The U.S. Food and Drug Administration (FDA) recently informed Cephalon, Inc. (CEPH) that it will require more time to review the supplemental new drug application (sNDA) submitted by the company for Nuvigil. Cephalon had filed the sNDA in June 2009, seeking to expand Nuvigil’s label as a treatment for improving wakefulness in patients with excessive sleepiness associated with jet lag disorder due to eastbound travel.

The FDA had initially granted priority review status to the candidate which means a decision would have been out by Dec 29, 2009. However, with the agency asking for additional review time, a decision is now expected by March 29, 2010.

Nuvigil (armodafinil) is a follow-on version of Provigil (modafinil) which contributed about 50% to revenues in 2008. Cephalon received 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.

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 is also looking to market a generic version of Nuvigil.

We believe Cephalon has ample time to switch users to Nuvigil and maintain growth of the sleep franchise. Besides this, approval for additional indications should help expand the market for the product and drive sales in the company’s sleep franchise.

In addition to the jet lag disorder indication, Cephalon is evaluating Nuvigil’s effectiveness for other indications like traumatic brain injury, restless leg syndrome, major depressive disorder, schizophrenia and fatigue associated with cancer. Cephalon intends to file three sNDAs for Nuvigil in the next five years.

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.

Zacks Investment Research

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