Avadel Shares Fall as Lundbeck Ends Bidding War
Alkermes' $2.1 billion acquisition set to proceed after Danish drugmaker withdraws its competing offer, capping near-term upside for the narcolepsy drug maker.
Shares of Avadel Pharmaceuticals (NASDAQ: AVDL) fell nearly 7% on Wednesday after Danish pharmaceutical giant H. Lundbeck A/S withdrew its takeover bid, effectively ending a brief but intense bidding war and clearing the path for Alkermes plc to acquire the company.
The stock closed at $21.40, down 6.67% in afternoon trading, settling just above the cash component of Alkermes' final offer. The move brings a dramatic conclusion to a week of competing proposals that had pushed Avadel's stock to multi-year highs, with the certainty of a deal now tempering investor expectations for a higher premium.
Alkermes is now poised to complete its acquisition under the terms of a revised agreement announced on November 18. The deal values Avadel at approximately $2.1 billion, consisting of $21.00 per share in cash and a non-tradable Contingent Value Right (CVR) of up to $1.50 per share. This CVR is tied to future sales milestones for Avadel's key narcolepsy drug, Lumryz.
The contest for Avadel, a Dublin-based biopharmaceutical company, began in late October when Alkermes first announced its intention to acquire the firm. However, the situation escalated in mid-November when Lundbeck presented an unsolicited offer that Avadel's board deemed a "superior company proposal." Lundbeck's bid was valued at up to $23.00 per share, comprising $21.00 in cash plus a CVR of up to $2.00.
This unexpected challenge forced Alkermes to return to the negotiating table. On November 18, Alkermes sweetened its offer, matching Lundbeck's upfront cash price of $21.00 while slightly lowering the potential CVR payout to $1.50. Despite the lower total potential value, Avadel's board accepted the revised terms from Alkermes, which has a significant commercial presence in the United States.
The final chapter was written this week when Lundbeck officially bowed out, stating it would not submit a further revised offer. Lundbeck's withdrawal removes any remaining speculation of a higher bid, causing Avadel's share price to retreat from its recent peak of $23.57 to a level more aligned with the accepted Alkermes deal.
The acquisition centers on Lumryz, Avadel's recently approved once-at-bedtime formulation for treating cataplexy or excessive daytime sleepiness in adults with narcolepsy. The drug is a direct competitor to Jazz Pharmaceuticals' established blockbuster, Xywav. Alkermes sees Lumryz as a significant growth driver that complements its existing portfolio of central nervous system therapies.
For investors, the conclusion of the bidding war provides clarity but caps the near-term gains. The stock's current price reflects the market's high confidence in the deal's closure at the $21.00 cash price, with the $1.50 CVR representing potential future upside contingent on Lumryz's commercial success. The transaction is expected to close subject to customary closing conditions and regulatory approvals.