Alkermes bets $2.1bn on Avadel and its narcolepsy drug

Alkermes has reached an agreement to buy Avadel Pharma in a deal valued at up to $2.1 billion, claiming rights to an FDA-approved therapy for sleep disorder narcolepsy that has been predicted to make sales of up to $275 million this year.

The deal revolves around Lumryz, an extended-release formulation of the well-established narcolepsy drug sodium oxybate, which was approved for use in adults with cataplexy or excessive daytime sleepiness associated with narcolepsy in 2023 and had its label extended last year to include paediatric patients aged seven and older.

The announcement of the Alkermes takeover came at the same time that Avadel reached a global settlement in litigation with Jazz Pharmaceuticals over Lumryz intellectual property, in which Jazz will make a payment of $90 million and waive rights to royalties on the drug before 30th September, in return for royalties on sales made after that date out to 2036.

With that litigation now in the rearview mirror, Alkermes has swooped on Avadel with a $20-per-share offer that is a 38% premium to the company's average price over the last three months and consists of $18.50 upfront and another $1.50 if Lumryz's label is extended in the US to include idiopathic hypersomnia (IH) – another sleep disorder – by the end of 2028.

Avadel has previously said it is on track to complete enrolment in the phase 3 REVITALYZ study of Lumryz in IH by the end of this year.

There are estimated to be around 50,000 oxybate-eligible people living with narcolepsy in the US, and Lumryz has become a popular choice because it is the only formulation that can be taken once daily at bedtime. Another 42,000 people in the US are thought to be diagnosed with IH.

For Alkermes, the takeover gives it an early entry into the sleep disorder market, with an established commercial presence, serving more than 3,100 patients in the US as of end-June, as it prepares to advance its in-house developed narcolepsy treatment alixorexton (formerly ALKS 2680) into phase 3 testing.

Alixorexton is an orexin receptor 2 (OX2R)-selective agonist that is in a race to market with Takeda's rival drug in the same class, oveporexton, which already has phase 3 data in hand and is being prepared for filing this fiscal year. Alkermes' drug offers once-daily dosing, while Takeda's needs to be taken twice a day.

Buying Avadel also gives Alkermes other sleep disorder candidates, including valiloxybate, a salt- and artificial sweetener-free formulation of oxybate licensed from XWPharma for $20 million upfront in September.

"Avadel's innovative portfolio, commercial capabilities, and dedicated employees provide a strong foundation for growth in this therapeutic area," said Alkermes' chief executive, Richard Pops.