Alkermes weighs options after Lundbeck’s higher bid for Avadel

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By Kamal Choudhury

(Reuters) -Alkermes said on Friday it is reviewing its options after Avadel Pharmaceuticals received an unsolicited takeover proposal from Danish drugmaker Lundbeck that tops Alkermes’ agreed-upon deal.

Shares of Avadel soared 21% in early trading on Lundbeck’s up to $23 per share offer, compared with Alkermes’ up to $20 per share.

Avadel’s board said the Lundbeck offer could reasonably lead to a “company superior proposal” under its deal with Alkermes, allowing it to share information and hold talks with Lundbeck.

Lundbeck’s proposal includes $21 per share in cash and up to $2 in additional payments tied to future U.S. sales milestones for Avadel’s sleep disorder drug Lumryz and experimental therapy valiloxybate. The milestones would need to be met by 2027 and 2030.

However, RBC analysts noted Lundbeck’s offer carries more uncertainty because the extra payments depend on hitting sales milestones, making it “riskier than Alkermes’ regulatory-based contingent value right,” which only requires FDA approval.

Alkermes agreed in October to buy Avadel in a deal worth up to $2.1 billion, offering $18.50 per share in cash and a contingent payment of $1.50 per share linked to regulatory approval of Lumryz for idiopathic hypersomnia.

“It will be interesting to see if Alkermes steps in with a higher proposal at this stage,” given the strategic value of Avadel’s sleep medicine portfolio, Needham analyst Ami Fadia said.

Avadel’s board said it has not changed its recommendation for the Alkermes deal and cannot terminate it at this stage.

Under the terms of the Alkermes deal, Avadel cannot walk away unless its board decides doing so is necessary to meet fiduciary duties and gives Alkermes written notice of at least five business days to discuss possible changes to the deal.

Analysts, on average, expect Avadel’s Lumryz to generate $504 million by 2030, according to LSEG data. The treatment is seen as a key growth driver for any buyer looking to expand in sleep medicine.

Lundbeck must make a firm offer no later than the seventh day prior to the date of Avadel’s shareholder meeting on the Alkermes deal, expected sometime in 2026, or walk away under Irish takeover rules.

(Reporting by Kamal Choudhury in Bengaluru; Editing by Krishna Chandra Eluri and Shailesh Kuber)