Cephalon Drops Jet Lag Indication - Analyst Blog

Cephalon Inc. (CEPH) recently announced that it no longer intends to pursue for the approval of Nuvigil for the treatment of patients with excessive sleepiness associated with jet lag disorder resulting from eastbound travel. The company arrived at this decision following the receipt of a second complete response letter (CRL) from the US Food and Drug Administration (FDA).

Nuvigil (armodafinil) is a follow-on version of Provigil (modafinil) which contributed about 48% to revenues in 2009. Cephalon received FDA approval for Nuvigil in June 2007 for the treatment of excessive sleepiness associated with obstructive sleep apnea/hypopnea syndrome (OSAHS), narcolepsy and shift work sleep disorder (SWSD).

Cephalon launched Nuvigil in June 2009 and is promoting the product aggressively. The company has taken several initiatives to ensure the smooth transition of users to Nuvigil, which has been priced at a significant discount to Provigil. 2009 sales came in at $79.4 million.

Cephalon has been looking to drive Nuvigil sales by gaining approval for additional indications like bipolar depression, schizophrenia, and excessive sleepiness associated with jet lag disorder. Unfortunately, Cephalon's efforts to expand Nuvigil's label have not met with much success.

Besides deciding to discontinue the development of Nuvigil for the jet lag disorder indication, Cephalon discontinued the development of Nuvigil for excessive sleepiness associated with traumatic brain injury due to poor enrolment.

Failure to receive approval for the jet lag disorder indication is a setback for Cephalon, which has been looking to maximize market penetration ahead of the entry of generic versions of Provigil in 2012. Several generic players including Mylan Labs (MYL) and Teva (TEVA) are seeking to launch generic versions of Provigil.  Moreover, generic companies like Teva, Watson Pharma (WPI), Mylan, Sandoz, Lupin Pharma and Actavis are also looking to market a generic version of Nuvigil.

Neutral on Cephalon

We currently have a 'Neutral' recommendation on Cephalon. While both 2012 and 2013 should be challenging years for the company due to the genericization of Provigil, we are pleased with Cephalon's efforts to reduce its dependence on its central nervous system franchise. Cephalon is looking to expand into new therapeutic areas to drive long-term growth and has been very active on the in-licensing/acquisition front over the past few quarters.

 
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