Cephalon Overcomes Sparlon Scare

Updated from 12:31 p.m. EST

Just a few weeks ago, Cephalon looked like it was marching confidently toward the regulatory review of its drug for attention deficit hyperactivity disorder.

Now, the Frazer, Pa., company appears to have developed a bit of a limp, as a panel of medical experts prepares to meet on Thursday to discuss the experimental ADHD drug Sparlon, which Cephalon is proposing for the treatment of children ages 6 to 17.

On Wednesday, a day ahead of the panel meeting, the Food and Drug Administration posted on its Web site an analysis by a staff member who recommended that Cephalon's application be rejected. The risks are greater than the benefits "and preclude the safe use of this drug" for treating ADHD, the staff report, written last September, says.

Sparlon shouldn't be approved because it doesn't show a "clear, demonstrated advantage over existing" ADHD drugs, the report says.

The FDA staff reviewer adds that if additional analysis bears out the potential risks, the agency should discuss halting all clinical programs involving children that are currently underway with another Cephalon drug, the sleep-disorders treatment Provigil. The reviewer says the label for Provigil should be strengthened to warn about the risks it could pose for children.

Provigil and Sparlon both contain modafinil, although Sparlon would be given in doses of 345 milligrams to 420 milligrams vs. the recommended 200-milligram dose of Provigil. The FDA notes that Sparlon won't work as an ADHD treatment at the lower dose.

Two other FDA reviewers advocated that Sparlon receive conditional approval, subject to additional research on safety issues. "I need more information before passing final judgment," one reviewer says in comments posted on the FDA site.

Internal Debate

Documents released by the FDA illustrate the debate within the agency.

For example, one staff member cited three cases of severe skin rashes, including one instance of the potentially lethal Stevens-Johnson syndrome, as one reason for opposing Sparlon. But two other FDA reviewers said the matter could be addressed with a warning label and a determination of whether the problems were caused by Sparlon interacting with other drugs.

Those latter two reviewers made their comments in October, just a few days before the FDA granted conditional approval for Sparlon, saying Cephalon needed to resolve matters that neither the company nor the agency identified at that time.

However, one of the FDA documents released Wednesday is the letter of conditional approval, outlining the agency's questions, including the request for more information about the three cases of skin rash among 933 patients receiving Sparlon.

The letter asked Cephalon to clarify information about potential psychiatric side effects and to comment on proposed labeling and risk-management recommendations.

Publication of the FDA staff members' comments sent Cepahlon's stock down sharply early in the morning, but by the close it had rebounded to end higher by $1.45, or 2%, to $73.31. The stock dropped as low as $65.04 earlier.

Cephalon's trading volume of 22.5 million shares was more than seven times the daily average for the past three months.

Cephalon had little to add on the matter. "I do not plan on attempting to answer investor questions regarding the volumes of information contained in this briefing document," Chip Merritt, senior director for investor relations at Cephalon, said in a prepared statement. "All of the pertinent data will be discussed by our experts at the panel meeting on March 23rd."

The latest information adds to the nervousness investors and some analysts have had since an FDA report last week stated that there were four instances of suicidal "events," but no deaths, among 664 Sparlon users, compared with no events among 308 people receiving a placebo.

Last week's FDA analysis was based on a compilation of many clinical trials. The report didn't find a statistically significant link to Sparlon, and it added that its research had several limitations.

Investors bailed once the report was posted on the FDA Web site after the markets closed on March 14. Cephalon's stock dropped 9% during the next two days, one investment banking firm cut its rating and several others worried that Sparlon might be saddled with more restrictions than expected.

Label Danger

"We think, at a minimum, serious label warnings will be required," says Sagient Research Systems, a San Diego firm that tracks pharmaceutical developments, in a report issued last week. "Though the number of patients having events was small ... the overall patient exposure in the clinical trials was also small."