Alkermes has agreed to acquire Ireland-based Avadel Pharmaceuticals in an all-cash deal worth up to $2.1 billion, marking a strategic expansion into the sleep medicine market. The transaction, announced Wednesday, will give Alkermes immediate access to Lumryz, an FDA-approved narcolepsy treatment that analysts project will generate approximately $272-275 million in sales this year.
Deal Structure and Strategic Rationale
Under the agreement, Alkermes will pay $18.50 per share upfront, representing a 3.5% premium to Avadel's closing price the day prior and a 38% premium to the company's three-month average price. An additional contingent payment of $1.50 per share will be triggered if the FDA approves Lumryz for idiopathic hypersomnia by the end of 2028.
"This transaction represents a pivotal step in Alkermes' strategic evolution. With the acquisition of Avadel, we are able to accelerate our commercial entry into the sleep medicine market at a critical inflection point," said Richard Pops, CEO of Alkermes.
The acquisition provides Alkermes with established commercial infrastructure and a sales force experienced in marketing treatments for rare conditions, which analysts view as essential for success in the specialized sleep disorder market.
Lumryz Market Position and Potential
Lumryz, an extended-release formulation of sodium oxybate, received FDA approval in 2023 for treating excessive daytime sleepiness or cataplexy in adults with narcolepsy. The drug's label was subsequently extended to include pediatric patients aged seven and older. The treatment has gained market traction as the only once-daily oxybate formulation available, serving more than 3,100 patients in the US as of June.
The drug addresses a significant market opportunity, with an estimated 50,000 oxybate-eligible people living with narcolepsy in the US. An additional 42,000 people are diagnosed with idiopathic hypersomnia, representing the potential expansion indication that could trigger the contingent payment.
Avadel is currently conducting the phase 3 REVITALYZ study of Lumryz in idiopathic hypersomnia, with enrollment expected to complete by the end of this year.
Competitive Landscape and Pipeline Integration
The acquisition comes as Alkermes prepares to advance its proprietary narcolepsy treatment alixorexton into phase 3 testing. Alixorexton is an orexin receptor 2 (OX2R)-selective agonist that competes in an emerging drug class targeting brain proteins that regulate sleepiness.
Leerink Partners analysts have positioned Alkermes as the "#2 player" in the orexin drug race, trailing behind Takeda Pharmaceutical. Takeda recently reported positive late-stage data for its competing drug oveporexton and plans to file for US approval before the end of March. Jefferies analysts have predicted that oveporexton could achieve annual sales of $3 billion.
Alixorexton offers potential advantages with once-daily dosing compared to Takeda's twice-daily regimen, though both drugs target the same patient population of an estimated 100,000 to 200,000 people with narcolepsy in the US.
Additional Pipeline Assets
The acquisition also brings Alkermes other sleep disorder candidates, including valiloxybate, a salt- and artificial sweetener-free formulation of oxybate that Avadel licensed from XWPharma for $20 million upfront in September.
Financial and Operational Impact
Alkermes expects the acquisition to be immediately accretive and drive "certain cost synergies and operational efficiencies." Stifel analyst Paul Matteis noted the deal's "clear" strategic rationale, stating that Alkermes "is acquiring the salesforce required to be successful in the space along with an asset that has demonstrated some traction."
However, some analysts questioned the valuation. Evercore ISI analyst Umer Raffat calculated Avadel's net present value at closer to $1.6 billion, suggesting Alkermes must be betting on either higher peak Lumryz sales than currently forecast or significant operational cost savings.
The transaction is expected to close in the first quarter of 2026, pending regulatory approvals and customary closing conditions.
