Cephalon Inc. (CEPH) suffered a setback recently with its label expansion plans for its sleep disorder drug Nuvigil. Cephalon reported disappointing results from a Phase II study that was conducted to evaluate Nuvigil as an adjunctive therapy for the treatment of the negative symptoms of schizophrenia.
Results showed that Nuvigil was not more effective than placebo in reducing the severity of the negative symptoms of schizophrenia. Based on these results, Cephalon has decided that it will not go ahead with the development of the product for this indication.
Nuvigil (armodafinil) is a follow-on version of Provigil (modafinil), which contributed about 48% to revenues in 2009. Cephalon received the US Food and Drug Administration (FDA) approval for Nuvigil in June 2007 for the treatment of excessive sleepiness associated with obstructive sleep apnea/hypopnea syndrome (OSAHS), narcolepsy and shift work sleep disorder (SWSD).
Cephalon launched Nuvigil in June 2009 and is promoting the product aggressively. The company has taken several initiatives to ensure the smooth transition of users to Nuvigil, which has been priced at a significant discount to Provigil. Sales came in at $79.4 million in 2009.
Cephalon is looking to maximize market penetration ahead of the entry of generic versions of Provigil in 2012. Several generic players including Mylan Labs (MYL) and Teva (TEVA) are seeking to launch generic versions of Provigil. Teva, Mylan, Watson Pharma (WPI) and a few other generic players are also looking to market a generic version of Nuvigil.
The company is seeking to expand Nuvigil’s label as this will help expand the market for the product and drive sales for the sleep disorder franchise. In addition to the schizophrenia indication, Cephalon is evaluating the product’s effectiveness in the treatment of traumatic brain injury, bipolar depression and jet lag disorder.
However, Cephalon has already faced a regulatory setback with the jet lag disorder indication earlier this year. The company failed to receive outright approval from the FDA for its supplemental new drug application (sNDA) for the jet lag indication.
Cephalon is now in discussions with the agency regarding the future regulatory path for the jet lag indication.
We currently have a Neutral recommendation on Cephalon. We expect investor focus to remain on Cephalon’s emerging oncology pipeline, Amrix, and the conversion of patients to Nuvigil.
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