négociations avec Intertek. Une source proche de la banque publique fait néanmoins savoir à L’Informé qu’aucun contact n’est établi à ce jour avec le groupe britannique.

Les quinze prochains jours devraient en tout cas être décisifs pour les discussions entre Bureau Veritas et SGS. Et cela sous le regard attentif de la Bourse, où l’action SGS s’est érodée de 8 % depuis l’officialisation des pourparlers, tôt le 15 janvier, quand celle de Bureau Veritas n’est plus qu’en hausse de 1,5 % après être montée de 5 % dans l’immédiat. Les marchés seront particulièrement attentifs au rationnel industriel d’un rapprochement, ainsi qu’aux synergies commerciales et de coûts qu’ils comptent tirer de celui-ci. Elles devront aussi expliquer comment de nouvelles économies pourraient s’articuler avec la cure de minceur annoncée l’an passé par SGS : le groupe avait communiqué vouloir réaliser 100 millions de francs suisses (110 millions d’euros) de coupes d’ici fin 2025. Plusieurs sources font état de 400 à 500 millions d’euros de synergies attendues par les parties. À titre de comparaison, Bureau Veritas a totalisé 5,8 milliards d’euros de chiffre d’affaires pour 930 millions d’euros de bénéfice opérationnel ajusté. SGS, lui, a généré 6,6 milliards de francs suisses de revenus (7,1 milliards d’euros) pour 971 millions de francs suisses de résultat (1 milliard d’euros).

Contactés, Wendel et Bureau Veritas n’ont pas souhaité faire de commentaires. Intertek n’avait pas donné suite à nos sollicitations au moment où nous publions ces lignes.

A third of patients lost at least a quarter of their weight, the late-stage trial showed

Novo Nordisk said that patients taking a higher dose of its blockbuster Wegovy obesity shot lost more weight than those on a lower dose without experiencing an increase in side effects, according to a new study.

The late-stage trial of semaglutide, which it markets as Wegovy to treat obesity, showed that those who took a once-weekly dose of 7.2 milligrams lost an average of 20.7% of their weight over 72 weeks.

A third of those patients lost at least 25% of their weight in the trial that was dubbed Step Up, it said.

Sydbank senior analyst Soren Lontoft Hansen said he was expecting an outcome of around 20% weight loss. Although it is a positive result, it isn’t super data, he said.

“This was more of an exploratory study. The higher dose will contribute to its portfolio and help cater to individual’s differing needs,” he said.

Shares were 4.1% lower in afternoon European trade as investors also digested news that semaglutide will be subject to U.S. government price negotiations that aim to lower the price that Medicare pays for certain drugs.

The Step Up trial was conducted to test the efficacy of the higher dose, as the current highest dose available is 2.4 milligrams. Those taking 2.4 milligrams lost an average of 17.5% of their weight in the trial.

Novo Nordisk said the higher dose appeared to have a safe and well-tolerated profile, consistent with other drugs of the same class.

The most common adverse events were gastrointestinal, the vast majority of which were mild to moderate and diminished over time, it said.

Patients in the trial didn’t have diabetes, but Novo Nordisk is conducting a second late-stage trial of the higher dose with obese patients who have Type 2 diabetes. Results are expected within the next few months.

The trial results come just weeks after the Danish pharmaceutical giant reported disappointing results of a closely watched clinical trial testing an experimental anti-obesity treatment. The company had hoped the two-drug combination, called CagriSema, would be the new best-in-class treatment by helping patients lose at least 25% of their weight. But the trial showed it achieved an average of 22.7% weight loss after more than a year’s treatment, roughly in line with Eli Lilly’s Zepbound, which is already available.

Public or private, investment banks win either way

Despite the trend for start-ups to delay their flotation, bankers can still find a way to make money

When David Solomon publicly downplays the value of companies going public, it might sound like a turkey voting for Christmas. The Goldman Sachs boss said on Wednesday that the reasons for start-ups to consider an initial public offering “are getting pushed out”. He is right. Fortunately banks like Goldman can still mint plenty of fees.

The trend for start-ups to stay private longer has been building for a decade or so. Deep pools of venture capital were not so readily available for companies seeking cash and liquidity in the noughties.

Social media forum Reddit waited almost two decades to go public, which it finally did last year. Buy-now-pay-later company Klarna, also founded in 2005, will have hit the 20-year milestone even if its IPO comes this year, as is expected. Compare that with Google — now Alphabet — which listed just six years after its genesis, or Facebook — now Meta Platforms — which went from dorm-room project to Nasdaq constituent in eight.

Despite some ebbing over the past decade, VC remains buoyant. Tiger Global, Sequoia Capital and Andreessen Horowitz lead the pack. But corporates are in on the act too. Google Ventures has a $10bn-plus portfolio composed of over 400 companies. Chipmaker Nvidia invested over $1bn across 50 funding rounds for AI start-ups alone last year. That money is worth more to a start-up — in terms of patient capital, expertise and potential marketplace — than ringing the Nasdaq bell.

Where bankers can’t serve as IPO underwriters, they can still be matchmakers. They have access to the VC arms, institutions, sovereign wealth funds and family offices whose funding late-stage start-ups covet. The universe of potential backers could expand, regulation willing, as mom and pop get in on the act. Modest perhaps but even Twitter’s $1.8bn IPO left underwriters sharing a $68mn fee pool.

Another role comes from facilitating exits, including secondary sales for current or former employees. These tender offers are popular with later stage start-ups, including financial payments group Stripe, which appointed Goldman Sachs to steer its offer last year. In Europe, Morgan Stanley acted on fintech Revolut’s share sale for employees last year. Exchanges for private shares — Nasdaq’s SecondMarket or the London stock exchange’s upcoming PISCES market — will still require banker input.

In one way, the bigger the hype around companies staying private, the more Goldman stands to distinguish itself as a provider of so-called alternative investments to its clients, on which it charges handsome fees. Those now make up $333bn of its assets under supervision — and their 20 per cent growth rate over the past year is almost twice the increase in Goldman’s overall AUS. The music hasn’t stopped for banks; it’s just that the tune is changing.

Arrest of FTSE 100 pharma group’s country president last year is expected to hit sales

AstraZeneca has overhauled its local management in China in a bid to move on from recent scandals and revive sales after the arrest of its president in the country. 

The FTSE 100 group has appointed new executives to lead its Chinese oncology business, which has come under intense scrutiny over two incidents including alleged illegal sales practices for cancer drugs.

The scandal ensnared the China president Leon Wang, who the company announced in November had been detained, along with several other employees. AstraZeneca shed more than £15bn off its market capitalisation after reports about an investigation by local authorities. 

Alex Lin is replacing Michael Lai as country general manager, according to two people with direct knowledge of the matter. Lai was one of Wang’s senior managers. Lai has moved to the US to be in charge of a key cancer drug for AstraZeneca and report to the head of oncology, according to people close to the company. Lai did not respond to a request to comment.

The drugmaker has promoted Mary Guan, who was previously at its Chinese general medicines unit, to lead oncology in China as part of a move to deal with the department, according to one person familiar with the matter. 

AstraZeneca declined to comment. It has previously said that it would fully co-operate with the Chinese authorities, and also that Wang was co-operating with the investigation.

The drugmaker — the largest foreign pharmaceutical group in China by revenues in 2023 — is trying reboot its business in China where insiders report they are expecting a dip in sales due to hospitals being unwilling to deal with the company. The new management will be pivotal to putting AstraZeneca back on course in what was once its most important growth market. China contributed 13 per cent of global sales in 2023.

The company wants to “show that there has been a clean cut with the old management,” said one person familiar with its position. 

Another person said there are “a lot of changes expected in the China Leadership team but they have not yet been announced”.

AstraZeneca executive Iskra Reic was appointed in early December to take over from Wang, who also ran the international region that includes other emerging markets. 

“AstraZeneca has distanced itself from Leon and the other affected employees,” said one person close to the company. 

They added that Wang had been under “a lot of pressure to rejuvenate growth” after China revenues declined in 2022. 

AstraZeneca leadership has received no formal explanation from Chinese authorities and has not been able to contact Wang, according to people familiar with the matter. The company has concluded that the probe is about the alleged illegal importation of cancer drug Imjudo through Hong Kong to China — where the drug is not approved — because authorities also detained AstraZeneca’s former head of oncology, Yin Min, who was in charge of the department during the alleged offences. 

Separately, scores of salespeople were convicted over the past two years for medical insurance fraud after the courts found they tampered with genetic test results to ensure lung cancer patients qualified for their drug Tagrisso under a national reimbursement scheme. 

The drugmaker is pinning much of its hopes in China on its breast cancer drug Enhertu, which authorities recently said would be included in the state health insurance scheme. 

List of drugs account for $41 billion in annual Medicare spending, Biden administration says

The U.S. government named 15 drugs that will be subject to the second round of price negotiations by Medicare, including Ozempic and Wegovy, the drugs at the center of the weight-loss craze.

The Biden administration said the drugs account for $41 billion in annual Medicare spending, and that price negotiations could result in significant savings. U.S. health officials selected the drugs because they account for high Medicare spending due to widespread use or high price tags.

“We have a chance to negotiate a better deal for the American people,” said U.S. Secretary of Health and Human Services Xavier Becerra. “We can try to save them once again billions of dollars.”

On the list of target medicines are treatments for cancer, type 2 diabetes, and asthma.

The government last year negotiated lower prices for the first 10 drugs selected for the new negotiating powers Medicare received from the Inflation Reduction Act of 2022. Those prices will take effect next year in Medicare, the government health insurance program for the elderly and some disabled people. Biden touted $6 billion in savings for taxpayers this year from those negotiations in his farewell letter Wednesday.

The hottest drug on the list is Novo Nordisk’s semaglutide, sold under the brands Ozempic and Wegovy and at the heart of the weight-loss boom that has made Novo NOVO.B -2.59%decrease; red down pointing triangle a fortune.

Semaglutide likely accounted for about $7.5 billion in gross spending by Medicare drug-benefit plans in 2023, according to research in the Journal of Managed Care & Specialty Pharmacy, by health-policy researchers from the University of Washington and the University of California, San Diego. The drug’s global sales were estimated to be about $28 billion last year, according to Factset.

A steep price cut for semaglutide in Medicare could dent Novo’s sales growth modestly, though analysts still expect semaglutide’s global sales to double over the next four years.

A price cut, however, could save Medicare and its members billions of dollars.

“There’s going to be pretty significant savings to Medicare,” said Sean Sullivan, a professor of pharmacy and health policy researcher at the University of Washington.

A price cut for semaglutide in Medicare could also have spillover effects, pressuring prices for Eli Lilly’s LLY 1.45%increase; green up pointing triangle Mounjaro diabetes drug and Zepbound for weight loss, Sullivan said.

Semaglutide is sold as Ozempic and Rybelsus for diabetes, and Wegovy for obesity. All three brands will be treated as a single drug for Medicare price negotiations purposes because they share the same main ingredient.

Ozempic accounts for most of the Medicare spending on semaglutide, but Wegovy is poised for higher spending. Last year, some Medicare drug plans began covering Wegovy for people with both excess weight and cardiovascular disease. The Biden administration proposed expanding Medicare coverage to include its use in people with obesity alone, though that hasn’t taken effect and its fate is uncertain under the incoming Trump administration.

If Medicare were to cover anti-obesity drugs, it would increase federal spending by about $35 billion from 2026 to 2034, the Congressional Budget Office estimated last year. The CBO predicted semaglutide would be selected for negotiation and that its price would fall substantially beginning in 2027.

Semaglutide sells for list prices ranging from $997 a month for Ozempic and Rybelsus to $1,349 a month for Wegovy.

Federal negotiators will be seeking a much lower price. Already, Novo Nordisk offers rebates and discounts that have cut roughly 50% or more off list prices, analysts say.

As a result, U.S. government negotiators are expected to use those existing net prices as a ceiling for their offers, to seek further cuts that go beyond 50% off the list price.