$7.8 billion acquired narcolepsy therapy! Weight loss drug giant "competing" in sleep health

Ask AI · Why did Lilly pivot to the sleep health market after success with weight loss drugs?

Weight-loss drug giant Lilly has made its latest bet on a sleep-therapy pharmaceutical company.

On March 31 local time, Lilly announced it plans to pay up to $7.8 billion to acquire Centessa Pharmaceuticals and to obtain access to an investigational sleep-related drug pipeline developed by the company. Spurred by the news, Centessa’s intraday share price jumped nearly 45% that day, while Lilly’s shares rose about 3%.

Centessa is developing a orexin agonist to treat narcolepsy and excessive daytime sleepiness. Broader sleepiness also includes conditions such as idiopathic hypersomnia, a serious sleep disorder. Such drugs may also be used to treat other neurological diseases caused by drowsiness, such as Alzheimer’s disease and depression.

This big acquisition by Lilly shows that after the great success of its GLP-1 weight loss drug products, the pharmaceutical giant is aiming at the next massive healthcare consumer market—sleep health.

Lilly CEO Dave Ricks said: “We’ve seen broader potential for this kind of drug, and it may be a little similar to GLP-1. Sleep and staying awake are core functions of the human body. When your sleep is disrupted or you can’t stay awake, it leads to many health problems.”

According to estimates by analysts at Oppenheimer, if one quarter of patients seek treatment, the drug market for severe sleep disorders used to treat narcolepsy and idiopathic hypersomnia could be as large as $15 billion to $20 billion; and if these drugs are applied more broadly, sales could rise further.

However, Oppenheimer analysts expect that Centessa’s orexin agonist may not receive regulatory approval until 2028, though mid-stage trial data indicates that Centessa’s therapy is superior to similar drugs in its class.

In the field of neurological diseases, Lilly has already launched a blockbuster drug, donanemab, for treatment in the early stages of Alzheimer’s disease.

With its latest bet on sleep therapy, Lilly is also expected to replicate its success with weight loss drugs. The company has achieved significant results in promoting the weight loss drug tirzepatide to a broader patient consumer population, and its market share has already surpassed that of strong competitor Novo Nordisk. Sleep health is also a consumer-level market with huge potential.

So far this year, Lilly has completed multiple acquisitions, including its acquisition of the cell therapy company Orna Therapeutics and its acquisition of Ventyx Biosciences, a drug developer for anti-inflammatory therapies.

(This article comes from First Financial)