Lundbeck bows out of bidding war for Avadel

Lundbeck has said it won't raise its offer to buy Avadel Pharma any further, clearing the way for the sleep disorder specialist to complete a merger with Alkermes.

In a statement, Denmark-based Lundbeck said it had carried out a "comprehensive assessment" of the bids on the table for Avadel and concluded that "increasing the purchase price […] would not meet its strategic or financial criteria for value creation."

It added: "Lundbeck's disciplined approach requires that any acquisition delivers a compelling benefit, and the evolving parameters of this opportunity no longer supported that threshold."

Alkermes announced a $20-per-share merger agreement with Avadel in October, which valued the Ireland-domiciled biotech at up to $2.1 billion. However, a spanner was thrown into the works of that deal a few weeks later when Lundbeck made a $23-per-share counteroffer, potentially valuing the company at up to $2.4 billion. Both offers included upfront cash and an additional payment tied to future achievements.

After a review, Avadel concluded that Lundbeck's offer was superior, meaning that it could extricate itself from the Alkermes deal. To prevent that from happening, Alkermes subsequently raised its bid to $22.50 per share, which – while slightly lower – provided an easier route to the bonus payment. Avadel switched its allegiance back to Alkermes last week.

The attraction for Alkermes and Lundbeck in Avadel is Lumryz, an extended-release formulation of the well-established narcolepsy drug sodium oxybate, which has been predicted to make sales of up to $275 million this year.

Lundbeck's offer provided for $21 upfront, plus an additional $2 tied to the achievement of sales targets for Lumryz and Avadel's follow-up drug, valiloxybate. Alkermes, meanwhile, also offered $21 upfront, with another $1.50 payable if Lumryz is approved in a new indication – idiopathic hypersomnia (IH) – by the end of 2028.

Avadel concluded that the sales targets set in Lundbeck's proposal – $450 million by 2027 and $700 million by 2030 – were "unlikely to be achieved."

"While Lundbeck is discontinuing this specific process, the strategic rationale for engaging in the sleep disorders space remains fully intact," said Lundbeck, which added that it would continue to look for opportunities in the space and "act with conviction when the right opportunities arise."

The bid for Avadel came shortly after the Danish company announced a change to its commercial strategy, withdrawing from 27 markets, handing day-to-day operations to partner companies, and shedding around 600 jobs.

The move was designed to focus its attention on its late-stage pipeline in rare and specialty neurological diseases, including anti-alpha-synuclein antibody amlenetug for multiple system atrophy (MSA), anti-PACAP drug Lu AG09222 for migraine prevention, ACTH blocker Lu AG13909 for Cushing's disease and congenital adrenal hyperplasia, and serotonin 5-HT 2C receptor super-agonist bexicaserin for seizures associated with rare forms of epilepsy.

Image by Mohamed Hassan from Pixabay