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Wall Street Loses Sleep Over Cephalon's Stay-Awake Pill

Mixed opinions from a Food and Drug Administration advisory committee on a stay-awake pill made by Cephalon (CEPH) are provoking a lot of tossing and turning on Wall Street.

The company's stock has been bouncing around ever since the panel's opinions were released Thursday just before markets closed. Analysts have been bouncing around, too, with many injecting uncertainty into their optimism. One indicator of how the FDA panel caused sleeplessness on Wall Street: Seven analysts filed Cephalon research notes between midnight and 6:30 a.m. Friday.

The subject of the swirling sentiment is Provigil, a Cephalon drug that is approved by the FDA for treating sleepiness associated with narcolepsy, a disease in which people can fall asleep in the daytime, any time. West Chester, Pa.-based Cephalon had asked the FDA to approve an expanded use of the drug.

Federal law allows doctors to prescribe a drug for anything as long as the FDA approves it for a single use. In the case of Provigil, Cephalon says only 11% of its sales come from treating narcolepsy.

Off-label uses include treating fatigue in depressed patients (38%) and in multiple sclerosis patients (12%). Provigil had sales of $196.3 million last year.

Federal law also prohibits companies from marketing drugs for any disease that isn't listed on the drug's label. That means Cephalon can only market Provigil to a small group of specialists -- neurologists, psychiatrists, sleep disorder experts -- who treat narcoleptics. There are 50,000 narcoleptics in the U.S.

But if Cephalon could convince the FDA to expand the number of diseases and conditions for Provigil, then Cephalon could reach the marketing goldmine -- general practitioners. Based on the FDA advisory committee's decision, Cephalon came away with some gold nuggets as well as some iron pyrite.

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