FDA Panel Rejects Cephalon's Sparlon

Cepahlon's previously issued 2006 basic adjusted income per common share guidance of $3.80 to $4 remains unchanged, but the company is reducing its sales forecast by $100 million to a range of $1.45 billion to $1.50 billion. The sales projection for its central nervous system drug franchise was also lowered by $100 million, to a range of $665 million to $715 million.

Frank Baldino Jr., the company's chairman and CEO, said he couldn't predict what additional tests might be needed, or how long they might last, until Cepahlon executives meet with FDA representatives. Like other Cephalon executives commenting during an early evening telephone conference call, Baldino sounded shocked by the committee's decision.

Baldino said he thought Cephalon had provided an adequate response to the FDA about Stevens-Johnson syndrome and two other cases of serious rash after the agency granted conditional approval for Sparlon in October.

Blake said he believed the committee's vote reflected "a general heightened sense of concern" among regulators for all drugs. He, too, was surprised by the committee's vote, noting that the 7-year-old child who contracted Stevens-Johnson wasn't hospitalized and wasn't kept out of school.

Thankfully for the child, he added, this was a "relatively benign case" of the disease, which lasted two weeks. The child took Sparlon for 16 days until symptoms appeared.

Analysts also were jolted by the committee's vote. They had expected the committee to recommend approval for Sparlon, perhaps with certain restrictions. Some predicted Sparlon might be saddled with a black box warning for the skin rash or for some psychiatric side-effects that appeared in some tests.

A black box warning is the FDA's strongest message to doctors and patients. Black box warnings can affect sales because they may discourage physicians from prescribing the drug, or at least encourage them to first prescribe competitors' products.