Cephalon Inc. - which in January picked up an option to acquire Ception Inc. and in February licensed worldwide rights to Lupuzor from ImmuPharma plc - is showing no signs of slowing its spending.

On Friday, the Frazer, Pa.-based company moved to acquire Arana Therapeutics Ltd., an Australian biotech with a TNF-blocking antibody in Phase II trials for psoriasis and rheumatoid arthritis.

Cephalon is offering A$318 million (US$207 million), or A$1.40 per share, for Arana. That price represents a 70 percent premium to Arana's recent average, and it could increase to A$1.45 per share if Cephalon obtains a relevant interest in 90 percent of Arana's shares and the offer conditions are satisfied or waived. In that case, the total deal value would be A$329 million.

Arana's independent directors support the transaction, which will be recommended to shareholders. Cephalon already has acquired a 19.9 percent ownership position in Arana by buying shares for A$1.40 from two of the company's largest investors.

Cephalon is funding the transaction from its existing cash balance, which totaled $524.5 million as of Dec. 31, 2008. The company posted net income of $222.5 million for the year, thanks to revenues of $1.97 billion from products such as sleep disorder drug Provigil (modafinil), muscle relaxant Amrix (cyclobenzaprine hydrochloride), seizure drug Gabitril (tiagabine), pain drugs Actiq (oral transmucosal fentanyl citrate) and Fentora (fentanyl buccal tablet), and cancer drugs Treanda (bendamustine hydrochloride) and Trisenox (arsenic trioxide).

Despite its wealth of marketed products and strong analyst expectations that soon-to-be-launched sleep disorder drug Nuvigil (armodafinil) will take the top spot once Provigil goes generic, Cephalon's late-stage pipeline is somewhat less robust. The company has several trials seeking to expand its existing drugs into new indications, but it has fewer novel compounds like CEP-701, which is in Phase II/III trials for acute myeloid leukemia.

But Cephalon is using its cash to address that issue. Last November the company paid $15 million up front to London-based ImmuPharma as part of a potential $500 million deal for the Phase IIb lupus drug, Lupuzor. Cephalon paid another $30 million in February to exercise its option to the compound and plans to start Phase III trials this year. (See BioWorld Today, Nov. 26, 2008.)

And in January, Cephalon paid a hefty $100 million up front for the option to acquire Malvern, Pa-based Ception Inc. for another $250 million. Ception's main asset, reslizumab, is in Phase IIb/III trials for pediatric eosinophilic esophagitis. (See BioWorld Today, Jan. 15, 2009.)

Both the Lupuzor and reslizumab deals give Cephalon a late-stage anti-inflammatory biologic: Lupuzor is an immune-modulating small peptide, while reslizumab is a humanized monoclonal antibody against interleukin-5.

The Arana deal follows suit on both counts. The company's lead product, ART621, is an anti-TNF alpha antibody in Phase II trials for psoriasis and rheumatoid arthritis.

ART621 - and Arana itself - have a history in the antibody field. Arana was formed through the merger of Australian antibody companies Peptech Ltd. and EvoGenix Ltd. Peptech previously had gained two preclinical antibody candidates through its acquisition of Nottingham, UK-based Scancell Ltd., and EvoGenix added two antibody platform technologies to the mix. (See BioWorld Today, May 8, 2007.)

But perhaps most importantly, Peptech held a stake in Cambridge, UK-based Domantis Ltd. When Domantis was acquired by GlaxoSmithKline plc for $454 million, Peptech relinquished its interest but kept the lead domain antibody from Domantis' platform: ART621. (See BioWorld Today, Dec. 11, 2006.)

Arana's patent portfolio around ART621 and anti-TNF alpha antibodies entitles it to royalties on approved TNF alpha blockers like Remicade (infliximab, Centocor Inc.) and Humira (adalimumab, Abbott). Cephalon said those royalties would largely offset ART621's development costs in the near term.

Shares of Cephalon (NASDAQ:CEPH) dipped $1.89 to close at $65.59 on Friday.