Alkermes to Acquire Avadel Pharmaceuticals for $2.1B, Expanding Sleep Disorder Portfolio

Alkermes, a brain drug developer, has announced plans to acquire Avadel Pharmaceuticals in a deal worth up to $2.1 billion. The acquisition aims to bolster Alkermes' presence in the sleep disorder market and provide a foundation for the potential launch of its own narcolepsy candidate, alixorexton.

Deal Structure and Strategic Rationale

Alkermes will pay $18.50 per share for Avadel, with an additional contingent value right of $1.50 per share if Avadel's lead drug, Lumryz, receives FDA approval for idiopathic hypersomnia by the end of 2028. The total transaction value represents a 12% premium on Avadel's closing share price on Tuesday and a 38% premium compared to its three-month weighted average trading price.

Richard Pops, CEO of Alkermes, emphasized the strategic importance of the acquisition, stating, "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."

The deal is expected to close in the first quarter of 2026, providing Alkermes with immediate revenue growth and a strong foundation in the sleep disorder market. Analysts from Stifel and RBC Capital Markets have noted the clear strategic rationale behind the acquisition, with Paul Matteis of Stifel highlighting that Alkermes is "acquiring the salesforce required to be successful in the space along with an asset that has demonstrated some traction."

Lumryz: A Key Asset in the Narcolepsy Market

Avadel's primary asset, Lumryz, is a once-daily sodium oxybate formulation approved for the treatment of excessive daytime sleepiness or cataplexy in narcolepsy patients. The drug has shown strong performance since its approval in May 2023, with second-quarter sales reaching $68 million. Avadel projects 2025 sales for Lumryz to be between $265 million and $275 million.

Lumryz's once-daily dosing provides a significant advantage over competing products from Jazz Pharmaceuticals, Xyrem and Xywav, which require twice-nightly dosing. This differentiation has led to rapid adoption, with new patient starts for Lumryz outpacing its competitors by more than 2 to 1 since launch.

Alkermes' Future in Sleep Disorders

The acquisition of Avadel not only provides Alkermes with an immediate revenue stream but also positions the company for the potential launch of its own narcolepsy candidate, alixorexton. Alkermes recently presented promising phase 2 results for alixorexton at the World Sleep 2025 Congress, demonstrating clinically meaningful and statistically significant impacts on wakefulness, cognition, and fatigue with once-daily dosing.

Alkermes plans to initiate a phase 3 trial of alixorexton in narcolepsy in the first quarter of 2026. The company expects that by the time alixorexton potentially gains approval later in the decade, it will have established a significant presence in the sleep disorder market through its commercialization of Lumryz.

Richard Pops emphasized the importance of this market entry, stating, "We will have a product that is doing a quarter of a billion dollars a year in sales—interacting with the key sleep centers, the key sleep physicians, the key sleep nurses, understanding the payment dynamics, the patient access journey. All that stuff is the prosaic, working part of launching pharmaceutical company drugs in this world."