Cephalon, BDC sign option agreement

Cephalon, Inc. (Nasdaq: CEPH) and BioAssets Development Corporation (BDC), a privately held biopharmaceutical company, today announced that the companies have signed an agreement that will provide Cephalon with an option to acquire BDC. Under the terms of the option agreement, Cephalon will pay BDC an upfront payment of $30 million and, assuming exercise of the option, an additional payment on the closing of the acquisition. BDC stockholders could also receive additional future payments related to regulatory and sales milestones. The option agreement is subject to customary closing conditions including the receipt of necessary BDC stockholder approvals.

BDC is currently conducting a Phase two placebo-controlled proof of concept study with the tumor necrosis factor (TNF) inhibitor, etanercept, epidurally administered to a minimum of 40 patients with sciatica. Sciatica is a neuropathic inflammatory pain condition that occurs when the sciatic nerve is compressed, injured or irritated. BDC has secured an intellectual property estate around use of TNF inhibitors for sciatic pain in patients with intervertebral disk herniation, as well as other spinal disorders.

"BioAssets offers an estate of intellectual property and scientific expertise that will allow us to evaluate our own domain antibody tumor necrosis factor inhibitor, CEP-37247 (formerly known as ART-621), for the treatment of sciatica," said Frank Baldino, Jr., Ph.D. chairman and CEO of Cephalon. "Combining these two innovations helps fulfill our strategy to address unmet patient needs, while focusing on specialty physicians."

"Development of an improved non-surgical therapy for sciatica presents a pressing unmet medical need and a potentially significant commercial opportunity," commented James Gorman, M.D., Ph.D., CEO of BioAssets. "Cephalon combines an innovative TNF inhibitor pipeline with a well established pain therapeutic franchise. I believe these capabilities uniquely position Cephalon to develop and commercialize a novel biologic therapy for these patients."

Cephalon may exercise its option at any time from the closing date of the option agreement until the date that is 60 days after receipt of one-month patient response data from the Phase two proof of concept study. Data are anticipated to be available in the second half of 2010.

The Cephalon pipeline of pain products includes intravenous celecoxib and two tamper-deterrent opioid medications. Earlier this year, Cephalon completed the acquisition of Arana Therapeutics and added to its pipeline several domain antibody biologics targeted to inflammatory diseases and cancer. One of those compounds CEP-37247 (formerly known as ART-621) is a tumor necrosis factor inhibitor. The complete Cephalon pipeline can be viewed at http://www.cephalon.com/our-science/pipeline/.