UNITED STATES SECURITIES AND EXCHANGE COMMISSION LITIGATION RELEASE NO. 15509 / September 25, 1997 U.S. SECURITIES AND EXCHANGE COMMISSION v. DALE J. LANGE, ET AL. (United States District Court for the Eastern District of Pennsylvania, Civil Action No.97-CV-6018) On September 25, 1997, the U.S. Securities and Exchange Commission ("Commission") filed a complaint in United States District Court for the Eastern District of Pennsylvania against seven individuals for insider trading in the securities of Cephalon, Inc. ("Cephalon"). The trading occurred prior to a public announcement on June 10, 1995 by Cephalon concerning favorable test results involving Myotrophin, a drug Cephalon developed to treat individuals suffering from Amyotrophic Lateral Sclerosis, also known as Lou Gehrig's disease. The complaint names the following individuals as defendants: Dale J. Lange ("Lange"), a clinical investigator for Cephalon and a member of the medical faculty and Associate Professor of Neurology at Columbia University's College of Physicians and Surgeons in New York City; Philip S. Portoghese ("Portoghese"), a member of Cephalon's Scientific Advisory Board, Stuart W. and Stephen P. Portoghese, Portoghese's sons; Frank G. Lepore ("Frank Lepore") and Mark F. Lepore ("Mark Lepore"), officers of a graphic arts company that was retained by Cephalon to prepare certain materials depicting the Myotrophin test results; and Timothy L. Garner ("Garner"), a former Cephalon employee. The Commission alleges that each of the defendants, while in possession of material non-public information concerning the favorable Myotrophin test results, purchased, or tipped others who purchased, Cephalon securities prior to the public announcement of the Myotrophin results. According to the complaint, Lange served as both a clinical investigator and an advisor/consultant during the course of the Myotrophin trials. Upon learning of the favorable test results, he purchased a total of 3,000 shares of Cephalon common stock during the one-month period prior to the company's public announcement. His profits from the trades totalled $26,496. The complaint further alleges that P. Portoghese, a member of Cephalon's Scientific Advisory Board ("Board"), first learned about the positive Myotrophin results during a telephone conference call between Cephalon officers and Board members. The Commission alleges that Portoghese told his sons, Stuart and Stephen, about the test results, and that they purchased 615 and 200 shares of Cephalon, respectively, within one and one-half hours after the telephone conference call ended. The Commission's complaint alleges that Frank and Mark Lepore obtained the information when Cephalon retained their company to enhance certain slides, charts and graphs, which depicted the results of the Myotrophin clinical trials. During the ten day period prior to Cephalon's public announcement, Frank Lepore purchased 600 shares of Cephalon common stock and 50 Cephalon call options. During that same period, Mark Lepore, his son, purchased 25 Cephalon call options. According to the complaint, Frank ======END OF PAGE 1====== and Mark Lepore realized profits of $25,737 and $15,084, respectively. Finally, the Commission alleges that Garner, who had never before purchased securities, purchased 100 shares of Cephalon common stock and 10 Cephalon call options prior to the public announcement. Garner was employed as a scientist at Cephalon and worked on projects analyzing proteins used for Myotrophin. He earned $4,656 in profits as a result of his trading. The Commission alleges that Lange, Frank Lepore, Mark Lepore and Garner purchased of Cephalon securities despite having signed confidentiality agreements with the company. In these agreements, they each acknowledged that the information they would receive from Cephalon was confidential and proprietary. According to the complaint, in his agreement, Lange also agreed not to purchase Cephalon securities during the term of the agreement. The Commission's complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In the complaint, the Commission also seeks disgorgement and the imposition of civil penalties against each of the defendants. Simultaneous with the filing of the complaint, Frank Lepore, Mark Lepore and Garner each consented, without admitting or denying the allegations in the complaint, to the entry of a Final Judgment and Order enjoining them from future violations of the relevant securities laws. Frank Lepore also agreed to disgorge his profits of $25,737, together with prejudgment interest, and to the imposition of a civil penalty of $25,737. Mark Lepore agreed to disgorge his profits of $15,084, together with prejudgment interest, and to the imposition of a civil penalty of $15,084. Garner agreed to disgorge his profits of $4,656, together with prejudgment interest. As part of the settlement with Garner, the Commission has declined to seek to impose a civil penalty based on Garner's demonstrated inability to pay. Cephalon is a Delaware corporation with headquarters in West Chester, Pennsylvania. The company originates and develops pharmaceutical products for the treatment of neurological disorders. Lange resides in Scarsdale, New York. Portoghese resides in North Oaks, Minnesota, and his sons, Stuart and Stephen, are both residents of St. Paul, Minnesota. Frank and Mark Lepore are residents of Mt. Laurel, New Jersey and Medford, New Jersey, respectively. Garner resides in Lancaster Pennsylvania. ======END OF PAGE 2======