`
`EXHIBIT 2013
`
`
`
`
`
`Use these links to rapidly review the document
`TABLE OF CONTENTS
`PART IV
`
`Table of Contents
`
`
`
`
`
`
`
`
`
`(Mark
`One)
`
`UNITED STATES
`SECURITIES AND EXCHANGE COMMISSION
` Washington, D.C. 20549
`
`FORM 10-K
`
`ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934
`
`For the fiscal year ended December 31, 2010
`
`or
`
`o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934
`
`For the transition period from to
`
`Commission File Number 000-19119
`
`Cephalon, Inc.
` (Exact Name of Registrant as Specified in Its Charter)
`
`
`
`
`
`Delaware
`(State or Other Jurisdiction of
`Incorporation or Organization)
`
`41 Moores Road
`P.O. Box 4011
`Frazer, Pennsylvania
`(Address of Principal Executive
`Offices)
`
`23-2484489
`(I.R.S. Employer
`Identification No.)
`
`19355
`(Zip Code)
`
`Registrant's telephone number, including area code: (610) 344-0200
`
`Securities registered pursuant to Section 12(b) of the Act:
`
`Title of each class
`Common Stock, par value $0.01 per
`share
`
`
`
`
`
`Name of each exchange on which registered
`
`NASDAQ Global Select Market
`
`Securities registered pursuant to Section 12(g) of the Act:
`
`None
`(Title of Class)
`
`Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o
`
`CEPHALON, INC. -- EXHIBIT 2013 0001
`
`
`
`Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý
`
`Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
`1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
`such filing requirements for the past 90 days. Yes ý No o
`
`Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
`required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
`shorter period that the registrant was required to submit and post such files). Yes ý No o
`
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
`to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any
`amendment to this Form 10-K. o
`
`Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
`See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.:
`
`Large accelerated filer ý
`
`Accelerated filer o
`
`Non-accelerated filer o
`(Do not check if a
`smaller reporting company)
`
`
`
`Smaller reporting company o
`
`Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý
`
`The aggregate market value of the voting stock held by non-affiliates of the registrant, as of June 30, 2010, was approximately $3.1 billion. Such
`aggregate market value was computed by reference to the closing price of the Common Stock as reported on the NASDAQ Global Select Market on
`June 30, 2010. For purposes of making this calculation only, the registrant has defined affiliates as including only directors and executive officers
`and shareholders holding greater than 10% of the voting stock of the registrant as of June 30, 2010.
`
`The number of shares of the registrant's Common Stock outstanding as of February 4, 2011 was 75,730,236.
`
`DOCUMENTS INCORPORATED BY REFERENCE
`
`Portions of the registrant's definitive proxy statement for its 2011 annual meeting of stockholders are incorporated by reference into Items 10, 11, 12,
`13, and 14 of Part III of this Form 10-K.
`
`
`
`CEPHALON, INC. -- EXHIBIT 2013 0002
`
`
`
`
`
`Table of Contents
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`
`
`
` Cautionary Note Regarding Forward-Looking Statements
`
` Business
` Risk Factors
` Unresolved Staff Comments
` Properties
` Legal Proceedings
` Removed and Reserved
`
` PART I
`
` PART II
`
` Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
`Equity Securities
` Selected Financial Data
` Management's Discussion and Analysis of Financial Condition and Results of Operations
` Quantitative and Qualitative Disclosures About Market Risk
` Financial Statements and Supplementary Data
` Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
` Controls and Procedures
`
` PART III
`
` Directors, Executive Officers and Corporate Governance
` Executive Compensation
` Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
`Matters
` Certain Relationships and Related Transactions, and Director Independence
` Principal Accountant Fees and Services
`
` PART IV
`
`
`
` Item 1.
` Item 1A.
` Item 1B.
` Item 2.
`
` Item 3.
`
` Item 4.
`
`
`
`
` Item 5.
`
`
` Item 6.
`
` Item 7.
` Item 7A.
` Item 8.
`
` Item 9.
`
` Item 9A.
`
`
`
` Item 10.
` Item 11.
` Item 12.
`
` Item 13.
` Item 14.
`
`
`
` Item 15.
`
` Exhibits and Financial Statement Schedules
`
` SIGNATURES
`
`i
`
` Page
`
`
`
`
`
`
`ii
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1
`18
`32
`32
`33
`33
`
`
`36
`
`38
`
`40
`
`74
`
`75
`
` 145
` 145
`
`
` 146
` 146
`
` 146
` 146
` 146
`
`
` 147
`
` 161
`
`CEPHALON, INC. -- EXHIBIT 2013 0003
`
`
`
`
`
`Table of Contents
`
`
`CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
`
`
`In addition to historical facts or statements of current condition, this report and the documents into which this report is and will be incorporated
`contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
`Exchange Act of 1934, as amended. Forward-looking statements contained in this report or incorporated herein by reference constitute our
`expectations or forecasts of future events as of the date this report was filed with the Securities and Exchange Commission and are not statements
`of historical fact. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may
`include words such as "anticipate," "will," "estimate," "expect," "project," "intend," "should," "plan," "believe," "hope," and other words and
`terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, strategic initiatives
`and business strategies, regulatory or competitive environments, our intellectual property and product development. In particular, these forward-
`looking statements include, among others, statements about:
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`our dependence on sales of PROVIGIL® (modafinil) Tablets [C-IV] and NUVIGIL® (armodafinil) Tablets [C-IV] in the United States
`and the market prospects and future marketing efforts for PROVIGIL, NUVIGIL, FENTORA® (fentanyl buccal tablet) [C-II],
`AMRIX® (cyclobenzaprine hydrochloride extended-release capsules) and TREANDA® (bendamustine hydrochloride);
`
`any potential approval of our product candidates, including with respect to any expanded indications for TREANDA, NUVIGIL
`and/or FENTORA;
`
`our anticipated scientific progress in our research programs and our development of potential pharmaceutical products including our
`ongoing or planned clinical trials, the timing and costs of such trials and the likelihood or timing of revenues from these products, if
`any;
`
`our ability to adequately protect our technology and enforce our intellectual property rights and the future expiration of patent
`and/or regulatory exclusivity on certain of our products;
`
`our ability to comply fully with the terms of our settlement agreements (including our Corporate Integrity Agreement) with the U.S.
`Attorney's Office ("USAO"), the U.S. Department of Justice ("DOJ"), the Office of the Inspector General of the Department of Health
`and Human Services ("OIG") and other federal government entities, the Offices of the Attorneys General of Connecticut and
`Massachusetts and the various states;
`
`our ongoing litigation matters, including the patent infringement lawsuits and other proceedings described in Note 18 to our
`Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by
`reference;
`
`our future cash flow, our ability to service or repay our existing debt and our ability to raise additional funds, if needed, in light of
`our current and projected level of operations, acquisition activity and general economic conditions; and
`
`other statements regarding matters that are not historical facts or statements of current condition.
`
`Any or all of our forward-looking statements in this report and in the documents we have referred you to may turn out to be wrong. They can be
`affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Therefore, you should not place undue
`reliance on any such
`
`ii
`
`CEPHALON, INC. -- EXHIBIT 2013 0004
`
`
`
`
`
`Table of Contents
`
`forward-looking statements. The factors that could cause actual results to differ from those expressed or implied by our forward-looking statements
`include, among others:
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`•
`
`the acceptance of our products by physicians and patients in the marketplace, particularly with respect to our recently launched
`products;
`
`our ability to obtain regulatory approvals to sell our product candidates, including any additional future indications for TREANDA,
`FENTORA and NUVIGIL, and to launch such products or indications successfully;
`
`scientific or regulatory setbacks with respect to research programs, clinical trials, manufacturing activities and/or our existing
`products;
`
`the timing and unpredictability of regulatory approvals;
`
`unanticipated cash requirements to support current operations, expand our business or incur capital expenditures;
`
`a finding that our patents are invalid or unenforceable or that generic versions of our marketed products do not infringe our patents
`or the "at risk" launch of generic versions of our products;
`
`the loss of key management or scientific personnel;
`
`the activities of our competitors in the industry;
`
`regulatory, legal or other setbacks or delays with respect to the settlement agreements with the USAO, the DOJ, the OIG and other
`federal entities, the state settlement agreements and Corporate Integrity Agreement related thereto, the settlement agreements with
`the Offices of the Attorneys General of Connecticut and Massachusetts, our settlements of the PROVIGIL patent litigation and the
`ongoing litigation related to such settlements, and the patent infringement lawsuits and other proceedings described in Note 18 to
`our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein
`by reference;
`
`our ability to integrate successfully technologies, products and businesses we acquire and realize the expected benefits from those
`acquisitions, including our recent acquisitions of Mepha GmbH ("Mepha"), Ception Therapeutics, Inc. ("Ception") and BioAssets
`Development Corporation, Inc. ("BDC"), our investment in ChemGenex Pharmaceuticals Limited ("ChemGenex"), and our strategic
`alliance with Mesoblast Ltd. ("Mesoblast");
`
`adverse decisions of government entities and third-party payers regarding reimbursement for our products;
`
`unanticipated conversion of our convertible notes by our note holders;
`
`market conditions generally or in the biopharmaceutical industry that make raising capital or consummating acquisitions difficult,
`expensive or both;
`
`the effect of volatility of currency exchange rates; and
`
`enactment of new government laws, regulations, court decisions, regulatory interpretations or other initiatives that are adverse to us
`or our interests.
`
`We do not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required
`by law. We discuss in more detail the risks that we anticipate in Part I, Item 1a of this Annual Report on Form 10-K. This discussion is permitted by
`the Private Securities Litigation Reform Act of 1995.
`
`iii
`
`CEPHALON, INC. -- EXHIBIT 2013 0005
`
`
`
`
`
`Table of Contents
`
` ITEM 1. BUSINESS
`
`
`Overview
`
`
`PART I
`
`
`Cephalon is a global biopharmaceutical company dedicated to discovering, developing and bringing to market medications to improve the quality
`of life of individuals around the world. Since its inception in 1987, Cephalon's strategy is to bring first-in-class and best-in-class medicines to
`patients in several therapeutic areas, with a particular focus on central nervous system ("CNS") disorders, pain, oncology, inflammatory disease
`and regenerative medicine. We market numerous branded and generic products around the world. In total, Cephalon sells more than 150 products in
`nearly 100 countries. Consistent with our core therapeutic areas, we have aligned our approximately 735-person U.S. field sales and sales
`management teams by area. We have a sales and marketing organization numbering approximately 660 persons that supports our presence
`throughout Europe, the Middle East and Africa. For the year ended December 31, 2010, our total revenues and net income attributable to Cephalon,
`Inc. were $2.8 billion and $425.7 million, respectively. Our revenues from U.S. and European operations are detailed in Note 21 to our Consolidated
`Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
`
`On December 16, 2010, our founder, Chairman and Chief Executive Officer, Dr. Frank Baldino, Jr. passed away. J. Kevin Buchi, formerly our Chief
`Operating Officer, was named Chief Executive Officer by our Board of Directors (the "Board") on December 21, 2010. On February 1, 2011, our Board
`named William P. Egan, an independent member of the Board since 1988 and formerly the Board's presiding director, as Chairman of the Board.
`
`During 2010, we completed certain transactions intended to build a portfolio of marketed and potential products, including:
`
`•
`
`•
`
`•
`
`•
`
`•
`
`entry into a strategic alliance with Mesoblast Ltd., an Australian public company, to develop and commercialize novel adult
`Mesenchymal Precursor Stem Cell ("MPC") therapeutics for degenerative conditions of the cardiovascular and central nervous
`systems and for augmenting hematopoietic stem cell transplantation in cancer patients;
`
`entry into a convertible note subscription agreement and option agreement with ChemGenex Pharmaceuticals Limited, an Australian-
`based oncology focused biopharmaceutical company to fund clinical activities to complete a planned New Drug Application
`submission to the U.S. Food and Drug Administration for omacetaxine for the treatment of chronic myelogenous leukemia ("CML")
`patients who have failed two or more tyrosine kinase inhibitor ("TKIs");
`
`acquisition of Mepha GmbH, a privately-held, Swiss-based pharmaceutical company that markets branded and non-branded
`generics as well as specialty products in more than 50 countries;
`
`acquisition of BioAssets Development Corporation, a privately-held company, whose intellectual property estate covers the use of
`cytokine inhibitors, including TNF inhibitors, for sciatic pain in patients with intervertebral disk herniation, as well as other spinal
`disorders; and
`
`acquisition of Ception Therapeutics, Inc., a privately-held biotechnology company, whose lead product, CINQUIL™ (reslizumab), a
`humanized monoclonal antibody compound, entered into Phase III studies for patients with eosinophilic asthma in late 2010.
`
`For more information regarding these transactions, please see Note 2 to our Consolidated Financial Statements included in Part II, Item 8 of the
`Annual Report on Form 10-K.
`
`We have significant discovery research programs focused on developing oncology and inflammatory disease therapeutics. Our oncology
`technology principally focuses on an understanding of kinases and proteases and the role they play in cellular integrity survival and proliferation.
`We have coupled this
`
`1
`
`CEPHALON, INC. -- EXHIBIT 2013 0006
`
`
`
`
`
`Table of Contents
`
`knowledge with a library of novel, small, orally-active synthetic molecules that inhibit the activities of specific kinases. We also have reinforced our
`commitment to the treatment of inflammatory diseases through the use of biologics. Our entry into the biologics space combined with our efforts
`with our small molecule products creates opportunities to address unmet medical needs. We also work with our collaborative partners to provide a
`more diverse therapeutic breadth and depth to our research efforts.
`
`As a biopharmaceutical company, we are or may become a party to litigation in the ordinary course of our business, including, among others,
`matters alleging employment discrimination, product liability, patent or other intellectual property rights infringement, patent invalidity or breach of
`commercial contract. In particular, our future success is highly dependent on obtaining and maintaining patent protection or regulatory exclusivity
`for our products and technology. In that regard, we are currently engaged in lawsuits with respect to generic company challenges to the validity
`and/or enforceability of our patents covering AMRIX, FENTORA, PROVIGIL and NUVIGIL. We intend to vigorously defend the validity, and
`prevent infringement, of our patents. The loss of patent protection or regulatory exclusivity on any of our existing products, whether by third-party
`challenge, invalidation, circumvention, license or expiration, could materially impact our results of operations. We are also engaged in litigation with
`the U.S. Federal Trade Commission ("FTC") and various private plaintiffs, including proposed class actions, regarding our PROVIGIL patent
`settlement agreements with certain generic pharmaceutical companies. We believe the FTC and private complaints are without merit. While we
`intend to vigorously defend ourselves in our patent and FTC litigations, these efforts will be both expensive and time consuming and, ultimately,
`due to the nature of litigation, there can be no assurance that these efforts will be successful. For more information regarding the legal proceedings
`described in this Overview and others, please see Note 18 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report
`on Form 10-K, which is incorporated herein by reference.
`
`For additional information regarding our product revenues, other revenues and geographic areas in which we operate, see Note 21 to our
`Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
`
`We are a Delaware corporation with our principal executive offices located at 41 Moores Road, P.O. Box 4011, Frazer, Pennsylvania 19355. Our
`telephone number is (610) 344-0200 and our web site address is http://www.cephalon.com. Our research and development headquarters are in West
`Chester, Pennsylvania and we also have offices in Wilmington, Delaware, Salt Lake City, Utah, suburban Minneapolis-St. Paul, Minnesota, France,
`the United Kingdom, Ireland, Denmark, Germany, Italy, the Netherlands, Poland, Spain, Switzerland, Australia, Hong Kong and certain other
`countries. We have manufacturing facilities in France for the production of certain products. We also have manufacturing facilities in Salt Lake City,
`Utah, for the production of FENTORA, EFFENTORA, ACTIQ and generic OTFC for worldwide distribution and sale, and Eden Prairie and Brooklyn
`Park, Minnesota, for the production of orally disintegrating versions of drugs for pharmaceutical company partners.
`
`Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports are available
`free of charge through the Investor Information section of our web site as soon as reasonably practicable after such material is electronically filed
`with or furnished to the Securities and Exchange Commission. We include our web site address in this Annual Report on Form 10-K only as an
`inactive textual reference and do not intend it to be an active link to our web site. The contents of our corporate website are not incorporated into
`this Annual Report on Form 10-K.
`
`2
`
`CEPHALON, INC. -- EXHIBIT 2013 0007
`
`
`
`
`
`Table of Contents
`
`Selected Products
`
`NUVIGIL
`
`NUVIGIL, a single-isomer formulation of modafinil, is indicated for the treatment of excessive sleepiness associated with narcolepsy, obstructive
`sleep apnea/hypopnea syndrome ("OSA/HS") and shift work sleep disorder ("SWSD") and was launched in June 2009. NUVIGIL comprised 7% and
`3% of our total consolidated net sales for the years ended December 31, 2010 and 2009, respectively, all in the U.S. market.
`
`In March 2009, we announced positive results from a Phase II clinical trial of NUVIGIL as adjunctive therapy for treating major depressive disorder
`in adults with bipolar I disorder. We have initiated two Phase III clinical trials, which we expect to complete in late 2011 or early 2012 and will initate a
`third in 2011, which we expect to complete in late 2012 or early 2013. In June 2010, we announced that the primary endpoint was not met for a Phase
`II study of NUVIGIL as an adjunctive therapy for the treatment of the negative symptoms of schizophrenia. In 2010, we also decided to discontinue
`our clinical studies regarding NUVIGIL as a treatment of traumatic brain injury due to slow patient enrollment. In December 2010, we announced that
`we will not pursue further a jet lag indication for NUVIGIL. In January 2011, we announced positive results from a phase IV clinical trial of NUVIGIL
`in patients experiencing excessive sleepiness associated with shift work disorder, specifically during the end of their night shifts (i.e., 4:00 a.m. to
`8:00 a.m.), including the commute home. The study data showed statistically significant improvement in overall clinical condition related to late-shift
`sleepiness in patients receiving NUVIGIL compared to the placebo group. This was the largest trial ever conducted in this patient population, with
`more than 380 patients randomized to treatment with NUVIGIL or placebo.
`
`In clinical studies, NUVIGIL was generally well-tolerated. The most common side effects were mainly mild to moderate in severity and included
`nausea, headaches, dizziness, diarrhea, decreased appetite and upset stomach.
`
`PROVIGIL
`
`PROVIGIL is indicated for the treatment of excessive sleepiness associated with narcolepsy, OSA/HS and SWSD and was launched in 1999.
`PROVIGIL comprised 41% and 48% of our total consolidated net sales for the years ended December 31, 2010 and 2009, respectively, of which 94%
`was in the U.S. market for each year. We expect that PROVIGIL will face generic competition in the United States beginning in April 2012 and, as a
`result, PROVIGIL sales will materially decline. In clinical studies, PROVIGIL was generally well-tolerated, with a low incidence of adverse events
`relative to placebo. The most commonly observed adverse events were headache, infection, nausea, nervousness, anxiety and insomnia.
`
`Outside of the U.S., modafinil currently is approved in more than 30 countries, including France, the United Kingdom, Ireland, Italy and Germany,
`for the treatment of excessive daytime sleepiness associated with narcolepsy. In certain of these countries, we also have approval to market
`modafinil to treat excessive daytime sleepiness in patients with OSA/HS and/or SWSD.
`
`GABITRIL
`
`GABITRIL is a selective GABA (gamma-aminobutyric acid) reuptake inhibitor approved for use as adjunctive therapy in the treatment of partial
`seizures in epileptic patients. We currently have worldwide product rights to GABITRIL, excluding Canada and Latin America, and we market
`GABITRIL in the United States, France, the United Kingdom and Germany, among other countries. The first of four Orange Book-listed patents for
`GABITRIL is set to expire in September 2011, and we could face generic competition at that time. As a result, GABITRIL sales may materially decline.
`
`3
`
`CEPHALON, INC. -- EXHIBIT 2013 0008
`
`
`
`
`
`Table of Contents
`
`FENTORA/ACTIQ/Generic OTFC
`
`FENTORA and ACTIQ (including our generic version of ACTIQ ("generic OTFC")) together comprised 13% and 17% of our total consolidated net
`sales for the year ended December 31, 2010 and 2009, respectively, of which 75% and 80% were in the U.S. market, respectively.
`
`FENTORA
`
`We received U.S. Food and Drug Administration ("FDA") approval of FENTORA in late September 2006 and launched the product in the United
`States in early October 2006. FENTORA is indicated for the management of breakthrough pain in patients with cancer who are already receiving and
`are tolerant to opioid therapy for their underlying persistent cancer pain and was launched in October 2006. In April 2008, we received marketing
`authorization from the European Commission for EFFENTORA for the same indication as FENTORA and launched the product in certain European
`countries in January 2009.
`
`We have focused our clinical strategy for FENTORA on studying the product in opioid-tolerant patients with breakthrough pain associated with
`chronic pain conditions, such as neuropathic pain and back pain. In November 2007, we submitted a supplemental new drug application ("sNDA")
`to the FDA seeking approval to market FENTORA for the management of breakthrough pain in opioid tolerant patients with chronic pain
`conditions. In December 2008, we received a supplement request letter from the FDA requesting that we submit a Risk Evaluation and Mitigation
`Strategy (the "REMS Program") with respect to FENTORA. We have been engaged in ongoing discussions with the agency regarding our REMS
`program for FENTORA and ACTIQ, and we expect to receive a response from the FDA in the first half of 2011. We believe that, by working with the
`FDA, we can design and implement a REMS Program to meet the FDA's requests and possibly to provide a potential avenue for approval of the
`sNDA. We anticipate initiating the REMS Program upon receipt of approval from the FDA.
`
`In clinical trials, FENTORA was generally well tolerated. Most adverse events occurring with FENTORA are typical opioid side effects. The most
`serious adverse events associated with all opioids are respiratory depression (potentially leading to apnea or respiratory arrest), circulatory
`depression, hypotension, and shock. The most common (greater or equal to 10 percent) adverse events observed in clinical trials of FENTORA in
`patients with cancer were nausea, vomiting, application site abnormalities, fatigue, anemia, dizziness, constipation, edema, asthenia, dehydration,
`and headache. In clinical trials in patients with other chronic pain conditions, the most common (greater or equal to 10 percent) adverse events were
`nausea, vomiting, back pain, dizziness, headache, and somnolence. Application site adverse events were reported in 12 percent of patients. Most
`side effects were mild to moderate in severity.
`
`ACTIQ/Generic OTFC
`
`ACTIQ is approved in the United States and certain countries in Europe for the management of breakthrough cancer pain in opioid-tolerant
`patients. Generic OTFC is the generic version of ACTIQ sold through our sales agent, Watson Pharmaceuticals, Inc. in the United States. The FDA
`has notified us that we must implement a REMS Program for ACTIQ and generic OTFC. Subject to the timing and nature of further discussions with
`the FDA, we expect to receive a response from the FDA in the first half of 2011. ACTIQ sales have been meaningfully eroded by the launch of
`FENTORA and other fentanyl-based products and by generic OTFC products sold since June 2006.
`
`AMRIX
`
`AMRIX is approved in the United States for short-term use as an adjunct to rest and physical therapy for relief of muscle spasm associated with
`acute, painful musculoskeletal conditions and was
`
`4
`
`
`
`CEPHALON, INC. -- EXHIBIT 2013 0009
`
`
`
`
`
`Table of Contents
`
`launched in November 2007. With convenient, once-daily dosing, AMRIX provides relief from muscle spasm comparable to that with
`cyclobenzaprine hydrochloride taken three times daily. AMRIX is intended for use up to two or three weeks. The most common side effects of
`AMRIX in Phase III clinical trials were dry mouth, dizziness, fatigue, constipation, nausea and dyspepsia.
`
`TREANDA
`
`TREANDA is approved in the United States for the treatment of patients with chronic lymphocytic leukemia and patients with indolent B-cell non-
`Hodgkin's lymphoma ("NHL") whose disease has progressed during or within six months of treatment with rituximab or a rituximab-containing
`regimen. TREANDA comprised 14% and 10% of our total consolidated net sales for the years ended December 31, 2010 and 2009, respectively, all in
`the U.S. market.
`
`We are currently conducting a Phase III clinical trial of TREANDA in combination with RITUXAN as a front-line treatment for NHL. While not a
`currently approved indication by the FDA, TREANDA was recently listed in the 2010 NCCN clinical practice guidelines and the Clinical
`Pharmacology compendia as a front-line treatment for NHL. Separately, the results of an independent Phase III clinical study conducted by the
`German Study for Indolent Lymphomas Group ("StiL Group") in Giessen, Germany were announced in December 2009. The study for the first-line
`treatment of patients with advanced follicular, indolent, and mantle cell lymphomas, indicated better tolerability and more than a 20-month
`improvement in median progression free survival when treated with TREANDA in combination with rituximab compared to cyclophosphamide,
`doxorubicin, vincristine, and prednisone ("CHOP") in combination with rituximab. The indications covered by the study are not currently FDA-
`approved indications for TREANDA. We plan to submit the StiL Group's study results to support an sNDA for TREANDA for the treatment of
`front-line NHL in 2011.
`
`Selected Products Intellectual Property and Exclusivity
`
`We place considerable importance on obtaining patent protection for new technologies, products and processes. We also rely on trade secrets,
`know-how and continuing technological advancements to support our competitive position. Our intellectual property protection is crucial for our
`company to stay competitive and to maintain exclusivity over our marketed branded products.
`
`Regarding our ongoing FENTORA, AMRIX, and NUVIGIL patent lawsuits and the PROVIGIL settlements and related lawsuits, please see Note 18
`to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference.
`While we intend to vigorously defend our intellectual property rights and the propriety of the PROVIGIL settlements, these efforts will be both
`expensive and time consuming and, ultimately, due to the nature of litigation, there can be no assurance that these efforts will be successful.
`
`PROVIGIL/NUVIGIL: We own various U.S. and foreign patent rights that expire between 2014 and 2015 and cover pharmaceutical compositions
`and uses of modafinil, including the commercial formulation of PROVIGIL. We also hold rights to other patents and patent applications directed to
`polymorphs, manufacturing processes, formulations, and uses of modafinil and to next-generation modafinil products. We also own rights to
`PROVIGIL and other various trademarks for our pharmaceutical products containing the active drug substance modafinil. Ultimately, these patents
`and patents related to our other products and product candidates might be found invalid if challenged by a third party, or a potential competitor
`could develop a competing product or product formulation that avoids infringement of these patents.
`
`With respect to NUVIGIL, we successfully obtained issuance of a U.S. patent in November 2006 claiming the Form I polymorph of armodafinil, the
`active drug substance in NUVIGIL. This patent is currently set to expire in 2023. Foreign patent applications directed to the Form I polymorph of
`armodafinil and its use in treating sleep disorders are pending in Europe and elsewhere. In addition,
`
`5
`
`CEPHALON, INC. -- EXHIBIT 2013 0010
`
`
`
`
`
`Table of Contents
`
`the particle size patent described above for PROVIGIL also covers NUVIGIL. We also hold rights to other patent applications directed to other
`polymorphic forms of armodafinil and to the manufacturing process relate