Cephalon 2Q Profit Rises 33%, Adjusted Net Falls On Weak Sales

Cephalon Inc.'s (CEPH) second-quarter earnings rose 33% on an investment gain, but the biopharmaceutical company's adjusted profit fell, breaking a long streak, on weak sales for central nervous systems drugs.

Sales of central-nervous-system drugs, the company's top-selling category, dropped 4.8%, while the smaller divisions for pain and oncology products saw sales rise 4.4% and 22%, respectively.

The company's core profit had increased for three years straight until the latest period. The pace of growth in central-nervous-system drugs had been abating before declining in the latest period, as have the rates for pain and oncology.

Cephalon posted a profit of $118.2 million, or $1.34 a share, from $89.1 million, or $1.11 a share, a year earlier. The latest results included a large gain on the fair value of investments, among other items. Excluding them, adjusted earnings fell to $1.62 a share from $2.05.

Revenue increased 1.6% to $738.3 million.

Analysts expected earnings of $2.06 a share on revenue of $764 million.

Gross margin as a percentage of total revenue rose to 83.2% from 76.5%. But costs for research and development jumped 33%.

In May, Cephalon agreed to a takeover by Teva Pharmaceutical Industries Ltd. (TEVA, TEVA.TV) for $6.8 billion, which prevailed over a hostile bid from Valeant Pharmaceuticals International Inc. (VRX, VRX.T). In June, U.S. antitrust regulators requested more details about the deal, a development Teva said it expected.

Shares were up 0.2% at $80.09 after hours. Through the close, the stock has risen 30% so far this year, better than the wider market.

-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; [e-mail]