ALKS Stock Surges 15% On Lilly-Centessa Buyout Igniting Sleep Pipeline Hopes

• In a mid-stage study, alixorexton demonstrated statistically significant, clinically meaningful and dose-dependent improvements from baseline compared to placebo in wakefulness.
• RBC Capital said the Lilly-Centessa deal highlights large pharma interest in the sleep space and "underscores what could likely be a large indication," which is "favorable" for Alkermes.
• Leerink, who has a ‘Market Perform’ rating on Alkermes shares, opined that the stock could attract interest from large pharma companies seeking a presence in sleep disorders.

Shares of Alkermes Plc (ALKS) rallied 15% on Tuesday after pharmaceutical giant Eli Lilly and Company reached an agreement to acquire its peer Centessa for up to $7.8 billion.

Centessa is developing a pipeline of orexin receptor 2 (OX2R) agonists to treat excessive daytime sleepiness and disorders of impaired wakefulness. Its lead investigational candidate cleminorexton is under development to treat narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia.

Alkermes, meanwhile, is also developing an orexin 2 receptor for narcolepsy called alixorexton. In a mid-stage study, alixorexton demonstrated statistically significant, clinically meaningful and dose-dependent improvements from baseline compared to placebo in wakefulness. Alkermes plans to initiate the alixorexton narcolepsy global phase 3 program in early 2026.

Wall Street Weighs In

RBC Capital said the Lilly-Centessa deal highlights large pharma interest in the sleep space and "underscores what could likely be a large indication," which is "favorable" for Alkermes. The firm, which thinks Alkermes' current share price is undervaluing the orexin program alone given comps, notwithstanding the profitable core business, has an ‘Outperform’ rating and $45 price target on the shares.

Leerink, who has a ‘Market Perform’ rating on Alkermes shares, opined that the stock could attract interest from large pharma companies seeking a presence in sleep disorders.

How Did Retail Traders React?

On Stocktwits, retail sentiment around ALKS stock rose from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume increased from ‘low’ to ‘normal’ levels.

ALKS stock has gained 5% over the past 12 months. 

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