Analysts had barely enough time to cheer -- comments ranged from "impressive" to "home run" -- when Cephalon and the FDA announced a strengthening of warnings for Provigil on Oct. 24. The sleep-disorders drug accounted for $415.5 million, or 47% of corporate revenue, for the first half of 2007. Patients and doctors are being warned about a rare, dangerous and sometimes fatal skin rash and about some reports of psychiatric problems, such as hallucinations and suicidal thoughts.

The back-to-back revelations for Treanda and Provigil is just one example of why some analysts get queasy, or at least prefer to sit on the sidelines until the swirling sensation subsides.

"A good deal of uncertainty surrounds Cephalon's new drugs, and the failure of a few launches could change the face of the company," says Karen Yiu, of the independent research firm Morningstar, in a report to clients late last month.

She cut her fair value to $64 a share from $77, thanks primarily to the poor performance of the alcoholism treatment Vivitrol. Initially, she said Vivitrol could produce peak annual sales of $500 million, but now she says it may average $200 million a year.

Cephalon markets Vivitrol for its developer Alkermes ( ALKS). Vivitrol, a once-a-month injectable drug, was approved by the FDA in April 2006.

Although Cephalon has an "impressive" marketing record and roster of experimental drugs, Yiu worries about Nuvigil and Fentora. These drugs "may not succeed in the marketplace, and there is no guarantee that the firm's other drug programs will be able to pick up the slack if one of these drugs fails to live up to its potential," she says.

Fentora, approved by the FDA in September 2006, is the successor to Actiq. Both treat severe pain in cancer patients and both contain the powerful painkiller fentanyl.

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