Sleeping pill developer Centessa (CNTA.US) surged before the market opening! Acquired by Eli Lilly (LLY.US) for $7.8 billion.

Eli Lilly (LLY.US) has agreed to acquire sleep drug developer Centessa Pharmaceuticals (CNTA.US) in a deal worth up to $7.8 billion, indicating the weight loss drug giant is seeking to expand its treatment product pipeline for other diseases. As of the time of writing, Centessa's stock price surged over 45% in pre-market trading on Tuesday. This is the largest acquisition deal by Lilly since the $8 billion acquisition of Loxo Oncology in 2019. According to a statement released on Tuesday, Lilly will acquire Centessa shares for $38 per share in cash a 70% premium to Centessa's closing price on Monday, and an additional $9 per share upon the achievement of three target milestones. The upfront payment corresponds to a stock value of around $6.3 billion, with a potential additional payment of about $1.5 billion. Centessa is developing drugs for the treatment of sleep-wake disorders. Although there are already drugs available for sleep disorders, these drugs often come with issues such as dependency and next-day side effects similar to a hangover. Neuroscience is one of the key areas where Lilly is focusing, and the company is looking to expand its drug product portfolio beyond obesity. While Lilly's top-selling diabetes and weight-loss drugs, Mounjaro and Zepbound, still have nearly a decade of patent protection, the company has begun early positioning to mitigate against future sales hitting a "patent cliff." Lilly has already made strides in the sleep field. The company's weight-loss injection drug Zepbound is currently the only drug approved for the treatment of sleep apnea (a nighttime breathing disorder affecting over 23 million American adults). Additionally, Lilly currently sells Kisunla for the treatment of Alzheimer's disease and is developing other drugs to treat this memory loss disease. The company also expressed interest in developing non-addictive pain relief medications.