Lundbeck makes bid for Avadel, trying to displace Alkermes

Another pharma M&A fight has broken out, with Lundbeck outbidding Alkermes in an attempt to take control of Avadel Pharma and its approved therapy for the sleep disorder narcolepsy.

Lundbeck's unsolicited offer has come in at $23 per share, above the $20-per-share figure agreed by Avadel and Alkermes – worth around $2.1 billion, when their merger agreement was announced last month.

The prize for Alkermes and Lundbeck 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.

In a statement, Avadel acknowledged that it had received the Lundbeck bid and that its board of directors had "determined in good faith, after consultation with its financial and legal advisors, that the Lundbeck proposal would reasonably be expected" to be superior.

However, it also said that it has not had time to fully explore the merits of the two offers and "has not changed its recommendation in support of the Alkermes acquisition at this time."

The competition for Avadel comes after Pfizer just completed a $10 billion takeover of obesity drug developer Metsera, after having to raise its offer from an initial $7.3 billion after Novo Nordisk tabled a $10 billion offer for the biotech.

While Metsera initially switched its allegiance to Novo Nordisk, Pfizer eventually won the bidding war after it became clear that its offer was less likely to lead to antitrust issues.

As with Metsera, both the offers for Avadel include an upfront payment and a bonus amount tied to achieving a particular business objective.

Alkermes has offered $18.50 upfront, with another $1.50 payable if Lumryz gets FDA approval for another sleep disorder – idiopathic hypersomnia (IH) – by the end of 2028.

Lundbeck's bid takes that upfront amount to $21 per share, with another $1 per share on offer if Lumryz and Avadel's follow-up drug valiloxybate collectively achieve peak sales in the US of $450 million a year or more by the end of 2027. A further $1 per share will become payable if the combined sales reach a threshold of $700 million by 2030.

Valiloxybate is a salt- and artificial sweetener-free formulation of oxybate licensed from XWPharma for $20 million upfront in September, which is being developed for both narcolepsy and IH and is due to start an initial pharmacokinetic (PK) and comparative bioavailability study shortly.

Alkermes issued a statement acknowledging Lundbeck's rival offer, which emphasised that Avadel "must continue to discuss and negotiate in good faith with Alkermes regarding any proposal that Alkermes may wish to make to amend the transaction agreement."

Avadel's shares rose 20% to $23.20 as news of the counteroffer emerged.