Lilly to spend up to $7.8 billion to acquire Centessa, maker of experimental sleep disorder drugs

Lilly will pay $38 a share upfront, or $6.3 billion, for Centessa and may pay up to $1.5 billion more if Centessa's drugs meet FDA approval deadlines; the transaction is expected to close in the third quarter pending regulatory approval.

Lilly has agreed to acquire Centessa in a deal that could total up to $7.8 billion. The purchase includes an upfront payment and additional contingent payments tied to regulatory milestones. Centessa is developing orexin receptor agonists aimed at treating narcolepsy, idiopathic hypersomnia and other conditions linked to daytime drowsiness. The acquisition follows Lilly's recent deals and its stated plan to deploy proceeds from its leading obesity and diabetes medicines to expand its pipeline. Deal details: - Lilly will pay $38 a share upfront, equivalent to $6.3 billion, with up to $1.5 billion more payable if Centessa's drugs win FDA approval by set deadlines. - The transaction is expected to close in the third quarter, subject to regulatory approval of the deal. - Shares reacted in trading: Lilly rose about 3% while Centessa's stock surged about 45% on the announcement. - Centessa's development program focuses on orexin agonists for narcolepsy and idiopathic hypersomnia and explores use in other disorders accompanied by drowsiness, such as Alzheimer's disease and depression. - An Oppenheimer analyst estimated that orexin agonists could represent a $15 billion to $20 billion market if roughly one quarter of patients seek treatment. - Centessa would not be first to market; a rival orexin agonist from Takeda is under FDA review and could be approved sooner, and an analyst cited in the reporting does not expect Centessa's drug until 2028. Summary: The deal adds experimental orexin-targeting medicines to Lilly's neuroscience portfolio and reflects continued M&A activity by the company. The timing and total value of the acquisition depend on regulatory clearances for the transaction and on future FDA decisions tied to Centessa's programs. Further specifics and approvals are pending; the expected close is in the third quarter, pending regulatory approval.