By Brady Huggett

Cephalon Inc. raised $300 million through a private placement of convertible subordinated notes Wednesday. Combined with a $100 million option, the company now has a potential $400 million to chase deals.

¿What this means is that this adds another $300 million to our cash position and it will enable us to pursue acquisitions and licensing agreement strategies,¿ said MaryBeth Alvin, director of investor relations at Cephalon. ¿It¿s hard to say how quickly it will be used. It depends on what we do with it.¿

Due 2006, the notes carry a rate of 5.25 percent. The offering was made through initial purchasers to institutional buyers, and is expected to close Monday. Cephalon granted initial purchasers a 45-day option to buy an additional $100 million in aggregate principal amount of notes, convertible into Cephalon common stock at $74 per share, subject to adjustment in certain circumstances.

The company¿s shares (NASDAQ:CEPH) dropped $5.68 Wednesday, or about 8.5 percent, to close at $60.90. It has traded between $36.375 and $83.625 in the past 52 weeks.

Cephalon will provide its quarterly figures next week, but the company had about $97.4 million in cash at year¿s end, with about 41 million shares outstanding.

Cephalon, of West Chester, Pa., has several products on the market. Provigil, approved for excessive daytime sleepiness, is the subject of ongoing trials for obstructive sleep apnea, sleep disorders for those scheduled on non-typical work shifts, multiple sclerosis fatigue, sleepiness related to Parkinson¿s and Alzheimer¿s disease, and as an antidepressant augmentation.

Provigil failed in a Phase II study as a treatment for attention deficit disorder in adults in the summer, driving Cephalon¿s stock down $24, or about 38 percent, on the day, but it recorded $72.1 million in sales for 2000, a 184 percent increase over 1999. (See BioWorld Today, August 1, 2000.)

Cephalon picked up complete ownership of Gabitril, an anti-epileptic drug, from Abbott Laboratories, of Abbott Park, Ill., for more than $100 million in November. Alvin said Cephalon is looking at the product as a mood stabilizer for the treatment of anxiety, bipolar disorder and agitation. It has shown potential, she said, as a treatment for neuropathic pain, migraine headaches, spasticity and infantile spasms. Overall, the drug did $23 million in sales last year, with $4 million of that total since Cephalon stepped in and took complete control. (See BioWorld Today, Nov. 2, 2000.)

Its product Actiq, approved to treat breakthrough cancer pain, did $15 million in sales in 2000. Actiq is notable for its delivery method, Alvin said.

¿It¿s essentially a lozenge on a handle,¿ she said. ¿You rub it on the inside of the cheek. It empowers the patients to manage their own pain relief.¿

Cephalon has the compound CEP-701 in Phase II trials for prostate cancer and Phase I for pancreatic cancer. Also, it has CEP-1347 in Phase I trials for Parkinson¿s disease, with Phase II trials expected to begin this year. When CEP-701 might make the jump to Phase III is not yet clear, Alvin said.

¿It¿s still too early,¿ Alvin told BioWorld Today. ¿We won¿t have results from this Phase II data until late summer or early fall of 2001.¿

This could be a banner year for Cephalon, Alvin said.

¿We are headed to profitability this year,¿ she said. ¿We are shooting for 10 cents per share, and we reiterated our product sales goals of $200 million [for 2001].¿

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