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)  February 9, 2011

Cephalon, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware	0-19119	23-2484489
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

41 Moores Rd.
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:

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

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

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

oPre-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.

Effective February 9, 2011, Cephalon, Inc. (the “Company”) entered into the Seventh Amendment (the “Amendment”) to the Credit Agreement dated as of August 15, 2008, among the Company, the lenders named in the Credit Agreement and JPMorgan Chase Bank, N.A., as administrative agent, as amended by that certain First Amendment to the Credit Agreement effective November 21, 2008, that certain Second Amendment to the Credit Agreement dated as of February 27, 2009, that certain Third Amendment to the Credit Agreement dated as of May 21, 2009, that certain Fourth Amendment to the Credit Agreement dated as of December 22, 2009, that certain Fifth Amendment to the Credit Agreement dated as of March 22, 2010 and that certain Sixth Amendment to the Credit Agreement dated as of December 7, 2010 (the “Credit Agreement”).  The pur pose of the Amendment is to provide that the Company’s transaction with Alba Therapeutics Corporation (“Alba”) described in Item 8.01 herein below is permitted under the Credit Agreement.

The foregoing is qualified in its entirety by the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

Item 8.01Other Events.

On February 9, 2011, the Company issued a press release announcing that the Company has purchased an option to acquire Alba’s assets relating to larazotide acetate.  The Company hereby incorporates by reference the press release dated February 9, 2011, attached hereto as Exhibit 99.1, and made a part of this Item 8.01.

Item 9.01              Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description of Exhibit
10.1	Seventh Amendment effective as of February 9, 2011 to the Credit Agreement dated as of August 15, 2008 among Cephalon, Inc., the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Deutsche Bank Securities Inc. and Bank of America N.A., as co-syndication agents, Wachovia Bank, N.A. and Barclays Bank plc, as co-documentation agents, and J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers
99.1	Press Release dated February 9, 2011

2

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: February 9, 2011	By:	/s/ Gerald J. Pappert
		Gerald J. Pappert
		Executive Vice President & General Counsel

3

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
10.1	Seventh Amendment effective as of February 9, 2011 to the Credit Agreement dated as of August 15, 2008 among Cephalon, Inc., the lenders named therein, JPMorgan Chase Bank, N.A., as administrative agent, Deutsche Bank Securities Inc. and Bank of America N.A., as co-syndication agents, Wachovia Bank, N.A. and Barclays Bank plc, as co-documentation agents, and J.P. Morgan Securities Inc., Deutsche Bank Securities Inc. and Banc of America Securities LLC, as joint bookrunners and joint lead arrangers
99.1	Press Release dated February 9, 2011

4

EX-10.1

Exhibit 10.1

EXECUTION VERSION

SEVENTH AMENDMENT dated as of January 14, 2011 (this “Amendment”), to the CREDIT AGREEMENT dated as of August 15, 2008, as heretofore amended (as so amended, the “Credit Agreement”), among CEPHALON, INC., a Delaware corporation, the LENDERS party thereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent.

WHEREAS, the Lenders have agreed to extend credit to the Borrower under the Credit Agreement on the terms and subject to the conditions set forth therein; and

WHEREAS, the Borrower has requested that the Lenders amend certain provisions of the Credit Agreement, and the Lenders whose signatures appear below, constituting at least the Required Lenders, are willing to amend the Credit Agreement on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:

SECTION 1.  Defined Terms.  Capitalized terms used but not otherwise defined herein (including in the recitals hereto) have the meanings assigned to them in the Credit Agreement.

SECTION 2.  Amendment to the Credit Agreement.  Section 6.04 of the Credit Agreement is hereby amended by (a) deleting the “and” at the end of clause (aa), (b) replacing the period at the end of clause (bb) with “; and” and (c) adding the following new clause:

(cc)  Investments by the Borrower in the form of loans under a single non-revolving unsecured credit facility to a Person identified as “Company A” in a transaction description heretofore delivered to the Administrative Agent for the purpose of funding clinical trials or other product development of such Person; provided that the aggregate amount of the Investments made pursuant to this clause (cc) shall not exceed US$25,000,000.

SECTION 3.  Representations and Warranties.  The Borrower hereby represents and warrants to the Administrative Agent and to each of the Lenders, as of the Amendment Effective Date (as defined below), that:

(a)  The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate or other organizational and, if required, stockholder or other equityholder action.  This Amendment has been duly executed and delivered by the Borrower and this Amendment and the Credit Agreement, as amended by this Amendment, constitute legal, valid and binding obligations of the Borrower, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting

creditors’ rights generally and to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b)  The representations and warranties of the Borrower and the Subsidiary Loan Parties set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects on and as of the Amendment Effective Date, except in the case of any such representation or warranty that expressly relates to an earlier date, in which case such representation or warranty is true and correct in all material respects on and as of such earlier date.

(c)  On and as of the Amendment Effective Date, after giving effect to this Amendment, no Default has occurred and is continuing.

SECTION 4.  Effectiveness.  This Amendment shall become effective, as of the date first above written, on the date (the “Amendment Effective Date”) on which the Administrative Agent shall have received duly executed counterparts hereof that, when taken together, bear the authorized signatures of the Borrower and Lenders constituting at least the Required Lenders, provided that the Administrative Agent shall have received all fees and other amounts due and payable to it or any of its Affiliates on or prior to the Amendment Effective Date, including reimbursement of all reasonable and documented out-of-pocket expenses (including fees, charges and disbursements of counsel) required to be reimbursed by the Borrower under the Credit Agreement.

SECTION 5.  Effect of Amendment.  (a)  Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle any Loan Party to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other Loan Document in similar or diffe rent circumstances.

(b)  On and after the Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Credit Agreement in any other Loan Document shall be deemed to be a reference to the Credit Agreement as amended hereby.  This Amendment shall constitute a “Loan Document” for all purposes of the Credit Agreement and the other Loan Documents.

SECTION 6.  Applicable Law.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

2

SECTION 7.  Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which, when taken together, shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic imaging shall be as effective as delivery of a manually executed counterpart of this Amendment.

SECTION 8.  Severability.  Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.  Headings.  The Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

SECTION 10.  Administrative Agent’s Expenses.  Without limiting the Borrower’s obligations under Section 9.03 of the Credit Agreement, the Borrower agrees to reimburse the Administrative Agent for its reasonable and documented out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore LLP, counsel for the Administrative Agent.

3

SIGNATURE PAGE TO

SEVENTH AMENDMENT TO

CEPHALON, INC. CREDIT AGREEMENT

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the date first above written.

CEPHALON, INC.,
by
	/s/ J. Kevin Buchi
	Name: J. Kevin Buchi
	Title: Chief Executive Officer
JPMORGAN CHASE BANK, N.A., individually and as Administrative Agent,
by
	/s/ James A. Knight
	Name: James A. Knight
	Title: Vice President

SIGNATURE PAGE TO

SEVENTH AMENDMENT TO

CEPHALON, INC. CREDIT AGREEMENT

BANK OF AMERICA, N.A.
by
	/s/ Yinghua Zhang
	Name: Yinghua Zhang
	Title: Vice President

SIGNATURE PAGE TO
SEVENTH AMENDMENT TO
CEPHALON, INC. CREDIT AGREEMENT
BARCLAYS BANK PLC
by
	/s/ David Barton
	Name: David Barton
	Title: Director

SIGNATURE PAGE TO

SEVENTH AMENDMENT TO

CEPHALON, INC. CREDIT AGREEMENT

DEUTSCHE BANK AG NEW YORK BRANCH
by
	/s/ Ming K. Chu
	Name: Ming K. Chu
	Title: Vice President

DEUTSCHE BANK AG NEW YORK BRANCH
by
	/s/ Heidi Sandquist
	Name: Heidi Sandquist
	Title: Director

SIGNATURE PAGE TO

SEVENTH AMENDMENT TO

CEPHALON, INC. CREDIT AGREEMENT

U.S. BANK NATIONAL ASSOCIATION
by
	/s/ Jennifer Hwang
	Name: Jennifer Hwang
	Title: Vice President

SIGNATURE PAGE TO

SEVENTH AMENDMENT TO

CEPHALON, INC. CREDIT AGREEMENT

WELLS FARGO BANK, N.A.
by
	/s/ John M. Fessick
	Name: John M. Fessick
	Title: Senior Vice President

EX-99.1

Exhibit 99.1

Cephalon Signs Option Agreement to Acquire Assets from Alba Therapeutics

Promising Compound in Stage II Clinical Trial for the Treatment of Celiac Disease

FRAZER, Pa. (February 9, 2011) — Cephalon, Inc. (Nasdaq: CEPH) and Alba Therapeutics Corporation, a privately held biopharmaceutical company, today announced that the companies have signed an agreement providing Cephalon with an option to purchase all of Alba’s assets relating to larazotide acetate, a tight junction modulator, progressing toward a Phase IIb clinical trial for the treatment of celiac disease. Under the terms of the option agreement, Cephalon will pay Alba a $7 million upfront option payment and will provide a credit facility to fund Alba’s Phase IIb clinical trial expenses for larazotide acetate.

Cephalon may exercise its option at any time prior to the expiration of a specified period after receipt of the final study report for the Phase IIb clinical trial. If Cephalon exercises its option, the company will purchase Alba’s assets for $15 million. Alba could receive additional payments related to regulatory and sales milestones.

“We are encouraged by the data that we have evaluated,” said Kevin Buchi, Cephalon’s CEO. “Alba will now initiate a Phase IIb trial utilizing a more disease specific primary endpoint.  If successful, larazotide acetate will add to our pipeline in immunology and has the potential to be the first pharmacologic therapy available to treat patients who endure this often serious condition.”

“Celiac disease affects approximately three million people in the US and 15 million worldwide.  For the past six years Alba has been working diligently to research and develop larazotide acetate, a new oral peptide that has been tested in approximately 450 patients with celiac disease.  We are excited to work with our partner Cephalon.  Their passion and experience goes hand in hand with bringing new medicines to the market for patients who suffer from this disease,” said Wendy Perrow, President and COO of Alba Therapeutics.

About Larazotide Acetate and Celiac Disease

Celiac disease is an autoimmune disorder that is triggered by the ingestion of gluten, which is primarily found in bread, pasta, cookies, pizza crust and other foods containing wheat, barley or rye. People with celiac disease who are exposed to gluten experience an immune reaction in their small intestines, causing damage to the inner surface (villi) of the small intestine, and an inability to absorb certain nutrients.  Signs and symptoms of celiac disease include intestinal pain, bloating, diarrhea and failure to thrive (infants and small children).  These symptoms can be reduced, and sometimes eliminated, by avoiding food that contains gluten.  However, many patients remain symptomatic despite a gluten-free diet, and these patients may benefit from the addition of pharmacotherapy.

Larazotide acetate is a tight junction modulator.  Tight junctions in a normal bowel are closed except to shed dead cells.  In the presence of gluten in patients with celiac disease, these tight junctions remain open, thus starting an inflammatory cascade within the bowel

that eventually destroys the intestinal villa.  Early research suggests larazotide acetate may help keep the tight junctions closed when ingested prior to a meal, thus reducing the inflammatory process in response to gluten.

About Cephalon, Inc.

Cephalon is a global biopharmaceutical company dedicated to discovering, developing and bringing to market medications to improve the quality of life of individuals around the world. Since its inception in 1987, Cephalon has brought first-in-class and best-in-class medicines to patients in several therapeutic areas. Cephalon has the distinction of being one of the world’s fastest-growing biopharmaceutical companies, now among the Fortune 1000 and a member of the S&P 500 Index, employing approximately 4,000 people worldwide. The company sells numerous branded and generic products around the world. In total, Cephalon sells more than 150 products in nearly 100 countries. More information on Cephalon and its products is available at http://www.cephalon.com/

About Alba Therapeutics Corporation

Alba Therapeutics Corporation (“Alba”) is a Baltimore, Maryland privately held, clinical-stage biopharmaceutical company focused on the development and commercialization of pharmaceutical products to treat autoimmune and inflammatory diseases.

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 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.

Media Contacts:

Media Contact:

Natalie de Vane

Senior Director, Corporate Communications & Public Affairs

T: 1-610-727-636

C: 1-610-999-8756

ndevane@cephalon.com

Investor Relations:

Chip Merritt

VP, Investor Relations

T: 1-610-738-6376

cmerritt@cephalon.com

Joseph Marczely

Manager, Investor Relations

T: 1-610-883-5894

jmarczely@cephalon.com

SOURCE: Cephalon, Inc.