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Investing.com - H.C. Wainwright has reiterated its Neutral rating and $46.00 price target on Alkermes (NASDAQ:ALKS), a pharmaceutical company with a market capitalization of $5.1 billion and impressive gross margins of 85%, following the company’s announcement of its acquisition of Avadel Pharmaceuticals. According to InvestingPro analysis, ALKS currently appears undervalued relative to its Fair Value.
Alkermes announced on Tuesday that it has entered into a definitive agreement to acquire Avadel Pharmaceuticals in an all-cash transaction valued at up to $2.1 billion, or $20.00 per share, consisting of $18.50 per share plus a contingent value right of $1.50 per share. The company’s strong balance sheet, with more cash than debt and a healthy current ratio of 3.23, positions it well for this strategic acquisition.
The acquisition is expected to be immediately accretive and will advance Alkermes into the sleep medicine space by adding Avadel’s commercial product Lumryz, an extended-release sodium oxybate formulation approved in 2023, to its portfolio.
Avadel has recently become cash flow-positive, driven by strong growth of Lumryz sales since its approval, eliminating the need for Alkermes to build its own infrastructure in the sleep medicine sector.
The transaction also offers potential upside through possible label expansion of Lumryz for idiopathic hypersomnia and the development of valiloxybate, a preclinical salt-free, once-daily oxybate formulation.
In other recent news, Avadel Pharmaceuticals announced it will be acquired by Alkermes in a deal valued at approximately $2.1 billion. The agreement includes a cash payment of $18.50 per share, with a potential additional $1.50 per share through a contingent value right if Avadel’s LUMRYZ receives FDA approval by the end of 2028. This acquisition adds Avadel’s once-nightly oxybate treatment, LUMRYZ, to Alkermes’ commercial portfolio. RBC Capital has raised its price target on Alkermes to $47, maintaining an Outperform rating, following the acquisition announcement. UBS also increased its price target for Alkermes to $46 from $42, citing a revised enterprise value-to-2030 estimated sales multiple. Meanwhile, Jazz Pharmaceuticals reached a settlement with Avadel, agreeing to a $90 million upfront payment and royalties on Lumryz sales. RBC Capital reiterated its Outperform rating for Jazz Pharmaceuticals , with a price target of $151. These developments highlight significant strategic moves in the pharmaceutical sector.
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