8-K: Lilly to Acquire Centessa for $6.3B Upfront, Plus CVRs

Eli Lilly and Company will acquire Centessa Pharmaceuticals plc for an upfront cash payment of $38.00 per share, with additional contingent value rights totaling up to $9.00 per share.

Summary

• Eli Lilly and Company (Parent) will acquire Centessa Pharmaceuticals plc (Company) through its wholly-owned subsidiary, LDH XV Corporation (Purchaser), via a court-sanctioned scheme of arrangement under UK law.
• Centessa shareholders will receive $38.00 in cash per share, plus one non-transferable Contingent Value Right (CVR) per share, potentially worth up to an additional $9.00.
• The total potential aggregate consideration for Centessa shareholders is up to $47.00 per share.
• The upfront cash consideration represents an aggregate equity value of approximately $6.3 billion, with the CVRs representing an additional potential aggregate equity value of approximately $1.5 billion.
• The acquisition has been recommended by Centessa's board of directors and approved by the boards of Parent and Purchaser.
• Key shareholders, including entities affiliated with Medicxi Ventures, Index Ventures, and General Atlantic, collectively owning approximately 20% of outstanding shares, have signed voting and support agreements.
• Centessa's outstanding equity awards (options with exercise price less than cash consideration and restricted stock units) will be canceled and converted into cash and CVRs; underwater options will be fully vested and can be exercised or canceled for no consideration.
• The transaction is subject to customary closing conditions, including Centessa shareholder approval, UK Court sanction, and HSR Act clearance.

Sentiment

Score: 9

Explanation: StockSavvy.ai views this as a highly positive development for Centessa shareholders, offering a substantial immediate premium and attractive contingent upside, while providing Centessa's pipeline with the resources of a major pharmaceutical company.

Positives

• Centessa shareholders receive a significant upfront cash premium of approximately 40.5% over the 30-day volume-weighted average trading price of Centessa's ADSs as of March 30, 2026.
• The inclusion of Contingent Value Rights (CVRs) offers shareholders potential upside of up to an additional $9.00 per share, tied to regulatory approvals of Centessa's lead product candidates.
• The acquisition by Eli Lilly, a major pharmaceutical company, provides Centessa's orexin receptor 2 (OX2R) agonist pipeline with substantial resources for accelerated development, clinical, regulatory, and commercial capabilities.
• Centessa's lead investigational candidate, cleminorexton (formerly ORX750), has shown a potential best-in-class profile in Phase 2a studies for narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia, indicating strong clinical promise.
• The transaction expands Lilly's neuroscience portfolio into sleep medicine, leveraging Centessa's expertise in orexin science.

Negatives

• The CVRs are non-transferable, limiting liquidity and the ability for holders to realize their value before milestones are met.
• There is no assurance that any of the CVR milestones will be achieved, meaning the contingent payments may not materialize.
• The CVRs do not have voting or dividend rights and do not represent any equity or ownership interest in the acquiring entities.
• Centessa will be required to pay a termination fee of approximately $63 million to Lilly under certain circumstances, such as if Centessa enters into a superior proposal or changes its board recommendation.

Risks

• Non-achievement of CVR milestones: There is no assurance that the specified milestones for ORX750 or ORX142 (FDA approvals for NT2, IH, or any indication) will be achieved prior to their expiration dates, or that payments will be required.
• Regulatory and development risks: Potential payouts of CVRs are subject to various risks and uncertainties related to the development of ORX750 or ORX142 and U.S. Food and Drug Administration clearances.
• Shareholder approval risk: Centessa shareholders may not approve the implementation of the acquisition.
• Court sanction risk: The Scheme of Arrangement may not be sanctioned by the High Court of Justice of England and Wales.
• Regulatory clearance delays: Failure to (or delay in) receiving required regulatory clearances for the transaction, such as under the HSR Act, could delay or prevent closing.
• Injunctions: The absence of any order, decree, or ruling that enjoins, prevents, prohibits, or makes illegal the consummation of the transaction is a closing condition.
• Company Material Adverse Effect: The occurrence of a Company Material Adverse Effect that is continuing at the Effective Time could prevent closing.
• Litigation: The outcome of any legal proceedings that could be instituted against the parties to the transaction could impact closing or terms.
• Integration risks: Lilly's ability to successfully integrate Centessa and execute on the continued development of Centessa's programs following the closing.

Future Outlook

The acquisition is expected to close in the third quarter of the current year, subject to shareholder and regulatory approvals. Lilly intends to accelerate the advancement of Centessa's orexin portfolio across a broad range of neuroscience indications. The CVRs offer potential future payments contingent on the first US FDA approvals of ORX750 or ORX142 for narcolepsy type 2, idiopathic hypersomnia, or any indication, with specific expiration dates for each milestone.

Management Comments

• Carole Ho, Executive Vice President and President, Lilly Neuroscience: "Orexin receptor biology represents one of the most compelling mechanistic opportunities in neuroscience as a direct intervention on the master switch of the sleep-wake cycle. Centessa has assembled a portfolio with the breadth and depth to improve wakefulness across a broad array of indications. Joining forces with Centessa colleagues means we can now pursue that potential at the speed and scale it deserves."
• Mario Alberto Accardi, PhD, Chief Executive Officer of Centessa and Founder of the Orexin Program: "Centessa is at the forefront of orexin science, and we've built a potential best-in-class portfolio of OX2R agonists with a level of depth and breadth that could help redefine what's possible in neuroscience. Driven by a bold vision, our team has advanced an innovative portfolio with the speed, rigor and conviction needed to lead a new era of orexin-based therapeutics. Now, we are thrilled to take our next step toward a potential combination with Lilly who shares our vision. By combining Centessa's team and capabilities with Lilly's global complementary research, clinical, regulatory and commercial capabilities, we will seek to accelerate the advancement of our orexin portfolio across a broad range of neuroscience indications for the benefit of patients in need. I'm incredibly proud of what our team has achieved and deeply grateful to the investigators, study participants, employees and shareholders who have made our progress possible. This milestone reflects not only the strength of our science, but also the transformative potential of our orexin portfolio for patients who urgently need new solutions."

Industry Context

StockSavvy.ai notes that this acquisition positions Eli Lilly to significantly expand its neuroscience portfolio, specifically entering the sleep medicine market with Centessa's promising OX2R agonist pipeline. The focus on orexin receptor biology aligns with a growing industry trend to target fundamental neurobiological systems for complex neurological disorders. This move could intensify competition in the sleep-wake disorder therapeutic space, potentially challenging existing treatments and other companies developing similar mechanisms.

Comparison to Industry Standards

• The upfront cash premium of 40.5% over the 30-day volume-weighted average trading price is a strong indicator of Lilly's confidence in Centessa's pipeline and is generally considered attractive for an acquisition in the biotechnology sector, often exceeding typical premiums seen in less strategic or less advanced asset purchases.
• The inclusion of CVRs is a common mechanism in biotech acquisitions, particularly for clinical-stage assets, allowing the acquirer to mitigate risk while providing target shareholders with participation in future success. The structure of three distinct milestones for different indications (NT2, IH, and any indication) provides multiple opportunities for payout, which is a favorable arrangement for Centessa shareholders compared to single-milestone CVRs.
• Centessa's lead candidate, cleminorexton (formerly ORX750), demonstrating a 'potential best-in-class profile' in Phase 2a studies for narcolepsy type 1, narcolepsy type 2, and idiopathic hypersomnia, suggests a strong clinical asset. This positions it favorably against competitors in the sleep-wake disorder market, such as Takeda's orexin agonist TAK-925 or Jazz Pharmaceuticals' Xyrem/Xywav, by potentially offering improved efficacy or safety profiles, though direct comparative data is not provided in the filing.

Management Changes

Corporate Governance

Legal Proceedings

• The Company shall promptly notify Parent of any actions or claims instituted against the Company, its Subsidiaries, or any of their directors or officers relating to the Transaction Agreement or the Contemplated Transactions (Shareholder Litigation).
• Parent will have the right to participate in the defense of any Shareholder Litigation, and Centessa will consult with Parent regarding the defense.
• Centessa will not settle or compromise any Shareholder Litigation without Parent's prior written consent, unless fully covered by insurance or related solely to additional proxy statement disclosure without business restrictions.
• Indemnified Parties (present or former directors/officers) will be entitled to retain their chosen counsel (e.g., Goodwin Procter LLP) to defend any Shareholder Litigation after the Effective Time.

Related Party Transactions

• Entities affiliated with Medicxi Ventures, Index Ventures, and General Atlantic (collectively, the Supporting Shareholders) entered into voting and support agreements with Parent and Centessa. These shareholders collectively beneficially own approximately 20% of Centessa's outstanding shares as of March 27, 2026, and agreed to vote in favor of the Scheme of Arrangement and against other acquisition proposals.

Stakeholder Impact

• Shareholders: Will receive $38.00 in cash per share and one non-transferable CVR per share, potentially worth up to an additional $9.00, representing a significant premium and contingent upside.
• Employees: Current employees will receive total base compensation and target annual cash incentive compensation opportunities at least as favorable, in the aggregate, for 12 months post-closing. Employee benefits will be substantially comparable in the aggregate to prior benefits (excluding certain 'Excluded Benefits'). Severance benefits will be no less favorable than existing Company Plans for those terminated under qualifying circumstances.
• Directors and Officers: Will be indemnified and have expenses advanced to the fullest extent permitted by law for actions related to their service, with provisions for D&O tail insurance for six years post-closing.
• Customers, Suppliers, Partners: Centessa is required to use commercially reasonable efforts to preserve relationships with these parties until closing, aiming to maintain goodwill and ongoing business.

Next Steps

• Centessa to prepare and file a preliminary and definitive proxy statement (Schedule 14A) with the SEC.
• Centessa to convene and hold a Scheme Meeting and Company General Meeting (GM) for shareholder approvals.
• Centessa to seek sanction of the Scheme of Arrangement by the High Court of Justice of England and Wales.
• Expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).
• Lilly and Purchaser to enter into a Contingent Value Rights Agreement at or prior to the Effective Time.
• Centessa to cause its ADSs to be de-listed from Nasdaq and de-registered under the Exchange Act following the Effective Time.
• Centessa to terminate certain contracts and prepay outstanding indebtedness under its credit agreement at or prior to closing.
• Centessa to apply for confirmation from His Majesty's Revenue & Customs regarding UK stamp duty/stamp duty reserve tax.

Key Dates

Recommendation

The acquisition offers Centessa shareholders a substantial immediate cash premium of 40.5% over recent trading prices, coupled with CVRs that provide additional upside potential. This combination of guaranteed value and contingent future payments, backed by a major pharmaceutical company like Eli Lilly, makes it a highly attractive proposition. The board's recommendation and significant shareholder support further de-risk the transaction's completion, warranting a 'strong buy' recommendation for investors seeking to capitalize on the acquisition premium.

Keywords

Acquisition, Eli Lilly, Centessa Pharmaceuticals, OX2R agonist, Sleep-wake disorders, Narcolepsy, Idiopathic hypersomnia, Contingent Value Rights, CVR, Pharmaceuticals, Biotechnology, Merger, Healthcare, Neuroscience, Drug development, FDA approval