Eli Lilly and Company (NYSE: LLY) has agreed to acquire Centessa Pharmaceuticals plc (NASDAQ: CNTA) in a transaction valued at up to approximately $7.8Bn, expanding Lilly’s presence in neuroscience and sleep-wake disorders. The deal, announced on March 31, 2026 and structured as a court-sanctioned scheme of arrangement under English law, became effective in late June 2026. In DelMorgan’s analysis, the transaction is a representative example of how large pharmaceutical companies are using milestone-linked structures to acquire clinical-stage assets while managing the risk that accompanies drugs that are still in development.

Transaction Overview

Under the terms of the agreement, Lilly paid $38.00 per share in cash upfront, representing an aggregate equity value of approximately $6.3Bn. Centessa shareholders also received a non-transferable contingent value right (CVR) entitling them to up to an additional $9.00 per share, tied to regulatory approval milestones for Centessa’s lead programs. Those contingent payments could add approximately $1.5Bn to the transaction value over the next several years, bringing the total potential consideration to as much as $7.8Bn. The structure means a meaningful portion of the headline value was contingent on clinical and regulatory success rather than simply payable at closing. The use of a contingent value right is a familiar tool in biopharmaceutical M&A, and it appears well suited to a target whose value rests largely on programs that have not yet reached the market.

Strategic Rationale

Centessa’s lead program is cleminorexton, formerly known as ORX750, an orexin receptor agonist being studied for narcolepsy type 1, narcolepsy type 2 and idiopathic hypersomnia. ORX750 has shown what the company characterizes as a potentially best-in-class profile in earlier-stage studies, though it remains in clinical development and its ultimate approval is not assured. For Lilly, the acquisition likely strengthens a neuroscience pipeline that complements the company’s established franchises and adds exposure to sleep-wake disorders, an area of growing scientific and commercial interest. The orexin mechanism has attracted considerable attention across the industry, and acquiring a differentiated asset in that space may allow Lilly to establish an early position.

Pipeline and Competitive Positioning

Beyond its lead program, Centessa brings additional orexin-directed candidates, including ORX142, that could broaden the opportunity if development progresses. The contingent value right is explicitly linked to approval milestones for these programs, which appears to align the incentives of both parties around clinical and regulatory execution. For Lilly, the transaction fits a familiar pattern in which a large, well-capitalized acquirer takes on the later stages of development and the eventual commercialization of assets originated by a focused, clinical-stage company.

The market for treatments addressing excessive daytime sleepiness has attracted growing interest, as orexin-targeting approaches move through clinical development across several companies. Narcolepsy and idiopathic hypersomnia remain areas of meaningful unmet need, and a therapy that improved on existing options could address a sizable patient population over time. By acquiring Centessa at a clinical stage rather than waiting for regulatory approval, Lilly appears to be positioning itself early in a category that is expected to become increasingly competitive, while using the CVR structure to avoid paying the full price before the science is proven.

Broader Implications for Pharmaceutical M&A

The transaction reflects a continued appetite among large pharmaceutical companies to replenish their pipelines through acquisitions of clinical-stage innovators, particularly in neuroscience. Milestone-linked structures such as CVRs appear to be an increasingly common way to bridge valuation gaps, allowing buyers to pay for success when achieved while protecting against the possibility of clinical failure. As several large companies are facing near-term patent expirations, deals of this kind are likely to remain a central feature of the sector’s strategy.

For clinical-stage companies and their investors, the transaction suggests that differentiated assets in attractive therapeutic areas can still command substantial value, even before reaching the market. However, the principal risk, as with any pipeline acquisition, is that the programs may not achieve their endpoints, in which case much of the contingent consideration would not become payable and the realized value would be lower.

Conclusion

Lilly’s acquisition of Centessa for up to $7.8Bn underscores the strategic importance of neuroscience and sleep-wake disorders within the company’s broader ambitions. The milestone-linked structure appears to balance opportunity against the inherent uncertainty of clinical development, aligning both parties around the programs’ progress. While the ultimate value will likely depend on clinical and regulatory outcomes that remain some way off, the transaction is a clear signal of how large acquirers are approaching innovation and risk in today’s pharmaceutical landscape.

About DelMorgan & Co. (www.delmorganco.com)

With over $300 billion of successful transactions in over 80 countries, DelMorgan’s Investment Banking professionals have worked on some of the most challenging, most rewarding and highest profile transactions in the U.S. and around the globe. DelMorgan specializes in capital raising and M&A advisor services for companies across all industries and is recognized as one of the leading investment banking practices in California and globally.

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