** Eli Lilly LLY.N said on Tuesday it would buy Centessa Pharmaceuticals 260y.F in a deal valued at up to $7.8 billion as the U.S. drugmaker looks to diversify beyond its metabolic portfolio and expand into treatments for sleep disorders.

** UK-based Centessa is developing a new class of treatments designed to target orexin, a molecule in the brain that regulates the sleep-wake cycle.

FOCUS TURNS TO OREXIN-TARGETING DRUGS

** BMO Capital Markets ("outperform") says the addition of cleminorexton boosts Lilly's neuroscience edge beyond Alzheimer's and pain treatments; says the deal and Biogen's $5.6 billion buyout of Apellis are positive signs for the sector

** Leerink Partners ("market perform") says big pharma's willingness to spend $6.3 billion to enter the orexin space underscores the size of the opportunity and validates the space

** UBS ("buy") says the deal makes sense for LLY as it adds mid-stage assets with potential launches from 2030 onward that could be important once GLP-1s lose exclusivity

** Oppenheimer ("outperform") says a neurologist called the new narcolepsy drugs a potential "game changer" for sleep disorder, with uptake seen at about 90% and no major safety or access issues

(Reporting by Kunal Das in Bengaluru)

((Kunal.Das2@thomsonreuters.com;))