Cephalon's Long Shot Falls Short

Cephalon (Nasdaq: CEPH  ) tried and failed yesterday to convince an FDA advisory panel to approve broader use of its lead pain drug, Fentora.

Fentora is already approved as a treatment for cancer patients who have become unresponsive to other opioid pain medications, to which they can develop a tolerance over time. In a 17-to-3 vote, the FDA advisory panel recommended against approving the oral opioid fentanyl for the much broader chronic pain population because of the risk that it could be misused.

Cephalon already had to send out a dear doctor letter regarding Fentora last year after some patients misused it (or doctors wrongly prescribed it), resulting in serious injuries and death. Considering this fact, the advisory panel's negative opinion wasn't a big surprise. The FDA will likely reject Cephalon's proposed expanded label for the drug when it comes up for review in early September.

Fentora sales totaled $135 million last year, and $39 million in the first quarter this year. Cephalon hopes Fentora will replace sales of its other fentanyl painkiller Actiq, which started facing generic competition from Barr Pharmaceuticals (NYSE: BRL  ) in late 2006.

Considering that Fentora is already heavily used off-label, this negative panel recommendation and probable upcoming FDA rejection won't kill its sales growth. However, the limitation should prevent Fentora from earning anything as grand as the $572 million that Actiq brought in during its heyday in 2006.


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