8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported)  December 8, 2005

Cephalon, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-19119	23-2484489
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
41 Moores Road Frazer, Pennsylvania		19355
(Address of Principal Executive Offices)		(Zip Code)
Registrant’s telephone number, including area code  (610) 344-0200
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01               Entry into a Material Definitive Agreement.

On December 8, 2005, Cephalon, Inc. (the “Registrant”) entered into an agreement with Teva Pharmaceutical Industries Ltd. (“Teva Ltd.”) and Teva Pharmaceuticals USA, Inc. (“Teva USA”, and together with Teva Ltd., “Teva”) to settle its pending patent infringement disputes in the United States and the United Kingdom (the “Ageement”) related to PROVIGIL® (modafinil) Tablets [C-IV] (“PROVIGIL”).

In connection with the Agreement, the Registrant will grant Teva a non-exclusive royalty-bearing right to market and sell a generic version of PROVIGIL.  Teva’s license in the United States will become effective in October 2011 absent a pediatric extension for PROVIGIL, which would delay the entry date by six months (to April 2012).  Outside the United States, Teva and the Registrant (collectively, the “Parties”) agreed to comparable terms for the license effective date, which generally allow for entry in October 2012.  An earlier entry by Teva in any of the territories may occur based upon the entry of another generic version of PROVIGIL.

The Parties also agreed to a series of business arrangements related to modafinil.  Specifically, Teva has agreed to grant to the Registrant a non-exclusive license, effective immediately, to its worldwide intellectual property rights related to the manufacture, development and formulation of modafinil in exchange for royalty payments.  The Registrant has also agreed to enter into certain arrangements with Teva related to Teva’s manufacture and supply of the active pharmaceutical ingredient modafinil.

The Parties will promptly file dismissals with prejudice with the United States District Court for the District of New Jersey and United Kingdom High Court of Justice, Chancery Division, which will conclude all pending litigations between the Parties regarding PROVIGIL.  This Agreement does not affect the status of the ongoing PROVIGIL patent litigations between the Registrant and certain other generic companies that are pending in the U.S. District Court in New Jersey.  These lawsuits claim infringement of the Registrant’s U.S. Patent No. RE37,516 (“the ‘516 Patent”) which covers pharmaceutical compositions and methods of treatment with the form of modafinil contained in PROVIGIL.  The ‘516 patent expires in October 6, 2014 and may be extended by six months (to April 6, 2015) upon submission of pediatric study data that is acceptable to the U.S. Food and Drug Administration.

The above description of the terms between the Registrant, Teva Ltd. and Teva USA is not intended to be a complete summary of all of the terms and conditions of the Agreement.  Many of the terms and conditions of the Agreement remain confidential.  There can be no assurance that the Federal Trade Commission will not raise objections to, or request modifications to, the Agreement; that any such modifications will be acceptable to the Parties; or that the Agreement will become effective on the terms currently proposed or at all.

The Registrant hereby incorporates by reference the press release dated December 9, 2005, attached hereto as Exhibit 99.1, and made a part of this Item 1.01.

Item 9.01               Financial Statements and Exhibits.

(a)           Financial Statements of Business Acquired.

None

(b)          Pro forma Financial Information.

None

(c)Exhibits.

Exhibit No.	Description of Exhibit
99.1	Press Release dated December 9, 2005

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CEPHALON, INC.
Date: December 9, 2005	By:	/s/ John E. Osborn
		John E. Osborn
		Senior Vice President, General Counsel & Secretary

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press Release dated December 9, 2005

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EX-99.1

Exhibit 99.1

News

Cephalon Contacts

Media: Robert Grupp

610-738-6402

rgrupp@cephalon.com

Investors: Chip Merritt

610-738-6376

cmerritt@cephalon.com

For Immediate Release

Cephalon, Inc. Announces Agreement with Teva Pharmaceutical

Industries Ltd. Regarding Settlement of PROVIGIL® Patent Litigation

Parties Also Agree to Business Arrangements Related to Modafinil

Frazer, Pa. – December 9, 2005 – Cephalon, Inc. (Nasdaq: CEPH) announced today that it has entered into an agreement with Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) and Teva Pharmaceuticals USA, Inc. to settle its pending patent infringement disputes in the United States and the United Kingdom related to PROVIGIL® (modafinil) Tablets [C-IV].

In connection with the settlement, Cephalon will grant Teva a non-exclusive royalty-bearing right to market and sell a generic version of PROVIGIL.  Teva’s license in the United States will become effective in October 2011 absent a pediatric extension for PROVIGIL, which would delay the entry date by six months (to April 2012).  Outside the United States, the parties agreed to comparable terms for the license effective date, which generally allow for entry in October 2012.  An earlier entry by Teva in any of the territories may occur based upon the entry of another generic version of PROVIGIL.

The companies also agreed to a series of business arrangements related to modafinil.  Specifically, Teva has agreed to grant to Cephalon a non-exclusive license, effective immediately, to its worldwide intellectual property rights related to the manufacture, development and formulation of modafinil in exchange for royalty payments.  Cephalon has also agreed to enter into certain arrangements with Teva related to Teva’s manufacture and supply of the active pharmaceutical ingredient modafinil.

The terms of the agreement are confidential, and are subject to review by the U.S. Federal Trade Commission.  Financial terms were not disclosed.

The parties will promptly file dismissals with prejudice with the United States District Court for the District of New Jersey and United Kingdom High Court of Justice, Chancery Division, which will conclude all pending litigations between the parties regarding PROVIGIL.

SOURCE:  Cephalon, Inc. • 41 Moores Road • Frazer, PA  19355 • (610) 344-0200 • Fax (610) 344-0065

This settlement does not affect the status of the ongoing PROVIGIL patent litigations between Cephalon and certain other generic companies that are pending in the U.S. District Court in New Jersey.  These lawsuits claim infringement of Cephalon’s U.S. Patent No. RE37,516 (“the ‘516 Patent”) which covers pharmaceutical compositions and methods of treatment with the form of modafinil contained in PROVIGIL.  The ‘516 patent expires in October 6, 2014 and may be extended by six months (to April 6, 2015) upon submission of pediatric study data that is acceptable to the U.S. Food and Drug Administration.

Cephalon, Inc.

Founded in 1987, Cephalon, Inc. is an international biopharmaceutical company dedicated to the discovery, development and marketing of innovative products to treat sleep and neurological disorders, cancer and pain. Cephalon currently employs approximately 2,500 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.

The company currently markets four proprietary products in the United States: PROVIGIL, GABITRIL^® (tiagabine hydrochloride), ACTIQ^® (oral transmucosal fentanyl citrate) [C-II] and TRISENOX^® (arsenic trioxide) injection, and more than 20 products internationally. Full prescribing information for all U.S. products is available at 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 the settlement of this litigation, including whether the Federal Trade Commission will approve the terms of such settlement,  anticipated scientific progress on its research programs; development of potential pharmaceutical products; interpretation of clinical results; prospects for regulatory approval; manufacturing development and capabilities; market prospects for its products; sales and earnings guidance; and other statements regarding matters that are not historical facts.  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.

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