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Teva Exec Says Cephalon Deal Still on Track

Sept. 28--Bill Marth, head of operations in the Americas for Teva Pharmaceutical Industries Ltd., broke ground Tuesday on a new facility in the Bustleton section of Philadelphia and then said he knew of no reason a federal investigation of Cephalon Inc. would impede Teva's $6.8 billion acquisition of the Frazer-based company, whose products might one day go through the new building.

"I don't have all the facts because we are still operating as separate companies," Marth said. "That said, with the due diligence we've done, the corporate integrity agreement [with the federal government] is very strict and they [Cephalon] have a robust compliance program. I realize there are investigations from time to time, but I believe they have probably done a very good job."

Cephalon's spokeswoman said Tuesday that the company would not comment beyond Monday's filing with the Securities and Exchange Commission, which said the U.S. Attorney's Office in the Southern District of New York had subpoenaed records about the leukemia drug Treanda (bendamustine hydrochloride). The filing also said, "The company is in the process of responding to the subpoena and intends to cooperate fully."

The corporate integrity agreement Marth referred to involves greater oversight from federal regulators and is part of Cephalon's 2008 settlement of charges brought by the U.S. Attorney's Office in Philadelphia that the company promoted drugs for uses not approved by the U.S. Food and Drug Administration. Cephalon also paid $425 million to settle the case.

Such investigations often take years to complete, so the new one probably will end after the Teva-Cephalon deal closes, which Teva still expects to occur next month. With a second investigation pending, does Marth worry about Teva inheriting a Cephalon problem?

"I don't think there is a Cephalon problem," Marth said. "We're excited about the transaction. We still anticipate it closing in mid-October and I don't think it will impact that at all."

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Posted: September 2011