Cephalon books 3rd-qtr net; settlement cost fades

FRAZER, Pa. - Drugmaker Cephalon Inc. said Tuesday it swung to a profit in the third quarter as its sales increased and the cost of settling a government probe came off its books.

Cephalon reported net income of $112 million, or $1.42 per share, compared with a net loss of $306.8 million, or $4.58 per share, a year earlier. Revenue increased almost 14 percent, to $498.5 million from $438.4 million, as revenue from its central nervous system business grew.

The company received a tax benefit of $62.4 million in the latest quarter.

A year earlier, Cephalon set aside $369 million as it prepared to settle an investigation with the federal government. The company paid $425 million after the U.S. Department of Justice investigated the way the company sold and marketed three drugs — cancer pain drug Actiq, epilepsy drug Gabitril and narcolepsy drug Provigil — in diseases they had not been approved to treat.

Analysts had expected an average profit of $1.22 per share in the latest period and $499.6 million in revenue, according to Thomson Reuters.

In the third quarter, the company said revenue from the CNS business grew 19 percent to $273.7 million. Sales of pain drugs slipped 4 percent, to $117.2 million, as Cephalon's new muscle relaxant Amrix couldn't make up for weaker sales of the painkiller Fentora and Actiq.

Amrix sales grew 20 percent from the second quarter, reaching $20.5 million, Cephalon said. Sales of Treanda, a leukemia drug, reached $24.6 million, up 71 percent from the second quarter. Sales of cancer drugs more than doubled to $52.4 million, the company said.

Cephalon raised its 2008 forecast and gave an optimistic look at 2009.

In after-hours trading, Cephalon shares rose $1.25, or 1.8 percent, to $69.55. They closed at $68.30, up $3.52, or 5.4 percent, in regular trading.

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