Cephalon off to Record Start in 2010

Wednesday, May 5, 2010 Drug News
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FRAZER, Pa., May 4 Cephalon, Inc. (Nasdaq: CEPH) today reported first quarter 2010 sales of $576.7 million, a 12 percent increase compared to sales of $514.4 million for the first quarter 2009. Basic income per common share for the quarter was $1.47. Excluding amortization expense and certain other items, basic adjusted income per common share for the quarter was $1.92, an increase of 31 percent over the comparable figure of $1.47 for the same period in 2009. Adjusted net income for the first quarter of 2010 was $144.0 million, a 42 percent increase over the comparable $101.1 million for the first quarter of 2009. This exceeded the high end of the company's adjusted net income guidance range by $16 million.

Central nervous system (CNS) franchise sales were $307.1 million during the quarter, a 14 percent increase compared to the same period last year. Pain franchise reported sales of $113.6 million, a 7 percent decrease versus first quarter 2009. Oncology franchise sales were $110.0 million, a 44 percent increase over the same period last year due to strong sales of TREANDAŪ (bendamustine hydrochloride).

"We are off to a great start in 2010," said Frank Baldino, Jr., Ph.D., Chairman and CEO. "TREANDA is now our fastest growing product with sales increasing 62% over the first quarter of 2009. Our diversified product portfolio generated record cash from operations during the quarter. This global portfolio coupled with our strong pipeline will continue to drive long term growth for the company."

Cephalon anticipates additional costs to its business as a result of the recently enacted health care reform legislation. For 2010 and 2011, we expect approximately $7 to $11 million in additional expenses associated with an increase in Medicaid discounts. The initial financial impact is captured in our first quarter results and the full-year impact is reflected in our revised 2010 financial guidance. Starting in 2011, we expect approximately $11 to $19 million in additional expenses as the annual tax for government sales and Medicare Part D coverage gap provision becomes effective.

The company is updating its guidance for 2010. Total sales guidance is $2.610-$2.690 billion. This includes CNS franchise sales of $1.22-$1.26 billion, pain franchise sales of $455-$490 million, oncology franchise sales of $460-$490 million, and other product sales of $450-$470 million. Full year R&D and SG&A guidance is $480-$500 million and $910-$930 million, respectively. Adjusted net income guidance is increased to $530-$545 million and basic adjusted income per common share guidance is increased to $7.00-$7.20 assuming 75.7 million basic shares outstanding.

For the second quarter 2010, Cephalon is introducing sales guidance of $645-$670 million, adjusted net income guidance of $124.6-$132.1 million and basic adjusted income per common share guidance of $1.65-$1.75.

Basic adjusted income per common share guidance for both the second quarter 2010 and full-year 2010 is reconciled below and is subject to the assumptions set forth therein. References in this press release to basic income per common share, basic adjusted income per common share, basic adjusted income per common share guidance, adjusted net income, adjusted net income guidance, adjusted net income per common share, adjusted net income per common share guidance refers to those metrics on an "attributable to Cephalon" basis and does not include any income or losses attributable to noncontrolling interests.

Cephalon's management will discuss the company's first quarter 2010 performance in a conference call with investors beginning at 5:00 p.m. U.S. EDT today. To participate in the conference call, dial +1-913-981-4915 and refer to conference code number 3364849. Investors can listen to the call live by logging on to the company's website at www.cephalon.com and clicking on "Investor Information," then "Webcast." The conference call will be archived and available to investors for one week after the call.

About Cephalon, Inc.

Cephalon is a global biopharmaceutical company dedicated to discovering, developing and bringing to market medications to improve the quality of life of individuals around the world. Since its inception in 1987, Cephalon has brought first-in-class and best-in-class medicines to patients in several therapeutic areas. Cephalon has the distinction of being one of the world's fastest-growing biopharmaceutical companies, now among the Fortune 1000 and a member of the S&P 500 Index, employing approximately 4,000 people worldwide. The company sells numerous branded and generic products around the world. In total, Cephalon sells more than 150 products in nearly 100 countries. More information on Cephalon and its products is available at http://www.cephalon.com

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon's current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; sales, adjusted net income and basic adjusted income per common share guidance for the second quarter 2010 and full-year 2010 and SG&A and R&D guidance for the full-year 2010; and other statements regarding matters that are not historical facts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. Cephalon's performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.

This press release and/or the financial results attached to this press release include "Adjusted Net Income," "Basic Adjusted Income per Common Share," "Adjusted Net Income Guidance," "Basic Adjusted Income per Common Share Guidance," and "Diluted Adjusted Income Per Common Share," amounts that are considered "non-GAAP financial measures" under SEC rules. As required, we have provided reconciliations of these measures. Additional required information is located in the Form 8-K furnished to the SEC in connection with this press release.

Contacts: Media: Investors: Sheryl Williams Robert (Chip) Merritt 610-738-6493 610-738-6376 swilliam@cephalon.com cmerritt@cephalon.com

SOURCE Cephalon, Inc.

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