Cephalon said on Friday U.S. regulators are willing to approve the company's experimental new drug Nuvigil for excessive sleepiness, but will require it and the company's older Provigil treatment to carry prominent warnings of a skin-rash danger.
The U.S. Food and Drug Administration also asked for additional safety data collected on Nuvigil since the last update in June 2006.
Shares were seen trading almost 1.5% higher in the after-hours session.
The FDA granted the drug a so-called "approvable letter" -- meaning it can be approved once certain requirements are satisfied -- and provided Cephalon draft language for the product's package insert label.
"This is probably what most people were expecting," said Russell McAllister, an analyst at Merriman Curhan Ford, noting that the agency could have asked for a stronger "black box" warning on the drug or additional clinical trials.
Cephalon asked the FDA to approve Nuvigil to treat excessive sleepiness associated with narcolepsy, obstructive sleep apnea and sleepiness associated with shift work.
The company said it would submit additional safety data to the agency within 30 days and the FDA is expected to complete its review within 60 days after that.
"The draft labeling includes a proposed bolded warning section that characterizes the potential occurrence of skin rash and hypersensitivity in patients taking modafinil and armodafinil," Cephalon said in a release, referring, respectively, to the chemical names of Provigil and Nuvigil.
FDA's Nuvigil review was delayed by an investigation of side effects seen with Sparlon, Cephalon's related attention deficit disorder drug also known as modafinil.
Industry analysts have said the delays should have little impact on Nuvigil since the company is not planning to push it as a replacement for Provigil, which is still under patent protection until about 2010.
Cephalon had fended off competition from cheaper versions of Provigil by making deals with four generic drugmakers that had fought the drug's patents.
Cephalon is also planning to study Nuvigil's effect on fatigue and cognition.