Cephalon, Barr Ink Patent Deal

Cephalon also says an FDA decision on Nuvigil will be delayed.
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Updated from 6:53 p.m. EST

Cephalon

(CEPH)

said it reached an agreement with generic-drug maker

Barr Laboratories

(BRL)

that will settle the pending patent infringement disputes related to Provigil and Actiq.

As a result, Cephalon has now resolved Provigil litigation with the four firms that had been attempting to sell a generic copy of the drug. The company previously settled with

Mylan Laboratories

(MYL) - Get Report

,

Teva Pharmaceutical Industries

(TEVA) - Get Report

and

Ranbaxy Laboratories

of India.

However, the company also said Wednesday that the Food and Drug Administration will take an extra three months before making a decision on whether to approve Nuvigil. The FDA had been expected to act by Jan. 31. Both Nuvigil and Provigil are for sleep disorders, while Actiq is for treating pain caused by cancer.

"We will continue to work closely with the FDA to assist them in completing their review of our application in a timely manner and do not anticipate any further delays beyond the April 30 action date," Cephalon said. "As pioneers in the development of wake-promoting agents, we are excited about the opportunity to bring Nuvigil to market in the middle of this year."

Cephalon filed a new drug application for Nuvigil last March. At the FDA's request, the company submitted additional information this past October. The FDA has told the company that the newer submission has been classified as a major amendment to the original application, which enables the agency to extend the action date by 90 days.

But overshadowing that announcement was word that Cephalon will grant Barr a nonexclusive royalty-bearing right to market and sell a generic version of Provigil in the U.S. under a license slated to become effective in October 2011. Barr can sell a generic earlier if another company starts selling an off-brand version of the drug.

As investors learned Cephalon had moved to secure its Provigil stake, its shares jumped. Lately, the stock was gaining $7.01, or 9.9%, to $77.51 in active after-hours trading.

"While we remain confident in the strength of the Provigil patent, we believe that with these settlements we have struck an appropriate balance between protecting our intellectual property rights and providing more certainty to our business through at least 2011," said John E. Osborn, senior vice president and general counsel.

Barr also agreed to grant Cephalon a nonexclusive license, effective immediately, to certain worldwide intellectual property rights related to modafinil in exchange for an upfront payment. Modafnil is the active ingredient in Provigil. Additionally, Cephalon will buy some existing and in-process inventory.

Regarding Actiq, Cephalon will give Barr the exclusive right to market and sell a generic version of the drug in the U.S. effective Dec. 6.

Financial terms of the agreements weren't disclosed.

Cephalon also repeated its plan, first disclosed last week, to issue new guidance for 2006 on Feb. 14. This time though, the company said it expects to report a "modest increase" in its forecast. The company previously said 2006 sales would be in the range of $1.35 billion to $1.40 billion while earnings, before items, would be $2.90 to $3 a share.