Cephalon shares fall ahead of FDA panel on pain drug Fentora

The drug is approved to treat severe pain flare-ups in cancer patients, but Cepahlon is seeking expanded approval to market the drug as a chronic pain treatment.

Cephalon shares shed $2.68, or 4.3 percent, to $60.71 in midday trading on higher than average volume. The stock has traded between $56.20 and $84.83 over the last 52 weeks.

In briefing documents for the Tuesday meeting the FDA said it wants the advisory panel to address several concerns, including the actual medical need for the drug as a chronic pain treatment and the need for a risk-management plan. Fentora has a high potential for abuse, as it is an opioid pain medicine and can be highly addictive.

Wall Street is mixed on the potential for an approval by the previously scheduled date of Sept. 13.

"Our initial read of the documents suggest the FDA has set a high bar for approval for this indication, in line with our expectations," said Cowen and Co. analyst Eric Schmidt, in a note to investors.

He has not included chronic pain sales of Fentora in his estimates for 2008 to 2012 and said downside would be otherwise limited if the FDA does not approve the new indication. He reaffirmed a "Outperform" rating.

"Although Cephalon's shares may remain choppy around the panel review, we expect the launch of (cancer drug) Treanda and (muscle relaxant) Amrix, coupled with steady performance from the central nervous systemn and pain franchises to drive stock outperformance," he said.

Meanwhile, Banc of America Securities analyst Frank H. Pinkerton viewed the meeting topics as favorable for Cephalon and expects approval to boost sales of the drug during the second quarter. Still, he is maintaining a "Neutral" rating on the stock.

Fentora sales rose 23 percent to $38.9 milliion during the first quarter. The key driver of the Frazer, Pa.-based company's profit, though, was the excessive sleepiness drug Provigil, which gained 6 percent to $213.2 million. It helped push profit above Wall Street forecasts.