Cephalon, Inc. Q4 2007 Earnings Call Transcript

Cephalon, Inc. (CEPH)

Q4 FY07 Earnings Call

February 12, 2008, 5:00 PM ET

Executives

Robert (Chip) Merritt - IR

Frank Baldino, Jr., Ph.D. - Chairman and CEO

Lesley Russell - EVP, Worldwide Medical and Regulatory Operations

J. Kevin Buchi - EVP and CFO

John E. Osborn, Esq. - EVP, General Counsel & Secretary

Robert P. Roche, Jr. - EVP, Worldwide Pharmaceutical Operations

Valli F. Baldassano, Esq. - EVP and Chief Compliance Officer

Analysts

Greg Gilbert - Merrill Lynch

Jim Birchenough, M.D. - Lehman Brothers

Marc Goodman - Credit Suisse

David Buck - Buckingham Research Group

Annabelle Samimy - UBS Securities

Eric Schmidt - Cowen and Company

Donald Ellis - Thomas Weisel Partners

Michael Rockefeller - Morgan Stanley

Larry Neibor - Robert W. Baird

Gary Nachman - Leerink Swann

Charles Duncan - JMP Securities

Presentation

Operator

Welcome to the Cephalon's Fourth Quarter 2007's Earnings Conference Call. Today's conference is being recorded. Now at this time, I would like to turn the call over to Chip Merritt, Vice President of Investor Relations. Mr. Merritt, please go ahead.

Robert (Chip) Merritt - Investor Relations

Thank you. Today we will review Cephalon's financial performance for the fourth quarter and the full year. Before we begin, let me remind you that certain statements on this call may be forward-looking and are subject to risks and uncertainties associated with company business. These statements may concern among other things; guidance as of future revenues and earnings, operations, transactions, prospects, intellectual property, litigation and other legal matters, development of pharmaceutical products, clinical trials and potential approval of our product candidates.

The company also may discuss certain non-GAAP financial measures within the meaning of Regulation G during today's call. The information required by Regulation G is available in the earnings press release and in the Newsroom section of our website, at www.cephalon.com.

Additional information and risk factors affecting the company's business and financial prospects, and factors that would cause Cephalon's actual performance to vary from our current expectations is available in the company's current Form 10-K on file with the SEC.

During this call, we will introduce first quarter 2008 guidance and reiterate our full year 2008 guidance. Please note that guidance will remain in effect, unless the company provides subsequent modifications or updates. Our earnings press release is available at www.cephalon.com. Investors with further questions should contact me at 610-738-6376. This conference call is being webcast via the Cephalon homepage and will be archived for one week after the call.

Speaking on today's call will be Dr. Frank Baldino, Chief Executive Officer; and Kevin Buchi, Chief Financial Officer, and Dr. Lesley Russell, Worldwide Medical and Regulatory Operations. Also joining us today, are Bob Roche, Worldwide Pharmaceutical Operations and John Osborn, General Counsel.

Following the remarks by Frank, Lesley, and Kevin, we will be pleased to answer your questions. Now, Frank Baldino.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Thanks Chip. Good afternoon everyone. 2007 was a tremendous year for Cephalon, as every operating division in the company exceeded expectations. Just look at what we accomplished this year. Probably the most exciting development was the completion of filing of two new NDAs for TREANDA.

The approval of TREANDA in 2008 will position Cephalon to be an important player in oncology. We acquired and quickly launch AMRIX. This once-a-day skeletal-muscle relaxant with its unique low rate of semblance has the potential to dramatically improve the treatment of painful muscle spasms. AMRIX is off to a good start and I will provide some detail on this call to better describe the full extent of this opportunity.

We received marketing approval for NUVIGIL. I would ask the Head of Clinical Development Dr. Lesley Russell to outline the product's overall clinical development plan. In addition, Dr. Russell will discuss some exciting findings from our recently completed study with NUVIGIL and schizophrenia. We are confident that our efforts will demonstrate a broader benefit of NUVIGIL for patients.

We successfully completed all the required trials for the FENTORA clinical program. And this past November, we filed our sNDA seeking a broader label for FENTORA.

Lastly, we enter Phase 1 clinical trials with three new compounds. CEP-11981, a VEGF/Tie2 kinase inhibitor that builds upon the well-established mechanism of Avastin with the contribution of Tie2 inhibition. CEP-18770, a proteasome inhibitor that we believe may offer advantages to patients over Welcade [ph]. And CEP-28190 the lead compound is our tamper-resistant opioid technology platform. We believe this platform will be an important advance in development of new opioid products.

Although 2007 was the first full year of generic active competition, we posted strong financial results and exceeded our full year guidance. We accomplished this through a combination of strong revenues and improved operating margins. Our sales for the year were over $1.7 billion and exceeded the high-end of our guidance range.

Adjusted net income was $309 million also beating the high end of our guidance. This was a great year for us and I am even more excited about the prospects for 2008 and beyond. We have set an ambitious goal to grow EPS by 15% to 20% for 2010 and have a solid strategy in place to achieve this.

As we look at 2008, we are extremely excited about the future of our oncology business, particularly TREANDA. At this past Decembers ASH Meeting in Atlanta, TREANDA data were presented from nine different studies. I've mentioned the three most compelling that are driving physician interest in this product today. Results from our front line TREANDA study in patients with chronic lymphocytic leukemia or CLL demonstrated a significantly higher overall response rate and a progression-free survival that approached a one-year advantage over chlorambucil. CLL is a common form of leukemia with 15,000 new cases annually. Our TREANDA CLL filing has been granted orphan-drug status and received priority review with an action date of March 20.

Results were also presented from a study examining TREANDA for patients with rituximab-refractory indolent non-Hodgkin's lymphoma or NHL. There are over 60,000 new cases of NHL annually in the United States, around half of which are indolent. In this study, single-agent TREANDA demonstrated durable objective response rates in patients, who were refractory to or had relapsed from a Rituxan containing regimen. Data from this study exceeded the hurdle race required by this special protocol assessment. We filed the NDA for NHL this past December and expect the FDA's action day will be set for late October.

And finally, a tremendous amount of enthusiasm is generated by a front-line study looking at TRENDA plus Rituxan, versus the standard CHOP plus Rituxan in patients with indolent NHL. And a serum [ph] analysis consisting of 315 randomized patients. TRENDA plus Rituxan appear to be as efficacious as and less toxic than CHOP Rituxan. The prospect of treating indolent NHL with a two-drug regimen, instead of a more toxic five-drug regimen is creating much interest in the oncology community. In all three studies, toxicity associated with TREANDA was predictable and manageable. And we expect TREANDA will offer a much needed alternative for patients and be another important growth driver for our company.

Our core CNS and pain business continue to perform quite well. The CNS franchise generated sales over $900 million and the pain franchise delivered sales of over $500 million. At 2007, our partners in Azwell Pharma and Mitsubishi Tanabe launched PROVIGIL in Japan under the trade name Mitaigo. Our European business had a better year with PROVIGIL sales growing 17%. Here in the United States, we are focusing our CNS investments in our NUVIGIL and not surprisingly, we have observed the moderation of prescription growth for PROVIGIL.

As you have seen over the last year or so, primary care has been the fastest growing market for PROVIGIL. To capitalize on this trend and to maximize the endless opportunity, we realigned our sales force in the fourth quarter to focus on primary care physicians. To reach even more of these doctors, we have created close to 80 new territories in the American heartland. At the same time, we recently modified our Takeda co-promotion agreement to provide a total of 500 sales representatives detailing PROVIGIL in the first position, primarily to specialty physicians. We expect our combined sales efforts to enable PROVIGIL to continue to grow in 2008.

In 2006, ACTIQ sales had a peak of around $570 million. It is remarkable then in 2007, the first full year that ACTIQ went generic, we achieved pain franchise sales of over $500 million. This was accomplished through effective execution of a well conceived life-cycle management strategy. We continue to enjoy a solid core business with ACTIQ, our generic OTFC and FENTORA. Securing a broader label for FENTORA will be a key driver for future growth of this product. As we announced last month the FDA has accepted our sNDA filing for FENTORA and set an action date of September 12th.

EC also will convene the advisory committee panel on May 6th to assist in the consideration of this application. Last month we announced that FENTORA has been recommended for approval in the EU. We anticipate approval with a label similar to the current U.S. label from the European Commission within the next two to three months. Preparations are underway to launch product later this year in Europe under the trade name EFENTORA. EFENTORA sales should also help to continue the solid growth we are seeing in our European business and further benefit of bottom line in the years ahead.

We are very pleased with the resilience of our core CNS and Pain businesses. With the opportunity to NUVIGIL FENTORA, VIVITROL and AMRIX we believe that we are on a brink of a very exciting period.

In the fourth quarter, we launched AMRIX, the only once-a-day skeleton-muscle relaxant or SMR approved in America. I am gratified report that is out to a solid start in a very big and growing market, and about 45 million prescriptions written for muscle relaxant in United States each year and roughly 37% of these prescriptions are for cyclobenzaprine. As you know the active ingredient in AMRIX is cyclobenzaprine, which is commonly known to prescribers as Flexeril.

Flexeril and other products of this space Skelaxin are typically dosed three to four times a day, and have a very high incidence of semblance. In addition to the benefit of one's daily dosing AMRIX is a very low incidence for semblance. It was a successful early launch, we have been exploring a number of opportunities to extend our reach for this new market. We are finalizing an agreement with the contract sales organization that would add 120 dedicated sales representatives on this detailed sensitive products. These reps are now completing their training and the product should hit the ground running before the end of the month.

With the recent realignment with of our CNS and pain sales forces, and addition of the contract sales organization we've broadened our reach to approximately 60% of the top-tier prescribers of skeleto-muscle relaxants. In addition, we received FDA approval of our samples and in mid-January introduced a sampling program. We view AMRIX as an exciting near-term growth driver and are putting all the necessary muscle behind it to ensure its success.

Now let's turn to Dr. Lesley Russell, who'll describe our clinical program for NUVIGIL including some exciting early results on our Phase 2 schizophrenia study.

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

Thank you Frank. To further develop our wakefulness franchise, we continue to study broader medical applications for NUVIGIL. To this end, starting in the second quarter, we will examine the effects of NUVIGIL in approximately 258 patients who experience jet lag disorder and approximately 450 patients who experience excessive sleepiness associated with traumatic brain injury.

Beginning in the third quarter, we look to evaluate approximately 450 patients, with excessive sleepiness due to restless leg syndrome and then additional 450 patients for the excessive sleepiness associated with comorbid major depressive disorder. We are also planning work in cancer-related fatigue.

Separately our bipolar depression study is set to complete enrollment in the third quarter and we look forward to reviewing these data. As Frank mentioned, we have seen exciting results from our Phase 2 schizophrenia study. Schizophrenia is a chronic and severely debilitating mental disorder that affects about 1% of the population worldwide. The disease is well known for its positive symptoms such as odyssey hallucinations, delusions and the feeling of being watched. However, there are a number of deficits in normal emotional and behavioral states that are referred to as negative symptoms, for which there are no currently approved therapies.

These negative symptoms include flat effects [ph] which is immobile face expression or a monotonous voice, abolition or a general lack of desire, motivation and persistence, lack of pleasure in everyday life, diminished ability to initiate and sustain planned activity and allogia, speaking infrequently even when forced to interact.

Once the positive symptoms are fairly well consulted with anti-psychotic medication patients continue to experience significant disability related to negative symptoms and cognitive impairment. As part of the clinical development program for NUVIGIL, Cephalon conducted a small exploratory control trial in 60 patients to evaluate whether adjunctive treatment with NUVIGIL improves cognitive deficits or negative symptoms in patients with schizophrenia.

Adult patients with chronic stable schizophrenia were enrolled in a full-week randomized double-blind placebo-controlled parallel group study of the NUVIGIL treatment of three doses, 50, 100 and 200 milligrams a day as adjunctive therapy to either Rispadol, Cyprexa or Envega.

Preliminary analysis of the data indicate that whilst there is no meaningful change in the metrics consensus cognitive, a potentially clinical relevant important improvement in overall curtail school and negative symptoms school, as assessed by the positive and negative syndrome scale will depend, was detected at the 200 milligram dose. Importantly, no deterioration in positive symptoms or in the patient's overall condition was noted. Furthermore with respects to other safety assessments, there is no difference in extra parameter symptoms or acacevir [ph] and the NUVIGIL groups as compared to placebo.

The results of this study although very preliminary suggest the possibility that NUVIGIL may provide added benefit for end uses in adjunctive treatment for schizophrenia. Cephalon now plans to further evaluate this positive signal in the fully-powered six months study using napalm as the primary endpoint. We are excited by the possibility that NUVIGIL maybe able to assist in the treatment of this disabling condition.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Thank you Leslie. Also in the clinical Lestaurtinib or CEP-701, the clinical program for this product had which conclude in the second half of this year. Acute myeloid leukemia affects approximately 13,000 patients in the United States, each year. 25% to 30% of who have FLT-3 mutation. CEP 701 has shown to be prominent inhibitor of the FLT-3 mutation and has the potential to greatly benefit patients bearing the specific mutation whose prognosis today is rather bleak.

Lestaurtinib also is an inhibitor of JAK-2 and we are conducting a Phase 2 trial of Myeloproliferative disorders based on several publications suggesting that JAK-2 may have a role to play in MDS.

Our early stage programs progress -- 2007 as well. CEP-11981 a potent orally-active VEGF/Tie2 inhibitor entered Phase 1 in the third quarter. Our pre-clinical data suggested that CEP-11981 which inhibits both Tie2 and VEGF may provide additional benefits compared to targeting VEGF or alone by preventing angiogenesis when the scape around VEGF occurs.

We also entered the clinical trial of proteasome inhibitors CEP-18770, which may prove useful in the treatment of multiple myeloma and with CEP-28190 our tamper-resistant opioid.

To summarize, Cephalon offers clear visibility in our future growth for product lifecycle management of our core business promising late-stage products that diversify our company and a strong commitment to an history of success in acquiring products and companies.

Now, Kevin will discuss our financial performance during the period and also our expectations for the first quarter of 2008.

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

Thank you Frank. Today we reported our 2007 financial results. Sales came in at $1.727 billion and basic adjusted net income per common share for the year was $4.64. We exceeded both our sales and earnings guidance for the year.

Adjusted net income for the year was $308.8 million, exceeding the high end of our current guidance by $6 million. CNS franchise sales increased 16% over 2006 to $909.4 million. Pain franchise sales were $512.6 million, with FENTORA sales were $135.1 million. This was a decrease of 22% from 2006, due a full year generic competition to ACTIQ. Other sales increased 15% compared to the same period last year to $305.3 million, representing a strong performance by both our European and drug-delivery businesses.

Net cash flow provided by operating activities was up 20% from 2006 to $385 million or $5.60 per each share outstanding leaving us with $826 million in cash and cash equivalents and investments at the end of the year. Our goal is to maintain wholesale inventory levels of between two to three weeks for each of our key products. Inventory levels during 2007 remained near the low end of this range. When compared to 2006, R&D expense as adjusted to certain pro forma items decreased $18.1 million.

Adjusted SG&A increased $45.1 million for the year ended December 31, 2007 versus 2006, primarily due to the cessation of the reimbursement of expense from Alkermes related to the promotion of VIVITROL, increased sales and marketing spending on oncology products and expenses incurred under our agreements for Takeda and Watson. Our adjusted tax-rate for the year was 37% which is inline with our prior guidance.

During the quarter there were several adjustments that were made to arrive at adjusted net income. The most significant of these were; we excluded $26.3 million associated with the ongoing amortization of the acquired intangible assets. We excluded $2 million in charges related to payments for several research and development collaborations. We excluded $7.2 million in charges related to certain employees' severance costs. We excluded $4 million in charges associated with the significant one-time charitable contribution and we excluded the tax effects of these items.

We reiterate our full year 2008 guidance. Total sales guidance remains between $1.8 billion and $1.85 billion. Guidance for the CNS franchise is between $975 million and $1 billion. The Pain franchise is between $500 million and $525 million. Oncology franchise sales of a $110 million to $120 million and our guidance for other product sales is between $190 million and $205 million.

Adjusted R&D and SG&A expenditures are targeted to be between $340 million and $360 million and $710 million and $730 million, respectively. Guidance for adjusted net income is between $344 million and $351 million, which equates to a basic adjusted income per common share of between $5.10 and $5.20 assuming 67.5 million shares outstanding.

Our assumed tax rate for the year is approximately 37%. We also are introducing first quarter 2008 guidance. Our sales guidance for the first quarter is between $435 million and $445 million. Consistent with prior years our sales guidance does not include other revenues.

Adjusted net income guidance is between $67.7 million and $74.5 million. This equates to a basic adjusted income per common share of between $1 and $1.10 based upon 67.5 million shares outstanding and a tax rate of approximately 37%. For our second quarter results will be impacted by new costs associated with the anticipated launch of TREANDA. We expect that the reminder of the year to benefit from increase sales primarily due to the ramp of AMRIX and the additional sales from TREANDA.

Clearly, we are very bullish on our future. And like all of you we are disappointed with where the market and our stock price are today. We are confident that during 2008 we will be able to execute our strategy and provide greater visibility to the growth of our earnings by our stated goal of 15% to 20% per year, through 2010.

Robert (Chip) Merritt - Investor Relations

We will now turn over the call to you and your questions.

Question And Answer

Operator

[Operator Instructions]. Our first question will come Greg Gilbert with Merrill Lynch.

Greg Gilbert - Merrill Lynch

Thanks. I have a couple. First for Kevin. Can you help us with what level of TREANDA expense you filed in for '08, if possible broken down between launch related versus ongoing expenses?

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

Sorry, I am not going to give you, such a...We do have, we are expecting an increase in expenses in the second quarter associated with the launch of TREANDA. But typically we... especially on the forecast basis, we haven't gone into that level of detail. As we get actual results, we will be happy to provide more detail.

Greg Gilbert - Merrill Lynch

Okay. I have one for Frank. Frank, do you think FDA's request for a panel for the product FENTORA label affects your confidence and approval of the broader label?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Well, we are going to let Lesley Russell answer that question, a little more depth for you. But I think from my perspective, we sort of anticipated in this environment with a schedule two drug that panel meeting is probably in our future. I think we were fairly clear about that, so it's not surprise to us. So, since we anticipated it really doesn't shake our confidence and where this is going. Lesley, you want to put some color behind that?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

Yes, I think there is... there is no doubt that the drug is efficacious and the safety that we saw in the clinical studies was really typical of other opioid analgesic, we saw no new signal there. But I don't think it's any surprise that the agency is taking a close look at schedule two opioids and their proposed risk management plans. And although we submitted what we believe to be a very robust risk management plan, I'm sure that will be the subject of discussion at the meeting. But I am fairly confident that we have done everything we can in that RMP to address any perceived issues that there maybe with this drug.

Greg Gilbert - Merrill Lynch

Thanks and one more question, if I could... I don't think John is on the phone but Frank, can you update us, or have someone update us on the patent strategy for AMRIX, I know that its not something you assumed in valuing the assets, but can give us an update on where that process stands. Thanks.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Well, thanks Greg. And John Osborn is indeed on the phone today and is exactly present in the room, here.

Greg Gilbert - Merrill Lynch

So can I ask you...

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Why don't you give Greg the fact on the AMRIX patent.

John E. Osborn, Esq. - Executive Vice President, General Counsel & Secretary

Still hanging-on Greg.

Greg Gilbert - Merrill Lynch

Good to hear.

John E. Osborn, Esq. - Executive Vice President, General Counsel & Secretary

We have gone back to the kind of trademark call. This we are working with year end to prosecute the patent, we have had some back and forth has there been publicly disclose but we continue to work this through. And I can't give you a lot of detail because you never know where an individual examiner is going to come out on issuance or claims but we ought to know something by the middle of this year.

Greg Gilbert - Merrill Lynch

Thanks that helpful.

Operator

Our next question is from Jim Birchenough with Lehman Brothers.

Jim Birchenough, M.D. - Lehman Brothers

Yes, hey guys. A few follow-up questions, just in terms of PROVIGIL trends, we saw a sequential decline in scripts but an increase in sales, just trying to understand that dynamic whether there were some stocking or whether prescription sizes were not... just try to understand that the disconnect there?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Kevin?

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

I mean I will answer one-half of it, and I flip the other half over to Bob. There was no additional, no additional stocking and so that is not the issue sequentially, fourth quarter versus third quarter, most of change we're seeing is the volume change. There were no changes in price.

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

Now, that's exactly right Kevin and I think Jim, that what we are going to be seeing as we move through the early part of 2008 is a... is a bit of revitalization here PROVIGIL and some significant growth as we go through the middle part and then later part of the year. So we've had some significant bumps in the road here over the last three or four months that we've got behind us and we're focused now on delivering continued growth for PROVIGIL and another elements of our portfolio.

Jim Birchenough, M.D. - Lehman Brothers

Just two follow-up question, if I could, one for Bob and one for Lesley. Bob, just on the AMRIX launch, just wondering whether sampling has impacted prescription trends and when you think that we'll start to see prescriptions reaccelerate. And then for Lesley, just on FENTORA for off... FENTORA for the broader label, is there a new risk management plan you think you'll have to put in place to satisfy the FDA to make them more comfortable with non-malignant pain use.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Bob Roche answer to Jim question first, related to...

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

Yes Jim, AMRIX samples as Frank mentioned have just been approved for distribution and have been shipped out really in the last seven to ten days. So I would not... I would not believe that any impact has been seen as yet, as a result of, of either the sampling program that we've just put in the place or the many other elements of newly revitalized promotional materials and programs that have just been put into the field. We are just in the process right now of training up our partner sales organization and that we'll be having our own sales meeting next week, during which all of our sales folks and we will have close to 500 of them working on AMRIX, will be schooled in the latest and greatest and be going back out into the field towards the end of the month, I think with a lot of energy, enthusiasm and extremely high hopes.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Just remember Jim the total process here takes a few months after you filed with the FDA and although AMRIX was approved, the labeling for and the approval of the AMRIX samples were not. We just received the approval in early January on that and that we disseminated into the field as late as January 18. And the same is true for the marketing materials. Now this was in our drug, we brought this thing and it took us a few month to catch up on what needed to be approved by federal agencies to allow to sell us effectively. And I think now Bob it's fair to say we've got all the pieces we need in place to go forward for the first time, right?

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

Absolutely Frank.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Lesley there was a question from Jim on the FENTORA risk management plans.

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

Yes I can't really go into specifics of risk management plan that we submitted, we do believe that it addresses specifically the perceived risk of a broader distribution of the drug and we believe that we have addressed any potential concern that might be associated with that.

Jim Birchenough, M.D. - Lehman Brothers

Thanks Lesley.

Operator

Our next question is from Marc Goodman with Credit Suisse

Marc Goodman - Credit Suisse

Couple of questions, I guess number one, when you look at the IMS trends for PROVIGIL and you bow down by prescriber, looks like the psychiatrists are really coming down quite a bit and that's where your partner is focused on. So I was wondering if you could addressed that and what's happening there and what we're going to do about it. Second of all, Kevin can you give us the sales for '07 for the oncology franchise, so we have that number to work with going into '08?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

While Kevin is looking at that number here Marc, first welcome back to the hunt here. Good to have back you in the game.

Marc Goodman - Credit Suisse

I'm just having a great time.

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

Yes it is nice to have you back Marc and thanks for the breather Frank. We had $92.9 million in sales in the oncology franchise in 2007. Our largest program being the MYOCET, ABELSET, TRISENOX and TARGRETIN and kind in that order.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Bob, on reorganization.

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

Absolutely Marc, nice to have you again. You remember that during the later stages of 2007, we went through a pretty significant reorganization of the CNS sales organization primarily around the opportunities that we saw with AMRIX and AMRIX is a product which is being prescribed almost well very, very heavily in primary care segment. PROVIGIL's growth was taking place largely in primary care as well. Our established base in psychiatry that we build up over the years was really rather mature and basically holding its own but did not demonstrate any real opportunity for significant growth, given our current labeled indications that will change with NUVIGIL.

So we made the decision that we would reorganize our selves around the opportunity of AMRIX and around building PROVIGIL in new audiences in primary care and else. And so that's the decision that we made. We brought Takeda into that loop and Takeda has agreed that with a dedicated sales organization of 500 they will now promote PROVIGIL in position one and resume there slip into the position two. So we're actually able to reach a significantly broader range of physicians under this new construct than have been the case in the past and with significantly higher numbers of position one details. So I'm very enthusiastic about what this new setup brings for us. Our growth in the last 24 to 36 months have been coming from the primary care audience. We are now providing more and more effort and attention there and I think we are going to see, as I mentioned earlier, a bump up in the PROVIGIL prescription numbers, supported by our direct-to-consumer program and so forth. So I think PROVIGIL has good prospects in '08 and it will be a good year.

Marc Goodman - Credit Suisse

Did you all take your PROVIGIL price increase yet?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Marc we haven't had a PROVIGIL price increase since the end of 2006. I'd like to provide a little bit of color there. Bob mentioned DTC with PROVIGIL. And you heard Kevin and I and Chip out there, saying we are not going to pursue an aggressive DTC campaign of PROVIGIL. What we've decided not to pursue was the television component of the DTC program. Other outlets for DTC are print media, website et cetera, we are moving forward and have moved forward and you may have seen some of the ads out there. That's the form of consumer advertising we think is viable for this product at this stage. So we just cut out the DTC television component of that.

Instead we are using that budget allocation to pursue a broader opportunity with AMRIX to a contract sales organization which would bring us to a larger audience of primary care than we can achieve on our own and that was the return on investment decision that we made and I think it's the right one.

Operator

Our next question then is from David Buck with Buckingham Research.

David Buck - Buckingham Research Group

Yes, thanks. Just a couple of quick questions. First there is your... I guess for Kevin, your guidance this year had some that you take price increases on FENTORA and PROVIGIL. Secondly Kevin I guess for... can you give us a sense of what the overall sales force is by promotion now, after realignment. And for, Frank, what do you think you need to have in terms of indications. Doctor Russell, obviously, gave some indications you're working on for individual, but what do you think you need to have in terms of labeling to be able to differentiate it at launch, and what's the current timing for launch expectation, thanks.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Dave, and I will answer it, if it's okay with you. The last question first, to give my colleague the chance to think of good quality answers post depressions. The play of individual really hasn't changed, we have an opportunity that's rare in this business to have a drug on the market PROVIGIL, a follow-on product that's improved and a chance to really embellish the label, and bring new data to bear on the NUVIGIL opportunity, and we are going to aggressively pursue that. You heard Lesley talk about interest in expanding the label in the area of excessive sleepiness. She outlined a number of studies that we think will get us there. She talked about, for the first time, an opportunity to go into psychiatry with schizophrenia and depression directly, and we have a bi-polar depression study that's ongoing and as she said early we should have data by yearend on that, and also we are pretty surprised and excited about the schizophrenia data. It was originally available to treat the negative symptoms, and we designed it into the study and we are very happy with the results. So, we can have a future for individual, it goes way beyond excessive sleepiness, it's something we never envisioned prior to this data, this code-break recently. So, we think there is going to be a lot of differentiating factors in both sleepiness and psychiatric indications for NUVIGIL which will allow us to continue to build the franchise for many, many years ahead. And hopefully by now you guys have good answer for David.

Valli F. Baldassano, Esq. - Executive Vice President and Chief Compliance Officer

Frank's looking at me David. So, I guess this is my turn.

David Buck - Buckingham Research Group

Hi, Valli.

Valli F. Baldassano, Esq. - Executive Vice President and Chief Compliance Officer

Yes, the sales organization has really not changed in total size over the last year or so, at least not markedly, but there has been shifting in between the different groups within the umbrella organization. We still have about 400 CNS sales people; keep in mind these guys are selling PROVIGIL in first position, AMRIX in second position. We have around 60 pain care sales people, selling FENTORA and AMRIX. We have about 50 to 60 VIVITROL sales people who are fully dedicated to VIVITROL, and around a 100 Oncology reps who sell, clearly, TRISENOX, they will be launching TREANDA and do promote FENTORA into their target audiences as well.

There was a lot of shifting, as I mentioned, between sales organizations, we were able to find homes for many of the sales folks who were displaced within the VIVITROL and the pain care realignments. In the Oncology group we were able to move some folks around the country, but the fact of the matter is there was some significant disruption. We do have some vacancies still and we're looking to fill those as rapidly as possible going into our sales meeting next week, and I suspect that we'll have most of them completed by then.

David Buck - Buckingham Research Group

Okay.

Unidentified Company Representative

I think, lastly, me, David, and I think this is my day to dodge questions to the extent possible. You asked the question on price and whether or not we've included the pricing assumptions in our guidance numbers. Rather to give you explicit insights into our pricing strategy, what I think it is reasonable to say is that we believe we have a fair amount of pricing flexibility with our current portfolio of products. These are products without a large amount of direct competition. So, we do believe the price can factor into a forecast going forward, and we'll just see how the year goes. We'll make a decision based upon the appropriateness of that decision around price as the year goes on.

David Buck - Buckingham Research Group

Okay, thanks.

Operator

Our next question is from Annabel Samimy with UBS.

Annabelle Samimy - UBS Securities

Hi, thanks for taking my call. Just really quickly on VIVITROL, you laid out a number of studies that are mainly in the sleepiness indication of jet lag from a brain [indiscernible] in major depressive disorder. Are these initiating enrolling or are they underway and when might we be we receive data from those?

Unidentified Company Representative

Lesley?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

These are studies that are about to start. So, I think, I outlined that there is a sort of a stagnant approach with Q2 and Q3 starts. So, all the program start up this year. The quickest study that we will be able to undertake and get data on is the jet lag disorder.

Annabelle Samimy - UBS Securities

Okay. And then on Centaur [ph] quickly. The advisory panel; I understand that the concern in taking the drug to a broader indication is really the riskiness of that. But is the FDA's intention to just manage the risk or to limit access to the drug, and how what is their position right now?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

I think, there are some interesting reading, Annabelle. If you look at the pink sheets from a few months ago, and she will be happy to send you a copy of it. The head of the Pain division, Dr. Rapoport was interviewed, and was asked that question precisely, one of the questions about fentanyl, in general. They were largely talking about Duragesic, was that should this, can physicians be trusted using this product and should it be made continue to be available, because don't forget Duragesic and the generic Duragesic has a label for pain. A very broad label for pain in opium-tolerant patients, and it is used very broadly. And Rapoport's answer was, you have to make this drug available for pain patients. He also referenced the fact that general practitioners were largely writing for Duragesic and he said that is the first point of care for patients, and those are the guys that need to be prescribing this drug.

So it was pretty clear to me that the agency is already taking the position on that very question you raised. I think the issue at hand is, look, we created a new segment of the market. It's called breakthrough pain, and we have the first drug in this space called ACTIQ, and now there is a bunch of others. And we have the first follow-on drug to ACTIQ, called FENTORA. In the end it's all fentanyl. And there is no difference between fentanyl, but this is the first category, the first time we are trying to expand the category. So we are not surprise it's going to panel. And as Lesley said earlier, the focus will probably be on the risk management plan, is it an effective enough plan to assure, safe and proper use of the product and limit diversion of the product in the context of a broader market, and as she said it earlier, I think we've got that plan in place, so we'll have to see what the panel says.

Annabelle Samimy - UBS Securities

When Rapoport talks about providing access to fentanyl products, is he talking specifically about just Duragesic and fentanyl or is he... does he see breakthrough pain products as lumping a few months back?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

The article I referenced was specifically on the Duragesic issue which was peaking issue a few weeks ago, it's actually during the JPMorgan Conference, whenever that was. I don't think any comments were made by the agency on the breakthrough cancer patient category. It's a new category, it's a relatively small category, and we were very happy to have first-in-class products in that space.

Annabelle Samimy - UBS Securities

Okay, and just one more question, if I may, on AMRIX. To what extent was there stocking in AMRIX ahead of just channel sales ahead of the... ahead of the launch for the quarter, how much of kind of the impact was there?

Unidentified Company Representative

Buchi will be delighted to answer your question.

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

There wasn't a significant amount of channel stuffing... channels stocking parameter... channel stocking parameters I apologies, bad choice of words. There was only a couple of million dollars of AMRIX inventory at wholesale at the end of the year. And in fact we saw a very little movement generally for all of our products during 2007 at wholesale.

Annabelle Samimy - UBS Securities

Okay, thank you.

Operator

Our next question is from Eric Schmidt with Cowen and Company.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Hey, Eric.

Eric Schmidt - Cowen and Company

Thanks Hello, but my apologies, but I think I am still little bit confused on PROVIGIL and the direction that franchise is going. Frank, in his preamble mentioned the moderation in PROVIGIL growth was not surprising, but Bob you seem to be optimistic for revitalization of the franchise, so what would... I guess my question is what would be helpful to me is to try to understand what has caused the weakness over the last two or three months, is that because you think, Bob, of the sales force realignment?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Let's... Eric, let's just talk a little bit... make sure we have the right terminology. In my preamble, we are talking about the investments that we made in NUVIGIL throughout 2007 and probably second-half of 2006. And with no new data on PROVIGIL for the last four years, the comment was it is no surprise that scripts would moderating. And at one point in time, scripts were 33% and growing and now they are not. So, that was a reference to the last several years. Your question really relates to the last few months, I believe...

Eric Schmidt - Cowen and Company

Okay, that's fair, yes.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

And Bob probably is looking at the performance from June of '06, when we had a complete, sort of, restructuring in the context of the Justice Department settlements and that announcement. And in the middle of all that, don't forget, we acquired product called AMRIX which needs a sales force to sell it. So, we had sort of reconfigured the entire sales organization around AMRIX and PROVIGIL. You have one sales force there to sell both of those products. And to nobody's surprise, and usually not ours, it's a different audience that PROVIGIL was aimed at, for the five or seven years prior to that. So Bob why don't you walk Eric through that kind of changes you made and why you think this got considerable growth going forward.

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

Yes, Eric, my earlier comments addressed the number of the actual, kind of, structural changes and changes of focus that where made, and the recognition that PROVIGIL as a major driver of top-line growth is certainly going to take a second seat to some of the other products we now have in the portfolio, namely, TREANDA, AMRIX, and beyond. But that does not mean that the product will not continue to grow nor that they will continue to be the most important component of our top-line. And I certainly think that both of those will remain the case for many years to come.

The reason that I'm optimistic and confident that we can continue to grow this brand even with its large base right now is because of the results that we're seeing in the primary care segment and with the additional... with the growth that we're seeing in obstructive sleep apnea. Currently close to 15% of our prescriptions are in OSA and other 5% to 7% are in the combination of narcolepsy and shift work. So, we've got a much bigger percentage of business within the three labeled indications. It had been the case in the past as a result of our focus there, and the opportunities that we've seen.

So, with additional focus on OSA, with the programs that we're rolling out to the patients, with the new alignment and added reach and frequency that will be provided by Takeda in their new setup. It gives me tremendous confidence that we've not seen the end of the growth days of PROVIGIL and that these will pick up again and continue for 2008 and beyond.

Eric Schmidt - Cowen and Company

Okay, that's helpful thanks. If I can move to question on TREANDA. I saw the guidance is assuming a mid-2008 launch and approval. Obviously the PDUFA date is March 20th, are you meaning to forecast that you will get a three months delay or are you just padding the timelines by the three months to be conservative.

Unidentified Company Representative

Come on, Eric. I think the fair answer would be probably somewhere in between. When we put the guidance together we assumed a mid-year launch, because we hadn't get that back from the FDA as to what the PDUFA date was or when the files will accepted. I do think, though, it's fair to say that CLL is a pretty small indication, initial, it's going to be in the initial indication. And so a couple of months extra with a fairly narrow label, I don't think is going to make a material impact on the overall sales for our business given the scale of the things.

Eric Schmidt - Cowen and Company

Okay, and then on the NHL timeline. I again, may have missed it, but did you specifically say you expect an PDUFA in late October or that you've gotten a ten month review cycle?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

I think we're expecting PDUFA date in October.

Eric Schmidt - Cowen and Company

So, you haven't yet been affirmed, Lesley?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

We haven't had official confirmation, yet.

Eric Schmidt - Cowen and Company

Thanks a lot. But we are pretty confident it will be a ten month...

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

I'm, fairly, confident yes.

Eric Schmidt - Cowen and Company

Why, maybe I'll... to Frank... since you asked [ph] the conference there, you have an SPA for a single-arm study indicating that this is clearly unmet medical need. Why would you get a ten month's review?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

It's not like there is other drugs out there to treat into indolent NHL, and we're talk enthused in that category and many others and --

Eric Schmidt - Cowen and Company

But nothing is approved in Rituxan refractory NHL?

Unidentified Company Representative

The Agency really has not historically... and Lesley can help me with this... sort of given priority reviews for subsets of patients, where there are many other drugs available for them to try. Lesley, do you want to give some color on that?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

I think that the issue in indolent non-Hodgin's lymphoma is... you are right we're talking about a specific indication in Rituxan refractory, there are other products that are used in that space, the radio isotopes and other chemotherapeutics are used there, so that is why I believe this can be another priority review.

Eric Schmidt - Cowen and Company

Okay, thank you.

Operator

Our next question is for Donald Ellis with Thomas Weisel Partners.

Donald Ellis - Thomas Weisel Partners

Thank you, most of my questions have been asked and answered. I just have a couple of quick ones left. The first one regarding CEP-701, can you give some idea when you plan filing the NDA. And then my second question is regarding AMRIX. Can you give us a qualitative description of the sampling program? Is this going to be a very aggressive sampling program, moderate or light sampling program? Thanks.

Unidentified Company Representative

Let's talk about the 701 opportunity. Our goal is to complete the study of 701 this year. It's taking little bit extra time, it's a fairly rare disease, and identifying patients with FLT3 mutation upfront with their bone marrow samples has been a complication, and we have managed our way through, but the goal was to finish that study this year and file soon thereafter. Leslie, you want to add to that?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

No, I think that answer me, reflects Bob's thinking.

Unidentified Company Representative

Bob, do you have your AMRIX sampling question.

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

With regard samples, Don, this is clearly a promotion sensitive market, we've got to be in the primary care offices on a regular basis, samples are a major component of primary care willingness to trail of a product and begin to use it, so we will sample this drug adequately to ensure that that happens.

Donald Ellis - Thomas Weisel Partners

Okay, thank you.

Operator

Our next question, then, is Michael Rockefeller with Morgan Stanley.

Michael Rockefeller - Morgan Stanley

Hi, thanks for taking the question. On NUVIGIL, can you guys gives us a sense of the types of trail that you will have to run for NUVIGIL and cancer-related fatigue and when you expect those trials?

Unidentified Company Representative

Is this Mike Rockefeller?

Michael Rockefeller - Morgan Stanley

It is

Unidentified Company Representative

Chip, did you take Mike's picture down from the lobby here?

Michael Rockefeller - Morgan Stanley

Come on, that's not fair.

Unidentified Company Representative

Anyway, Mike, I think it's your question can you repeat the question.

Michael Rockefeller - Morgan Stanley

So, in cancer-related fatigue, I know this is something that you were previously excited about, just wanted to know what type of trails you will to run there and when you expect to begin those trails?

Unidentified Company Representative

Leslie, why don't you answer that.

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

Yes, we are going to start a program this year, I think it's fair to say that the difficulty in fatigue studies is actually getting anyone to agree on the what the definition of fatigue is and how you measure it. So, in long [ph] this will be a Phase II exploratory study, and we would hope to get that going this year and based on that devise a Phase III program. But it's not straight forward.

Michael Rockefeller - Morgan Stanley

Thanks, and then, would you ever consider launching NUVIGIL earlier than 2010.

Unidentified Company Representative

I think the option to launch it whenever we want is in front of us. We consider it all the time and reconsider it all the time, and I think as long as we have the path forward here to investigate and expand the label, expand the utility. I think it's an opportunity you have to take. And there is no downside. I mean, you know PROVIGIL is doing fine in the space. PROVIGIL is going to grow for another couple of years, it's not going to be generic from 2012. We have an opportunity here to make it even bigger, better product than NUVIGIL and launch it with several years in advance. So, the plan was 2010 and depending on when we get the labeling enhancements, if you will, from clinical, we will launch it accordingly. But the plan remains 2010.

Michael Rockefeller - Morgan Stanley

Okay, thanks. And Frank I will keep your picture up in my lobby if you keep mine up.

Operator

Our next question is from Larry Neibor with Baird.

Larry Neibor - Robert W. Baird

Good afternoon. Given that a lot of the extra work you are doing on NUVIGIL is schizophrenia, major depressive disorder, bipolar; those would seem to be indications aimed at a psychiatrist physician force, whereas your sales force is moving more towards primary care. So, in two years, assuming you're success in getting these indications, how are you going to handle the detailing?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

I think, Larry, it's a really good question and if you follow the Company for a while you will notice that we change our sales force around quite often. We have grown it and we started this business many years ago with a sales force of 25 or so. We've grown it, we've enhanced it, we've shifted around from sleep clinics, psychiatry offices, neurology offices, now in the primary care. So, if you look at the growth as the target audience of provision, it's really involved with the growth of the product and PROVIGIL now is through the specialty physicians and now is residing in a primary care driven use of the product, and that's where we are today. I think if we get NUVIGIL in a label that includes psychiatric claims, we'll go back in the psychiatrist office. We have done it before, and we think we are really good at that, and we'll just now grow the sales force or redirect it to get us there, but historically we've changed ourselves as well changed our whole universe as the products mature and that's not going to change.

Larry Neibor - Robert W. Baird

How long is your contract with Takeda.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Well, we've got a contract with Takeda that runs through mid-2009, renewable with both parties consent, of course. And we'll see where we are at that time, whether we go forward with them or not or whether we... it depends on what universe our products are going to be positioned to. And also, Cephal will be a different company in 2009. It is in 2008. And I am sure we can handle more than we are handling today. And we just spoke earlier about our first initiative with a contract sales organization to expand the AMRIX audience. We'll see how our experience goes there. We may be doing more of that in the future if that is a good investment. So, all things are possible.

Larry Neibor - Robert W. Baird

And one final question. Did I read your press release right; so the PROVIGIL sales in Europe were down 19% in the quarter?

Unidentified Company Representative

I don't believe so, but let me...

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Maybe the one you got. But we will take that...

Unidentified Company Representative

PROVIGIL sales in the quarter, let me see, Q3 versus Q4... it's Q4 versus Q3 '07 was down about 4%. Q4 '07 versus Q4 '06 was down about 3%. Full year it was up 3%. So

Larry Neibor - Robert W. Baird

Page 6 of 10 shows PROVIGIL sales in Europe 11.2 million versus 13.8 million last year, fourth quarter '07 versus fourth quarter '06.

Unidentified Company Representative

Three months '07, three months '06, hold on. You are correct sir.

Larry Neibor - Robert W. Baird

And why would that be?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

It was probably because TEVA is now selling the product for us in the UK market. So, we are no longer recording those sales. We are no longer recording those revenues as sales.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Remember, part of our transaction with TEVA is they have broader distribution in Europe, as a portion of those sales in, largely the UK I believe, that that they are booking, so the top line is affected by that, but the Company is benefited by that.

Larry Neibor - Robert W. Baird

And what were your PROVIGIL UK sales in '07?

[Multiple Speakers]

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

I don't think we give guidance on that number [ph].

Unidentified Company Representative

By country.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

I think we answered you question on TEVA.

Larry Neibor - Robert W. Baird

Thank you.

Operator

Our next question is from Gary Nachman with Leerink Swann.

Gary Nachman - Leerink Swann

Hi, first for, Bob. What are you hearing anecdotally about AMRIX in terms of the lower somnolence rate, are physicians actually seeing that clinically, just talk about how they are using the product, is it during the day or at night, just give us a sense on that?

Robert P. Roche, Jr. - Executive Vice President, Worldwide Pharmaceutical Operations

I am glad you asked that question Gary. I just came back as a matter of fact from a sales meeting, training session with our partner organization. And there were a number of physicians participating at a roundtable discussion. I will give a little bit of feedback from my dinner conversations with them last night. And then some general feedback from our own sales people that I have been soliciting and getting over the last several days.

The two doctors with whom I had dinner last night, both of them used a product in a number of patients. One of them, I think, said 12 patients on, and the other one had fewer than that. But their experiences were very similar. And they found that the drug, really, lived up to the billing of an efficacious product, at least as good as anything that they were using. And actually did cause a significantly lower degree of sedation, as measured, very subjectively, by the patients that they were talking to and hearing back from than anything else that they had been using. They were using it once a day, dosing the product at night. There wasn't a whole lot of residual hangover during the day. The drug was working. It was helping their pain states. And it was a very interesting and gratifying discussion for me to have with them last night.

I've also gotten feedback from a number of our area managers and regional directors which is really largely the same. Clearly there is going to be outliers. Folks who are using the product at a different time of day, but I think if dosed at night as is the instruction and as we are promoting you will see as we have seen thus far a better profile on the sedation front.

Gary Nachman - Leerink Swann

Okay, and 120 DSO reps, will they be targeting only PCs and who is the DSO, if you don't mind telling us?

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

We'll announce that in due course. But they won't just be calling on primary care docs, they will be able to call on any of the physicians that, by territorial alignment or other factors, we are not able to reach ourselves. It won't be overlap with our sales team, but what happens here is that even at some of the high deciles of prescribers, we can't call on every single physician in a geographic region. So they will be picking up on certain... even if the highest prescribers. But their involvement with us will allow us to reach well down into the mid-range of prescribers and get down to about 60% of all users of these products. So, it's going to be a significant boost to our ability to reach key customers around the country.

Gary Nachman - Leerink Swann

Okay. Is the 100 oncology reps enough to launch TREANDA, do you need to add to that number, and can you just talk a little bit about some other pre-launch activities that you might be doing at this point?

Unidentified Company Representative

Yes, we think that we've staffed up our oncology franchise optimally given every element of the products profile and the customer base that we're going to be reaching. We also have a variety of other field-based personnel including reimbursement staff, including medical science liaisons; they report into my oncology business unit. So, the total number of field-based individuals is well over a 100 when all told and including management.

So, yes, I mean, I think that is the right number. We'll certainly evaluate that as we go through the launch phase. If we have to add more than clearly we'll do so. You asked about the pre-launch activities and preparations. Frank mentioned a number that had taken place at the ASH meeting in December. I don't know if you were at that meeting, but there was a lot of excitement and a lot of buzz around TREANDA, around the data, around our first real big presence in a meeting such as that, and anticipation of the product's availability. So, we are doing many of the traditional pre-marketing sorts of programs, you may have seen some of the advertisements and so forth and we are going to continue that right through the end of the pre-launch phase and launch this baby in a big way.

Gary Nachman - Leerink Swann

Are you guys willing to comment about potential pricing for the product or at least what you are hearing from a reimbursement standpoint just maybe more general terms?

Unidentified Company Representative

Not at this time.

Gary Nachman - Leerink Swann

Okay and what about current pricing per prescription for branded ACTIQ, do you guys into... are you guys still getting a benefit of mix shift to the higher dose?

Unidentified Company Representative

I am sorry benefited what?

Gary Nachman - Leerink Swann

Oh the mix shift to the higher dose. You usually give us the pricing per prescription for branded ACTIQ and FENTORA.

Unidentified Company Representative

I do have that, but I am not sure that I do with me.

Unidentified Company Representative

In the fourth quarter PROVIGIL was running about $300 a scrips, and what was the other drug you are asking about?

Gary Nachman - Leerink Swann

ACTIQ and FENTORA.

Unidentified Company Representative

ACTIQ brand was running about $3,500 a scrip and FENTORA was up over $1,500 a scrip almost 16.

Gary Nachman - Leerink Swann

Okay, and then lastly there for Kevin or Frank. Would you guys consider buying back stock down here at these levels with your cash balances? Thanks.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Are they...

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

I am sorry, Frank.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

No, no, no, no. My philosophy on this has available always been, we see little value in doing that. Chip has done a nice analysis for us and it never seems to have any sustainable affect. If we thought it did, we certainly would. And then there is the question of what my shareholders want. And you got to believe the best thing I can do with our cash is to buyback our stock, I think there will be very concerned. So, I can see your point of view I just don't see us doing that for those reasons.

J. Kevin Buchi - Executive Vice President and Chief Financial Officer

I'd add a purely practical comment on that. We've got about 800... little over $800 million in cash at the end of year. As you know we owe the Government $425 million of that, we've got convertible debt coming due in June 2008, which will take another $200 million. So, really in terms of free cash, we are not an organization that's sitting on a big cash pile.

Gary Nachman - Leerink Swann

Thanks

Operator

Our next question is from Oran Luvnet with Pansixix [ph].

Unidentified Analyst

Hi, thanks for taking my question. I was wondering if you could maybe give me a better understanding of the implications of the schizophrenia data you have in the pilot Phase II? Can you talk tell us, maybe exactly what were your thoughts, how that might be incorporated into a potential Phase III design. And also on the last call, I believe you said you did not expect to have the bipolar or schizophrenia data ready for the potential NUVIGIL launch, and I was wondering if maybe that's changed giving what you are seeing.

Unidentified Company Representative

I think before Lesley answers your technical question here. I think you know there is a whole series of data that's going to be generated between now and when we decide to launch NUVIGIL. Including in that, it's not like just additional studies but additional promotional claims that we are developing with the regulatory agency based on new data and new study. So it's going to... you should look at NUVIGIL as an evolving opportunity, starting with some promotional claims moving on to excessive sleepness indications including some antipsychotic perhaps uses and/or psychiatric uses for schizophrenia, and may be even depression. So, it's going to be one of these evolutionary things where after one year you might have a small increase in the label, three years later a dramatic difference in the label. Lesley why don't you answer his specific question about how it fits into our designer Phase III study based on that data?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

Yes, these were stable schizophrenic patients, so they were chronic schizophrenic, some of them have been diagnosed 15 years ago. They are under a atypical antipsychotic, so Olanzapine, Risperidone or Paliperidone, and still suffering from some negative symptoms and general symptomology. What we did with NUVIGIL, we looked to 50, 100 and 200 milligrams. And at the higher dose, what we saw was, really, clinically round of effects on the negative symptoms subscale of the PANS score and on the overall effect.

I don't know how familiar you are with the PANS score but it divided into positive symptoms, negative symptoms and then general psychopathology. So, we are very pleased we didn't loss the positive symptoms we don't want to do that. They are well controlled with the antipsychotic, but we did move the negative and overall general symptoms. So, where it fits in, is really is in adjunctive treatment to an antipsychotic. So, the Phase III design will be, obviously, a large number of patient adding on NUVIGIL as an adjunctive treatment and a longer duration of study. So, instead of a four week study, the short study, it will be a six months study, to see if we can replicate these findings. If we do, it's very, very exciting for the patient population. There is nothing out there that treats the negative symptoms. So, this would be a very important new addition, if the data comes to fruition.

Operator

And we will take our final question from Charles Duncan with JMP Securities.

Charles Duncan - JMP Securities

Hi, guys. Most of my question have been answered, but I also had a question regarding NUVIGIL on the schizophrenia trial. I am not sure if I heard you right was that six... a plan for a six months trial or a six week trial?

Lesley Russell - Executive Vice President, Worldwide Medical and Regulatory Operations

It should be a six months trial. To treat the negative symptoms, these are long duration studies and so, for an approval as an adjunct treatment, it would be six months studies.

Charles Duncan - JMP Securities

Okay. Thanks for the added color.

Frank Baldino, Jr., Ph.D. - Chairman and Chief Executive Officer

Okay. That concludes today's conference call, we thank you all for your participation. Take care.

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