TheChek News Flow

Amid loose talk of resuming weapons tests, cold war-era controls are unravelling

Donald Trump’s statement last week that the US would resume testing nuclear weapons “on an equal basis” with Russia and China wrongfooted his own officials as much as it did Beijing and Moscow. Restarting warhead tests would break a three-decade moratorium by the major nuclear powers. Coming after Russia’s Vladimir Putin bragged of two new weapons delivery systems, it bolstered concerns that the world is sliding into a new nuclear arms race — when much of the cold war-era arms control architecture has collapsed.

Trump’s comments appeared primarily a response to Putin’s claims to have tested two nuclear-powered delivery platforms: Burevestnik, a long-range cruise missile, and Poseidon, a torpedo said to be able to devastate coastal regions with a radioactive tidal wave. Russia’s president said both could evade existing defences, in a swipe at Trump’s plan to expand today’s US missile defence system into an elaborate “Golden Dome”.

Trump may have intended to signal the US would step up testing of delivery systems, not warheads. In a weekend TV interview, though, he appeared to confirm that he meant explosive nuclear testing. His energy secretary said the US would simply continue systems tests involving “non-nuclear explosions”.

Whatever the truth, a return to US warhead testing would be a highly retrograde step. It would provide cover to do likewise not just for Russia and China but other nuclear states keen to upgrade their weapons. That could encourage non-nuclear states to pursue their own.

It would also demolish one of the few remaining pillars of US-Russian arms control. Agreements limiting missile defence systems (intended to buttress mutual deterrence) and intermediate-range missiles are no longer in force. The New Start treaty, limiting deployed strategic warheads to 1,550 on each side, is due to expire next February. Putin has offered a conditional one-year extension; Washington has made positive noises but not formally responded.

The erosion of arms control, rush for new systems and loose talk on testing are all the more unsettling since Russia’s war on Ukraine has marked the return of nuclear blackmail. Putin has used it from the outset to deter Nato countries from intervening and supplying the most lethal weapons to Kyiv. Chillingly, US intelligence estimated at 50-50 the chance that Moscow would carry out a threat to use a nuclear weapon when Russian forces were losing ground in Ukraine in late 2022.

The decades-old strategic balance between the two nuclear superpowers threatens to be upset, meanwhile, by China’s rise as an atomic power. The Pentagon estimates Beijing’s armoury could swell from about 600 warheads to more than 1,000 by 2030. Trump has insisted China should join future arms control agreements; US officials worry that, in terms of deployed warheads allowed by New Start, Russia’s arsenal plus China’s could soon dwarf its own. Beijing has rejected joining talks, arguing it has far fewer weapons.

Despite its resistance to caps on its warheads, however, it is in China’s interest to take part in efforts to avert a senseless, multilateral, new arms race. Beijing is already understood to have privately urged restraint after Putin’s 2022 threats. Nuclear weapons are not only abhorrent for their fearsome power, but ruinously expensive.

Whatever Trump’s justifiable frustrations with Putin in his efforts to end the Ukraine war and regardless of China’s position today, the US president ought to engage with Moscow on extending New Start as a step towards rebuilding arms control. He has previously called that a priority. Making decisive progress towards it would be a far better way of earning the Nobel Peace Prize he craves than ending the long taboo on weapons testing.

Two groups fight for edge in one of the most lucrative drug classes in pharmaceutical industry history

In 2023, US biotech Metsera bought a promising weight-loss start-up spun out of an Imperial College London laboratory, and the life’s work of the professor behind it, for up to $114mn.

Two years later, those treatments have thrust Metsera to the centre of a fierce takeover battle, with Ozempic maker Novo Nordisk and Pfizer willing to pay up to $10bn for the company. Both once again sweetened offers for Metsera on Tuesday, with the coveted biotech continuing to view Novo’s bid as “superior”.

At stake is the chance to compete in one of the most lucrative drug classes in the history of the pharmaceutical industry, with the market expected to reach $95bn in annual sales by 2030, and with existing anti-obesity treatments facing competition from a wave of next-generation medicines. The fight has spread from the boardroom to the courtroom to the corridors of Washington, during a sensitive time for industry where drug giants Novo and Eli Lilly are negotiating pricing discounts with the White House, and Pfizer already has.

“It is rare to see a bidding war break out after an acquisition is already announced, but it speaks to the level of demand for high-quality assets in this space,” said Ailsa Craig, portfolio manager at International Biotechnology Trust, which holds Metsera shares.

Metsera is at the vanguard of a promising new obesity treatment, a longer-lasting injection than the weekly doses required by other drugs. Pfizer in September sealed a deal valuing Metsera at up to $7.3bn, after its chief executive Albert Bourla personally courted board members. The offer bested six other suitors entertained by Metsera. Then, a month later, Denmark’s Novo, which was among the parties bidding on Metsera before, emerged from the blue with an unsolicited offer.

Pfizer and Novo have exchanged bids and barbs in equal measure as they vie for Metsera. Pfizer is appealing to the White House by casting the battle as a foreign company raiding US assets. It is also suing to block Novo’s attempt to gatecrash its deal, arguing in two separate lawsuits that it violates the original merger agreement and contravenes antitrust rules.

Morgan Zurn, a Delaware Court judge, on Tuesday delayed a hearing on Pfizer’s attempt to block Novo’s deal by arguing its deal structure was illegal, erring against injecting the court into the middle of an “ongoing topping process”.

The battle over Metsera caps a busy stretch for dealmaking in the biotech sector, which has delivered approaching $120bn worth of acquisitions so far this year, roughly double the whole of last year, according to industry tracker Dealforma.

“This bidding war makes sense to me, especially when you consider that Big Pharma is racing to make up revenues from its portfolio constantly going generic,” said Peter Kolchinsky, managing partner at RA Capital Management, a top 20 shareholder in Metsera.

Behind this acrimony are two pharmaceutical companies in a bind. Under its new chief executive Maziar Mike Doustdar and incoming chair Lars Rebien Sørensen, who formerly ran the company, Novo is scrambling to regain its ascendancy in the weight-loss drug market after being outmanoeuvred by Zepbound-maker Eli Lilly.

Novo is turning to deals to make up for the ground it lost to Eli Lilly in the US market, as investors question the strength of its pipeline to replace Wegovy and Ozempic, especially after next-generation drug CagriSema disappointed in trials late last year. It struck a $5.2bn deal to buy fatty liver-disease biotech Akero, a close adjacency to obesity. Novo also expressed interest in acquiring obesity start-up Kailera before its recent $600mn funding round, according to people familiar with the matter.

Metsera and Pfizer did not immediately respond to requests for comment. Kailera declined to comment.

The Danish drugmaker said it was “confident in our portfolio of marketed products for obesity, type 2 diabetes and other cardiometabolic diseases, as well as our development pipeline. We want to stay at the forefront of innovation in all the areas we operate in and that requires us to look at both internal and external innovation”.

Pfizer, on the other hand, is seeking a beachhead into the weight-loss drug market, after an obesity drug it was developing in-house flopped in clinical trials earlier this year. Bourla, who in the past year fought off activist investor Starboard Value, is grasping to reinvigorate the pharma giant which has languished since delivering the blockbuster Covid-19 vaccine that helped to end the pandemic.

Metsera, which was founded by veteran biotech investors Arch Venture Partners and Population Health Partners, bills itself as biotech with a portfolio of next-generation obesity drugs, ready to compete with Eli Lilly’s much-awaited pill Orforglipron and more potent treatment Retatrutide.

“Metsera is leading the pack in a crowded market of experimental obesity drugs,” said Kosta Kleyman, a healthcare investor at Columbia Threadneedle. “Both companies’ willingness to duke it out over Metsera point to where they are both at more than anything else.”

Gareth Powell, a healthcare fund manager at Polar Capital, said the interest was spurred by Metsera’s pipeline “ticking two big boxes”: potential new ways to deliver the drugs, as pills or longer-acting injections, and a new method of tackling obesity using the satiety hormone amylin.

But the potential medicines are still in the early stages: Metsera has treated about 900 patients across four different prongs of its clinical trials. Potential acquirers have been given an early look of the safety data on its phase-two trial of a monthly injectable — enough to excite scientists at Novo, the experts in the field. Its amylin-based drug is still in phase 1 trials.

Pfizer’s first hint that its deal with Metsera was about to hit the buffers came on October 25. Three days earlier, Novo had overhauled half its board in a bid to reverse its declining share price. Then it returned with an unsolicited bid.

Novo’s deal deployed a quirky two-step structure, created by Metsera’s lawyers to allay antitrust concerns, which paid the US biotech’s shareholders billions of dollars upfront via a dividend almost immediately upon signing in exchange for a 50 per cent non-voting stake. Those non-voting shares would then convert to a controlling stake once the deal closed.

In the days that followed, Pfizer executives hurried to respond. Eventually, Bourla sent a text to a Metsera director offering to bump up its bid by $3 a share if the biotech gave Novo the cold shoulder. Bourla never received a response to his message. Pfizer then took the legal route.

Bourla has taken the decision to shun Pfizer as a personal affront and was directly involved in the US drugmaker’s charge to get the deal over the line, according to two people familiar with the matter.

In its lawsuits, Pfizer depicted the Ozempic maker as a “massive foreign” company seeking to protect its market share, “recklessly indifferent to the lives and health of tens of millions of Americans”.

Both companies are entering unknown territory as tensions heighten and the clock ticks towards Pfizer’s next deadline to return with an improved offer by the end of Wednesday. The bidding war “shows a desperation on behalf of both companies”, said John LaMattina, Pfizer’s former head of research and development, as they attempt to boost their drug pipelines.

“Both companies will play their best cards: Pfizer has deep ties with the White House,” said Columbia Threadneedle’s Kleyman, “and Novo has infinite spending capacity”.

“It remains to be seen who triumphs in the bidding war, but whatever happens Metsera will be the ultimate victor.”

Norway suspends $2.1tn oil fund’s ethics rules to avoid selling Big Tech stakes

Jens Stoltenberg says move will avoid forced sale of shares in Amazon, Microsoft and Alphabet over their work for Israel

Norway has suspended its ethical investing rules to avoid its $2.1tn oil fund being forced to sell out of Amazon, Microsoft and Alphabet due to their work for the Israeli government, according to its influential finance minister.

Jens Stoltenberg told the Financial Times that the US had publicly conveyed its concerns after the world’s largest sovereign wealth fund sold out of Caterpillar after its bulldozers were used in the Palestinian territories.

Norway’s centre-left government pushed an urgent proposal through parliament on Tuesday, putting the work of the independent ethics council on hold.

Stoltenberg said the ethics council had planned soon to look into technology companies such as Amazon, Microsoft and Google owner Alphabet, as well as those on a UN blacklist issued in July.

The report, by UN special rapporteur Francesca Albanese, states that the three tech giants “grant Israel virtually government-wide access to their cloud and artificial intelligence technologies, enhancing data processing, decision-making and surveillance and analysis capacities”.

Stoltenberg said: “It is obvious that there is a possibility that the existing framework can lead to a decision by an independent body to withdraw from some of the largest companies in the world. That would undermine the purpose of the fund to be a broad, diversified global investment fund.”

The oil fund has faced a tumultuous few months over its holdings in Israel, leading it to sell out of half of its Israeli holdings as well as Caterpillar under heavy political and public pressure in Norway over the war in Gaza.

The existing arrangement has involved the oil fund’s ethics council giving recommendations on whether to sell out of a specific company to Norway’s central bank, which houses the fund and takes the final decision on whether to divest.

Stoltenberg said he was worried that selling out of one of the US tech giants — the biggest seven of which make up more than 15 per cent of the fund’s equity holdings — would harm its status as an index fund and threaten Norway’s welfare state. The fund contributes about a quarter of the country’s annual budget.

The proposal only passed with the support of the two largest opposition centre-right groups. Leftwing politicians — needed by the government to pass the budget — were scathing about the move.

“It means that if you are a big enough company, you can do whatever you want,” Arild Hermstad, leader of the Greens, told the FT.

Kirsti Bergstø, leader of the Socialist Left party, said in a separate interview: “Norwegian politics should not be guided by [US President Donald] Trump’s fear-mongering. I am concerned that the Norwegian government is now making decisions to accommodate him and tech oligarchs, rather than its own population and the moral conviction of not investing in genocide.”

Stoltenberg also said that the upcoming review of the fund’s ethical guidelines would also consider whether it should be able to invest in more defence companies. The likes of Boeing, Airbus, BAE Systems and Lockheed Martin have been off-limits because they make parts for nuclear weapons.

Stoltenberg, the former head of Nato, said that Norway enjoyed the nuclear umbrella of the western defence alliance and that Oslo had just signed a £10bn deal with BAE for warships.

“This is at least a paradox. For all these reasons, the time has come to go through these ethical guidelines . . . we face serious dilemmas, being one of the biggest sovereign wealth funds in the world,” he said. “There are no easy answers to these questions. But we need to handle them better than we have done so far in the ethical guidelines.”

The fund’s ethics council welcomed the review, adding that it had noted the “political disagreement” about companies connected to Israel and Gaza.

Company is looking to acquire CNL Healthcare Properties in a $1.8 billion deal

Sonida Senior Living is in advanced talks to acquire CNL Healthcare Properties for $1.8 billion, which would create the eighth-largest senior housing company.

The acquisition would result in a company with over 14,000 units across 153 communities, primarily in Texas, the Midwest and western states.

The senior housing sector is rebounding, with transaction activity up 67% to $13 billion this year and rents increasing 4% annually.

Sonida Senior Living SNDA 2.26%increase; green up pointing triangle is in advanced talks to acquire a smaller rival in a $1.8 billion deal that would create one of the country’s largest senior housing companies.

The Dallas-based owner and operator is offering stock and cash to acquire CNL Healthcare Properties CHTH 44.44%increase; green up pointing triangle in a deal that could be announced within days, according to people familiar with the matter. It would represent the largest senior-housing transaction in the U.S. since 2021.

Sonida’s acquisition would create the country’s eighth-largest senior housing company, with more than 14,000 units in 153 independent living, assisted living and memory-care communities in Texas, the Midwest and western states.

The senior housing business is emerging as one of the hottest in the commercial real-estate sector, recovering from a devastating slump that lasted for years.

A glut of new supply and collapse in demand during the pandemic caused occupancy rates to tumble and many senior housing facilities to shut down. Inflation, labor shortages and higher interest rates also pounded the sector.

The industry has rebounded this year as more baby boomers approach their 80s and more of them conclude they can no longer live safely at home.

Construction of new senior communities has slowed to historic lows, and occupancy rates and rents are now rising fast. Overall, the industry has been raising rents 4% a year in 2024 and 2025, but higher quality operators are pushing 6% to 8% increases, according to real estate analytics firm Green Street.

Dealmaking in the sector is also on the rise. Transaction activity in the first three quarters of this year reached $13 billion, up 67% from the same period last year, according to Newmark, a commercial real-estate services firm.

“People are moving out of a survival mindset into a growth and meeting the future mindset,” said Arick Morton, chief executive of NIC MAP, a data firm that tracks the senior housing industry.

Sonida’s past five years capture both the pain of the senior-housing industry and its recent recovery. The company, formerly named Capital Senior Living, was on the ropes financially in the early stages of the pandemic as costs skyrocketed and revenue plummeted.

Its occupancy rate plummeted more than 10 percentage points to mid-70% range. Its share price, which was close to $400 in 2015, fell below $10 in 2020 as Wall Street worried about whether it would be able to continue servicing its high debt load.

Sonida’s relief initially came in the form of a $154.8 million equity infusion by Conversant Capital, an investment firm founded in 2020. That allowed Sonida to shore up its balance sheet, restructure debt with lenders, and reposition itself to capitalize on the industry’s fallout rather than be consumed by it.

Since then, Conversant has invested another $100 million in Sonida. As part of the CNL deal, the firm would contribute an additional $100 million, giving it a roughly 60% stake in the merged company, according to people familiar with the matter.

Following the capital infusion, Sonida’s occupancy rate rebounded strongly, positioning the company to go on an acquisition spree. The company has acquired 23 communities with more than 2,500 units, not including the CNL deal, over the past 18 months.

CNL Healthcare is a nontraded real-estate investment trust sponsored by CNL Securities that was formed more than a decade ago to purchase senior housing and healthcare real estate. It owns about 70 properties, with close to 8,000 units in 26 states.

Under the terms of the deal, shareholders of CNL Healthcare would receive $6.90 in cash and stock for every share of CNL they hold, according to people familiar with the matter. Shares of CNL Healthcare initially were sold to the public at $10 each in 2011. Since then they have paid dividends as well as a $2 per share special distribution, according to public filings.

Talking to business leaders about AI these days can often feel paradoxical.

On one hand, AI is becoming a steady part of company software budgets, especially productivity tools like chatbots and AI coding software that individual employees use. On the other hand, there’s a persistent frustration that AI isn’t living up to the hype when it comes to meaningfully automating work.

That contradiction was evident when we spoke to a range of customers for our story on Monday about AI agents, including how customers increasingly need hand-holding from Amazon, Anthropic, OpenAI and other providers to make the agents work reliably.

Another theme that emerged: AI can be useful for a wide range of work but quickly loses its lustre when companies try to automate tasks that need a high level of accuracy.

For instance, one frustrated cybersecurity executive told us that using Microsoft’s Security Copilot, an AI agent meant to automate security analysts’ work, was essentially like lighting money on fire because the data it provided was often inaccurate. Separately, a customer support executive at Bosch Power Tools said the company has held off from releasing a chatbot that explains how tools work because it frequently hallucinated incorrect information that could potentially get customers hurt.

Still, those companies say they’re getting value out of other AI tools that aren’t quite as ambitious. For instance, Bosch is using an AI tool from SAP that reads customer support queries and automatically routes them to the right human employee—that process used to require humans to route support tickets, but now the SAP tool accurately routes 95% of the over 1 million annual tickets automatically, the company said.

But the broader struggles with AI could explain why so many AI firms are offering to get hands-on with customers to work out the kinks in their AI products. Still, not every customer is enough of a heavyweight to get the white-glove treatment from AI labs. In the short term, that appears to be setting up a system of AI haves and have-nots.

The agent race is getting crowded. Database firm Snowflake on Tuesday said it made its AI agent for answering business questions generally available to customers following months of testing.

It said more than 1,000 customers had already used the product, Snowflake Intelligence, to launch 12,000 agents that can search for and get data on their sales or other corporate metrics, tapping information that resides in Snowflake databases or in apps such as Microsoft Teams and in Salesforce apps. Snowflake also said it had reached a deal with SAP so that joint customers can make data from SAP’s enterprise resource planning apps available to Snowflake tools.

Snowflake CEO Sridhar Ramaswamy said at a press event that the Intelligence product is akin to ChatGPT’s deep research tool, which spends extra processing power to search through a variety of data source, “but powered by your own important enterprise data, both structured as well as on structured.”

For instance, Snowflake itself developed a “go-to-market” agent so if an employee can type that they’re going to meet with a particular client and the agent generates a report that describes what Snowflake features the client is using and what kinds of support tickets they’ve filed.

Numerous enterprise and AI developers have launched such agents, in part as a reaction to early traction from AI search startup Glean. But Snowflake and some of its customers, including ServiceNow, said Snowflake’s product is especially accurate, relative to other agents. Snowflake manager Jeff Hollan said at the press event that the company’s agent relies on the most advanced models from firms such as OpenAI and Anthropic but that Snowflake had rigorously tweaked them to be accurate.

TS Imagine, which provides software to financial firms to evaluate risks, uses the Snowflake agent to quickly generate dashboards that contain numerous charts, said Thomas Bodenski, chief operating officer.

“Rome wasn’t built in a day, but for sure dashboards are,” he said.

We’re curious to see how much or how little hand-holding Snowflake customers will require to use the new product, given Ramaswamy’s prior comments about utilizing more forward deployed engineers to assist clients with AI. We’re also interested to know how much customers are willing to pay for the service. Ramaswamy said his main goal is to get customers using the product before he worries about making money from it.

US judge declines to intervene in fray because process ‘is creating value for Metsera stockholders’

Novo Nordisk and Pfizer have submitted improved offers for US weight-loss start-up Metsera, but the coveted biotech continues to view Novo’s bid as the “superior” option as the takeover battle escalates.

Meanwhile, a Delaware judge rejected Pfizer’s request for a temporary restraining order to halt Novo’s bid for Metsera. Another hearing has been scheduled for Wednesday. The judge’s decision boosts Novo’s chances of taking over the highly desired weight-loss drugmaker.

Novo’s proposal values the biotech at up to $10bn, up from an earlier offer of as much as $9bn. Under the new proposal, Novo has offered to pay Metsera $62.20 a share upfront in cash almost immediately upon signing, in exchange for a 50 per cent non-voting stake, which converts to a controlling shareholding upon closure. A further $24 a share will be paid later based on the company achieving clinical trial milestones.

Shares of New York-based Metsera shot up 20 per cent to $72.59 on Tuesday after the bids were announced. Shares of Novo and Pfizer were little changed.

The battle pits two big pharma companies against each other that are eager to improve their position in the growing anti-obesity market. Pfizer is trying to enter the market, while Novo, which makes Wegovy and Ozempic, is trying to boost its pipeline after losing ground to Eli Lilly.

The unusual structure of Novo’s offer is designed to ensure investors receive the majority of the cash before the deal undergoes full regulatory scrutiny.

The Denmark-based company on Tuesday said: “Novo Nordisk believes that the proposal, including the structure of the transaction, complies with all applicable laws and is in the best interest of patients who will benefit from our commitment to innovation, as well as Metsera’s shareholders.”

Pfizer had also improved its offer, valuing the company at $8.1bn, or up to $70 a share, up from an earlier bid of up to $7.3bn. The US drugmaker and Metsera have two more business days to continue negotiations.

The latest round of bids adds drama to a contentious takeover battle, in which Pfizer has attempted to exert pressure on its Danish rival through lawsuits.

“My strong sense [is] that it would be wrong for this court to inject itself into [an] ongoing topping process that is creating value for Metsera stockholders,” Morgan Zurn, vice-chancellor of the Delaware Court of Chancery, said on Tuesday in reference to the bidding war.

Last week, Novo topped Pfizer’s original deal for Metsera with an offer of up to $9bn, sparking one of the most contentious bidding wars over a biotech in recent memory.

Pfizer has accused Novo of trying to stifle competition and sued the Danish drugmaker and Metsera to try to block a deal. Its complaints have centred on the structure of its rival’s offer to pay the weight-loss drugmaker almost immediately upon signing — a manoeuvre Pfizer called “an old-fashioned bribe”.

Pfizer chief executive Albert Bourla criticised Novo’s Metsera bid on Tuesday. “It is an illegal attack by a foreign company to do an end run around antitrust laws, taking advantage of the government shutdown,” he said during an earnings call.

Novo is attempting to “cut and kill an emerging competitor, which is a significant antitrust concern given Novo’s dominant market position” in the weight-loss drugs market, he said.

Asked about the Federal Trade Commission’s move to fast-track Pfizer’s antitrust approval during a government shutdown, Bourla denied any involvement. “No, I think the FTC made their own decision,” he said. “I don’t want to speak for them.”