Cephalon has been forced to slash its sales forecasts for 2006 after a US Food and Drug Administration (FDA) advisory committee said Sparlon, its new drug for attention-deficit hyperactivity disorder, should not be approved.

The panel said the drug was clearly effective in treating ADHD, but voted by 12 to one not to recommend approval because of fears that it may be linked to a serious and potentially fatal allergic skin reaction known as Stevens Johnson syndrome. Almost all cases of the disease are caused by exposure to drugs, according to the SJS Foundation in the USA.

Cephalon should conduct a one-month clinical trial - involving at least 3,000 patients - to examine the drug’s potential to cause SJS, said the panel, a requirement which would add a significant cost to its development and likely delay approval for at least a year. Last October, the FDA said Sparlon was approvable, but additional data was required before it could give it a green light.

The panel reviewed four cases of SJS seen in patients treated with modafinil, including one case in a child treated with the drug in an ADHD clinical trial and four cases from post-marketing surveillance of the drug, which is already approved in a different dosage form for narcolepsy.

The US biotechnology firm said its 2006 sales would be reduced by $100 million to $1.45-$1.5 billion as a result of the delay.

Earlier in the two-day meeting, the panel had recommended that safety labelling on all ADHD drugs be upgraded to warn of possible cardiovascular and psychotic side effects, but stopped short of asking for a black-box warning on the products.

And while there had been considerable speculation ahead of the meeting that the panel would concentrate on these issues in its review of Sparlon, particularly with regard to the risk of suicide with the drug, the panel agreed that the data do not suggest it differs from other ADHD products in ths regard.

Trading in Cephalon’s shares had been halted ahead of the FDA panel meeting, but the stock is expected to suffer a significant decline when it resumes today.