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Cephalon Still a Stressor

Hit by generic competition, Actiq's sales dropped to $129.8 million for the first half of 2007 from $289.7 million for the same period last year. Cephalon also sold $64.9 million of its own generic Actiq, as well as $68 million of Fentora during the first half of this year.

Some analysts are edgy about Fentora's start. They wonder how sales growth will respond to a recent FDA alert about some severe side effects and deaths due to improper use of the drug. The FDA has asked Cephalon to strengthen the drug's warnings.

The market-expanding break will be if Cephalon can convince the FDA to approve Fentora for other types of pain. Analysts expect Cephalon to seek FDA approval by year-end, but a concern about side effects could affect the regulatory review.

The other big drug of the future is Nuvigil, a chemical cousin of Provigil. Both treat sleep disorders such as narcolepsy and problems experienced by people whose work shifts change constantly.

The FDA approved the longer-acting Nuvigil in June, but Cephalon has delayed marketing to prevent cannibalizing Provigil's sales. Cephalon can afford to do this because it negotiated deals with six companies between late 2005 and August 2006 to halt patent litigation and delay generic competition until the spring of 2012.

Cephalon will probably introduce Nuvigil in 2010. If Cephalon had lost any patent challenge, it would have had to push Nuvigil into the market last year.

The agreements were controversial, and the Federal Trade Commission continues to investigate the Provigil deals. Some analysts say the FTC could allege anticompetitive behavior.

"We are cooperating fully with the FTC," Cephalon says in an August SEC filing. If the FTC cites one or more deals, "we believe such a challenge would take years to resolve," Cephalon says.

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