PRESS RELEASE: Cephalon Announces Strong Third Quarter Financial Results

Cephalon Announces Strong Third Quarter Financial Results

Company Also Announces Agreement in Principle with U.S. Attorney's Office; Earnings Exceed Company Guidance; Company Again Increases 2007 Earnings Guidance and Introduces 2008 Guidance

FRAZER, Pa., Nov. 8 -- Cephalon today reported third quarter 2007 sales of $428.7 million, compared to adjusted sales of $457.2 million for the third quarter of 2006 and within the company's previously issued guidance. Basic loss per common share for the third quarter of 2007 was $4.58. Excluding the settlement reserve increase, amortization expense and certain other items, basic adjusted income per common share during the quarter was $1.08, which compares to $1.71 for the third quarter of 2006 and exceeds the high end of the company's guidance range of $0.85 to $0.95.

During the third quarter, central nervous system (CNS) franchise sales increased 9 percent to $230.9 million and the pain franchise reported strong sales of $121.8 million, a decrease of only 33 percent despite generic competition to ACTIQ(R). Sales of other products were $76.0 million, an increase of 20 percent over the same period last year.

The company also announced that it has reached an agreement in principle with the U.S. Attorney's Office in Philadelphia and the U.S. Department of Justice with respect to the previously disclosed investigation of the company's sales and marketing practices. The company expects to pay $425 million as part of a comprehensive settlement of Federal and related state Medicaid claims. The company has increased its existing financial reserves for this matter accordingly. In addition, the company will agree to a single misdemeanor violation of the U.S. Food, Drug, and Cosmetic Act and will enter into a corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services. The terms of the settlement are subject to the final negotiation and execution of definitive agreements. The previously disclosed investigation by the Connecticut Attorney General is ongoing.

"We are pleased with the strong financial performance we delivered in the third quarter of 2007," said Frank Baldino, Jr., Ph.D., Chairman and CEO. "We also are launching this month our latest product, AMRIX(TM), a once daily extended release muscle relaxant, and are excited about the continued development of our oncology business with TREANDA(R)."

Dr. Baldino continued, "We look forward to finalizing our settlement with the U.S. Attorney's Office. We have always taken seriously our responsibility to conduct our business in accordance with both the letter and spirit of the law. Over the past few years, we have devoted substantial resources to continually enhancing our compliance program and have built a strong foundation for our ongoing compliance efforts."

Based on the strong third quarter financial results announced today, the company is reiterating its guidance for 2007 total sales of $1.675 - $1.725

billion, and increasing its basic adjusted income per common share guidance from $4.40 - $4.50 per share to $4.45 - $4.55 per share.

Basic adjusted income per common share guidance for the full-year 2007 and 2008 is reconciled below and is subject to the assumptions set forth therein.

Cephalon is introducing 2008 sales guidance of $1.80 - $1.85 billion. This includes CNS franchise sales of $975 - $1,000 million, pain franchise sales of $500 - $525 million, which will include sales of AMRIX(TM) (cyclobenzaprine hydrochloride extended-release capsules), oncology franchise sales of $110 - $120 million, and other product sales of $190 - $205 million. SG&A and R&D guidance for 2008 are $710 - $730 million and $340 - $360 million, respectively.

The company also is introducing adjusted net income guidance for 2008 of $344 - $351 million and 2008 basic adjusted income per common share guidance of $5.10 - $5.20.

Cephalon's management will discuss the company's third quarter 2007 performance in a conference call with investors beginning at 5:00 p.m. U.S. EST on Thursday, November 8, 2007. To participate in the conference call, dial +1-913-981-5543 and refer to conference code number 6083046. Investors can listen to the call live by logging on to the company's website at www.cephalon.com and clicking on "Investor Information," then "Webcast." The conference call will be archived and available to investors for one week after the call.

About Cephalon, Inc.

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and marketing of innovative products in four core therapeutic areas: central nervous system, pain, oncology and addiction. Cephalon has delivered a seven-year compound annual growth rate (CAGR) through 2006 greater than 75% and 2006 revenue of $1.760 billion. A member of the Fortune 1000, Cephalon currently employs approximately 3,000 people in the United States and Europe. U.S. sites include the company's headquarters in Frazer, Pennsylvania, and offices, laboratories or manufacturing facilities in West Chester, Pennsylvania, Salt Lake City, Utah, and suburban Minneapolis, Minnesota. Cephalon's European headquarters are located in Maisons-Alfort, France.

The company's proprietary products in the United States include: PROVIGIL(R) (modafinil) Tablets [C-IV], FENTORA(R) (fentanyl buccal tablet) [C-II], TRISENOX(R) (arsenic trioxide), AMRIX, VIVITROL(R) (naltrexone for extended-release injectable suspension), GABITRIL(R) (tiagabine hydrochloride), and ACTIQ(R) (oral transmucosal fentanyl citrate) [C-II]. The company also markets numerous products internationally. Full prescribing information on its U.S. products is available at http://www.cephalon.com or by calling 1-800-896-5855.

In addition to historical facts or statements of current condition, this press release may contain forward-looking statements. Forward-looking statements provide Cephalon's current expectations or forecasts of future events. These may include statements regarding anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results; prospects for regulatory approval, including with respect to TREANDA; manufacturing development and capabilities; market prospects for its products, including with respect to AMRIX; sales, adjusted net income and basic adjusted income per common share guidance for 2007 and 2008; and other statements regarding matters that are not historical facts, including the Company's position and expected performance in 2007 and 2008, the final resolution or outcome of the ongoing investigations by the U.S. Attorney's Office and the Office of the Connecticut Attorney General and the final amount of any settlement and/or fines related thereto, and the relative strength of the foundation for the Company's ongoing compliance efforts. You may identify some of these forward-looking statements by the use of words in the statements such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" or other words and terms of similar meaning. Cephalon's performance and financial results could differ materially from those reflected in these forward-looking statements due to general financial, economic, regulatory and political conditions affecting the biotechnology and pharmaceutical industries as well as more specific risks and uncertainties facing Cephalon such as those set forth in its reports on Form 8-K, 10-Q and 10-K filed with the U.S. Securities and Exchange Commission. Given these risks and uncertainties, any or all of these forward-looking statements may prove to be incorrect. Therefore, you should not rely on any such factors or forward-looking statements. Furthermore, Cephalon does not intend to update publicly any forward-looking statement, except as required by law. The Private Securities Litigation Reform Act of 1995 permits this discussion.

This press release and/or the financial results attached to this press release include "Adjusted Net Income," "Basic Adjusted Income per Common Share," "Basic Adjusted Income per Common Share Guidance," and "Diluted Adjusted Income Per Common Share," amounts that are considered "non-GAAP financial measures" under SEC rules. As required, we have provided reconciliations of these measures. Additional required information is located in the Form 8-K furnished to the SEC in connection with this press release.