Alkermes Wins Avadel Takeover Battle as Lundbeck Withdraws
Shares of the biopharmaceutical firm climb after it emerges as the sole suitor for Avadel, securing the narcolepsy drugmaker in a deal valued at up to $2.37 billion.
Alkermes Plc shares gained more than 2.5% in morning trading after the Irish biopharmaceutical company prevailed in its bid to acquire Avadel Pharmaceuticals, a rival drugmaker focused on sleep disorders. The path for the takeover cleared after Danish competitor H. Lundbeck A/S withdrew its unsolicited offer, ending a brief but competitive bidding war.
The development solidifies Alkermes' position to acquire Avadel and its key asset, the narcolepsy treatment LUMRYZ™, in a transaction valued at up to $2.37 billion. The deal is structured to pay Avadel shareholders $21.00 per share in cash, with an additional $1.50 per share in a non-tradable Contingent Value Right (CVR). The CVR is tied to the U.S. Food and Drug Administration (FDA) granting LUMRYZ™ an expanded approval for idiopathic hypersomnia by the end of 2028.
Shares of Alkermes (NASDAQ: ALKS) rose to $29.72 on the news, reflecting investor optimism that the company secured the acquisition without a protracted and costly bidding contest. Conversely, Avadel's stock (NASDAQ: AVDL) fell nearly 7% to trade around $21.40, settling just above the cash portion of the offer price as merger arbitrage traders priced in the deal's near-certainty.
The conclusion of the bidding war marks a strategic victory for Alkermes, which is positioning itself to become a dominant force in the sleep medicine market. According to a company press release, the acquisition is a pivotal move to enhance its commercial portfolio with a high-growth asset. LUMRYZ™, an extended-release sodium oxybate formulation, was approved by the FDA in 2023 and is a direct competitor to Jazz Pharmaceuticals' established narcolepsy treatments.
Avadel projects that LUMRYZ™ will generate between $265 million and $275 million in net revenues in 2025, tapping into a U.S. market of over 50,000 narcolepsy patients eligible for oxybate treatment. The potential label expansion into idiopathic hypersomnia could further broaden the drug's commercial runway.
The takeover saga began earlier this month when Alkermes and Avadel first announced a definitive merger agreement. However, the deal was complicated when Lundbeck submitted a competing, unsolicited bid that Avadel's board initially deemed a "Company Superior Proposal," as reported by BioSpace. This forced Alkermes to revise its terms, leading to the current offer which ultimately secured the board's recommendation.
With Lundbeck's withdrawal, Alkermes avoids the risk of overpaying and can proceed with the integration of Avadel. The transaction is expected to be accretive to Alkermes' earnings and is slated to close in the first quarter of 2026, pending customary closing conditions and shareholder approvals.
For Alkermes, the acquisition diversifies its revenue stream, which has been heavily reliant on its portfolio of treatments for schizophrenia, bipolar I disorder, and addiction. The addition of LUMRYZ™ provides a durable, patent-protected asset in a new therapeutic area. Analysts have a consensus price target of $43.88 on Alkermes stock, suggesting significant upside potential as the company integrates its new prize.
The deal underscores a continuing trend of strategic consolidation within the biotechnology and pharmaceutical sectors, where companies with established commercial infrastructure are seeking to acquire innovative, de-risked assets to fuel growth. By securing Avadel, Alkermes has not only expanded its product line but has also decisively blocked a competitor from entering a lucrative market segment.