Lease deal buys Cephalon time
By Natalie Kostelni
Philadelphia Business Journal
Jan. 5 — WEST CHESTER -- Cephalon Inc., one of the region's and nation's fastest-growing biotech companies, has decided to lease an additional 200,000 square feet of space, giving it some breathing room in its search for a new corporate headquarters site.
The company is looking to sign a deal in the first quarter on space near its current offices in the Brandywine Business Park off Route 202 in West Chester, said Robert W. Grupp, vice president of corporate communications. The amount of space the company intends to lease is huge, particularly in a market where few big deals have been consummated in the last year. It's also a sign of the company's continued growth.
If a deal is completed on schedule, Cephalon figures it will move into the space a year from now. Grupp declined to divulge the exact location of the space since a deal hasn't been finalized.
The company launched its search for roughly 100 acres for a new headquarters campus in the spring of 2002. Over the last two years, it pushed out the date for selecting a site. At one point, it had anticipated having a property picked and a deal struck by the end of the first quarter of 2003. That hasn't materialized, forcing the company to seek additional space.
"Interim space was always in the cards," Grupp said. "If the company continues to grow as fast as we expect it to, that need will continue."
The company is on track to do so. In November, it reported third quarter revenue of $190 million with earnings of 38 cents a share, which included a $9.8 million pre-tax charge related to the early retirement of debt. These results compare with revenue of $130.4 million for the same period a year ago. Its sales for the quarter were strong, coming in at $184.9 million, compared to $122.4 million in the third quarter of 2002.
It also bought Cima Labs Inc., a Minnesota manufacturer of prescription and over-the-counter products based on its proprietary, orally disintegrating drug-delivery technologies, in the third quarter for $515 million.
Earlier last year, Cephalon leased an additional 40,000 square feet in the Brandywine Business Park, where it owns a 160,000-square-foot building at 145 Brandywine Parkway. In all, it occupies space in three buildings in the park.
It narrowed its search for a new campus to southeastern Pennsylvania between Malvern and the Delaware state line. The company has considered and continues to look at existing facilities that would accommodate an eventual 1 million-square-foot campus, as well as land that could be developed into office and lab space, Grupp said.
"We've been looking all year," he said. "We would like to identify it as quickly as possible but with the availability of interim space, we don't feel under any pressure to jump into any transaction."
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