With Zepbound approved for sleep apnea, Lilly spends up to $7.8 billion for a company with a narcolepsy drug

By Jaimy Lee

The drugmaker has been on a dealmaking spree

Eli Lilly is spending up to $7.8 billion to buy Centessa, which is working on treatments for sleep-wake disorders.

Eli Lilly has made yet another deal, this time buying a drug company that's developing a therapy for narcolepsy for up to $7.8 billion.

It's acquiring Centessa Pharmaceuticals, which is working on orexin receptor 2 agonists for conditions like narcolepsy and idiopathic hypersomnia - both forms of daytime sleepiness. Its most advanced candidate, which is called cleminorexton, is currently in Phase 2 clinical trials for three conditions.

The deal fits neatly into Lilly's neuroscience business, which already includes Alzheimer's disease treatment Kisunla and the migraine shot Emgality.

Lilly "is making a disciplined move into next-generation sleep pharmacology that fills a clear portfolio gap and signals renewed confidence in [central nervous system] innovation," RBC Capital Markets analyst Trung Huynh told investors.

Huynh describes Centessa's most advanced candidate as having "best-in-class potential," with once-daily dosing and better tolerability, and he noted that Lilly has already been working with sleep specialists since the 2024 approval of its GLP-1 Zepbound for sleep apnea. If cleminorexton is approved in 2028, Wall Street expects peak sales of $2.3 billion for that drug by 2034.

The company, which is flush with cash from sales of its market-leading GLP-1 franchise, has been an active dealmaker. This year alone, Lilly announced several deals, including one earlier this week with an artificial-intelligence biotechnology company, Insilico Medicine, worth up to $2.75 billion. It also bought Ventyx Biosciences, which is working on treatments for inflammatory diseases, for $1.2 billion; Orna Therapeutics, which is developing cell therapies, for up to $2.4 billion; and Nimbus Therapeutics, to design a new obesity pill, for $1.3 billion.

With Centessa, Lilly is paying $6.3 billion up front along with up to $1.5 billion for a contingent-value right. (Using CVRs is an increasingly common tactic in biopharma deals.) It's paying $38 in cash per share, a 38% premium over Monday's closing price of $27.58, in addition to one contingent-value right of up to $9 based on three milestones.

Leerink Partners' David Risinger described the deal as "compelling" for both companies.

Lilly's stock (LLY) closed 3.7% higher on Tuesday, while U.S.-listed shares of Centessa (CNTA) closed 74% higher.

The acquisition wasn't the only major biopharma deal Tuesday morning. Biogen (BIIB) also announced plans to buy Apellis Pharmaceuticals (APLS), which develops treatments for kidney diseases, for $5.6 billion.

The State Street SPDR S&P Biotech exchange-traded fund XBI, which is viewed as a benchmark for the biotech industry, ended up closing 7.5% higher. The rally snapped a three-day losing streak and was the largest percent increase in the last year.

-Jaimy Lee

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03-31-26 1732ET