Shares of Alkermes (NASDAQ:ALKS) climbed about 13% on Tuesday after Eli Lilly (NYSE:LLY) revealed plans to acquire Centessa Pharmaceuticals (NASDAQ:CNTA), a biotechnology company developing therapies for sleep-related disorders.
Under the agreement, Lilly will purchase all outstanding and to-be-issued Centessa shares for $38.00 in cash per share, along with a non-transferable contingent value right (CVR) that could add up to $9.00 per share if certain milestones are achieved. This structure gives the transaction a potential total value of $47.00 per share. The upfront payment represents an equity value of roughly $6.3 billion, while the CVR component could contribute up to $1.5 billion in additional value.
Centessa is advancing a pipeline of orexin receptor 2 (OX2R) agonists, therapies designed to target a neurological pathway central to regulating the sleep-wake cycle. Its lead drug candidate, cleminorexton, has shown promising results in Phase 2a studies across several sleep disorders, including narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia.
The CVR attached to the deal includes three possible milestone payouts: $2.00 per CVR if the U.S. Food and Drug Administration approves cleminorexton or ORX142 for narcolepsy type 2 before the fifth anniversary of the deal’s closing; $5.00 per CVR if approval is granted for idiopathic hypersomnia within the same timeframe; and $2.00 per CVR if either therapy receives its first FDA approval for any indication before January 1, 2030.
In addition to cleminorexton, Centessa’s OX2R-focused portfolio includes several other assets currently in clinical and preclinical development, which could potentially be applied to a wider range of neurological, neurodegenerative, and neuropsychiatric conditions.