Lundbeck’s surprise bid throws Alkermes’ $2.1B deal for Avadel into doubt

Lundbeck has challenged Alkermes' agreement to buy Avadel Pharmaceuticals by submitting a higher, unsolicited offer, escalating a new biotech bidding war over the sleep disorder drug Lumryz.

Why it matters: Alkermes must now decide whether to up its offer or risk losing a drug central to its future narcolepsy strategy; all while facing financial limits that could make it tough to compete with Lundbeck’s deeper pockets.

Backstory: Avadel initially accepted a $2.1B deal from Alkermes, which included a $1.50/share bonus tied to future approval of Lumryz for idiopathic hypersomnia. Lundbeck's counteroffer ups the upfront cash to $21/share (from $18.50/share) and adds a contingent value right worth up to $2/share, potentially pushing the total deal value near $3B.

Big picture: The battle reflects a broader trend of aggressive biotech dealmaking as companies scramble to secure future revenue amid looming patent cliffs and rising competition from generics.

Zoom in: Lumryz is already approved for narcolepsy and could expand into new indications. Avadel’s board is still evaluating whether Lundbeck’s offer is superior.

Yes, but: Both suitors face risks: Alkermes may overpay; Lundbeck may struggle to extract long-term value from Lumryz amid generic pressure. Some analysts estimate that Alkermes' financial limits may cap its bidding power at $2.7B vs. Lundbeck’s $3.8B.