Eli Lilly stock rises after $7.8B Centessa deal—bet on sleep drugs

Eli Lilly has agreed to acquire Centessa Pharmaceuticals in a deal valued at up to $7.8 billion, marking a significant expansion of the drugmaker’s neuroscience portfolio into sleep medicine.

Under the terms announced Tuesday, Lilly will pay $38 per share in cash upfront, valuing Centessa at approximately $6.3 billion.

The offer represents a 38% premium to Centessa’s Monday closing price of $27.58.

Shareholders will also receive nontransferable contingent value rights worth up to an additional $9 per share, tied to future regulatory approvals of Centessa’s drug candidates.

The total potential consideration brings the deal value to $47 per share.

The transaction is expected to close in the third quarter, subject to regulatory approval.

Lilly’s shares rose about 2.75% following the announcement, while Centessa’s US-listed ADR surged between 45%, reflecting investor optimism about the strategic fit and future potential of the pipeline.

Bet on orexin-based therapies

The acquisition centers on Centessa’s experimental drug portfolio targeting excessive daytime sleepiness, including narcolepsy and idiopathic hypersomnia.

These conditions impair the ability to stay awake during the day and are part of a broader category of neurological disorders.

Centessa’s lead candidate, cleminorexton, has demonstrated what Lilly described as a potential best-in-class profile in Phase 2a studies.

Another candidate, ORX142, is also part of the agreement, with milestone payments tied to approvals from the US Food and Drug Administration.

The therapies belong to a new class of drugs known as orexin agonists, which target the brain’s sleep-wake regulation system. The approach is drawing increasing interest across the pharmaceutical industry.

“Orexin receptor biology represents one of the most compelling mechanistic opportunities in neuroscience as a direct intervention on the master switch of the sleep-wake cycle,” Dr. Carole Ho, president of Lilly Neuroscience, said in a statement. “Centessa has assembled a portfolio with the breadth and depth to improve wakefulness across a broad array of indications.”

Beyond narcolepsy, these drugs may have applications in conditions such as Alzheimer’s disease and depression, where drowsiness is a common symptom.

Competitive landscape and broader strategy

Centessa is not expected to be first to market in the orexin agonist category.

A competing treatment from Takeda is currently under FDA review and could receive approval later this year.

Analysts estimate the market for orexin-based treatments could reach between $15 billion and $20 billion if roughly a quarter of eligible patients seek treatment.

Wider adoption across additional neurological conditions could further expand that opportunity.

Despite promising mid-stage data, Centessa’s lead drug is not expected to gain approval until 2028, according to analyst estimates. However, early results suggest it could emerge as a best-in-class option.

The deal underscores Lilly’s broader strategy of reinvesting proceeds from its successful obesity and diabetes drugs, including Zepbound and Mounjaro, into new therapeutic areas.

It also follows a series of recent acquisitions. Earlier this year, Lilly announced plans to acquire Orna Therapeutics for up to $2.4 billion and Ventyx Biosciences for about $1.2 billion.

With the Centessa deal, Lilly is deepening its presence in neuroscience, building on a legacy that includes blockbuster treatments such as Prozac and more recent Alzheimer’s therapy Kisunla.