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The Associated Press March 21, 2011, 7:09PM ET

Cephalon to acquire Gemin X for $225M

Cephalon Inc. said on Monday it will acquire privately held Gemin X Pharmaceuticals Inc. for $225 million in an all-cash deal aimed at bolstering Cephalon's lineup of cancer treatments.

Cephalon said Gemin X's private shareholders could receive as much as an additional $300 million in cash payments if certain regulatory and sales goals are met.

Cephalon would have no royalty obligations to Gemin X shareholders under the transaction, which is subject to regulatory clearances and other conditions. After the deal's expected closure in this year's second quarter, Gemin X would become a wholly owned subsidiary of Cephalon.

Gemin X is based in Malvern, Pa., with research operations in Montreal, Canada.

Cephalon CEO Kevin Buchi said cancer treatments that Gemin X is developing would complement his company's existing oncology lineup. Buchi cited a compound called obatoclax that is being studied as a treatment for small-cell lung cancer.

A mid-stage clinical trial is examining the compound as a first-line treatment in combination with standard chemotherapy. Gemin X is also studying potential uses for obatoclax in treating other types of cancer, and has other drug development programs.

The acquisition of Gemin X comes as Cephalon tries to head off a patent challenge targeting its drug Fentora, used to treat extreme pain in cancer patients. Generic drugmaker Watson Pharmaceuticals Inc. is hoping to launch its own version of Fentora. Earlier this month, a federal court overturned two of the patents on Fentora. Watson is challenging three of the patents supporting Fentora. Watson, said on March 14 that it cannot launch its generic version of Fentora until the court makes a ruling on the third patent.

Cephalon also makes a leukemia treatment, Treanda. The company's top seller is the sleep disorder drug Provigil.

Cephalon announced the Gemin X acquisition after its shares rose 95 cents, or about 1.7 percent, to close at $56.87. The stock is near the bottom of its 52-week range of $54.15 to $72.87

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