You wouldn't think getting sued by a federal agency for unlawful marketing behavior would be catalyst for a company's shares to rise.
But yesterday Cephalon Inc. shares closed at $61.42, up $3.98, or nearly 7 percent.
That increase in value came less than a day after the Federal Trade Commission sued the biotechnology firm over deals it cut with potential generic drug competitors to forego the making cheaper copies of Cephalon's Provigil sleep-disorder drug until 2012.
Cephalon, in defending both its practice and patent validity for Provigil, had this to say after the FTC took action:
We are disappointed that the FTC has determined to challenge these agreements as we believe they fully comply with both the spirit and letter of the antitrust laws. As importantly, our settlements confer a meaningful benefit to U.S. consumers by providing for the entry of generic modafinil three years early.
Several analysts say that federal government has had little success in changing this industry practice. And it looks like the market agreed on Thursday.
