UPDATE 2-Cephalon boosts 2010 earnings view after strong Q3

* Q3 adjusted EPS $2.14 vs Street view 1.79

* Revenue $717 million

* Sees adjusted 2010 EPS $8.20 to $8.40

* Sees adjusted 2011 EPS $8.45 to $8.65

* Shares rise 0.7 percent (Adds analyst, company comment, sales details, share move)

By Bill Berkrot

NEW YORK, Oct 28 (Reuters) - Cephalon Inc CEPH.O on Thursday boosted its full-year earnings forecast range by 75 cents a share, helped by cost cutting, and provided a rosy outlook for 2011 after reporting a 38 percent jump in third-quarter profit.

The company’s flagship sleep disorder drug Provigil also posted sales that exceeded expectations and its shares rose.

Cephalon said it now expects 2010 adjusted earnings of $8.20 to $8.40 per share, excluding items, up from its July forecast of $7.45 to $7.65 per share.

“Most of the upside is really coming from Provigil and lower costs,” Summer Street Research analyst Jon Stephenson said of the forecast boost, noting that the research and development (R&D) spending forecast came down by $20 million.

For the third quarter, Cephalon posted a net profit of $131.6 million, or $1.66 per share, compared with a profit of $95.1 million, or $1.31 per share, a year ago.

Excluding items, the Frazer, Pennsylvania-based company earned $2.14 per share. Analysts on average expected $1.79, according to Thomson Reuters I/B/E/S.

“The reason that they crushed the bottom line was really because they spent a lot less than what we thought,” said Gary Nachman, an analyst with Susquehanna Financial Group.

“Most of the upside in this quarter came from lower SG&A and R&D,” Nachman added.

The company also provided its first view of 2011, saying it expects adjusted earnings excluding items of $8.45 to $8.65 per share, well ahead of Wall Street estimates of $7.68 a share.

Cephalon forecast 2011 sales of $2.96 billion to $3.04 billion. It expects 2010 sales to come in at $2.69 billion to $2.73 billion, up from its prior view of $2.63 billion to $2.71 billion.

“They’re coming in with a very strong revenue number for 2011. Some of that may be driven by price increases,” Nachman said.

The company, on a conference call with analysts, cautioned that it expects “an earnings dip in 2012” when Provigil will be faced with competition from cheaper generics.

Third-quarter revenue of $717 million topped analysts’ expectations of $720.3 million.

Worldwide sales of Provigil for the quarter rose 9 percent to $281 million. Wall Street was looking for sales of about $266 million for the drug for narcolepsy.

Sales of the much newer sleep disorder drug Nuvigil more than doubled to $51.4 million. The company said more than 200,000 Nuvigil prescriptions were written in the quarter, but that sales were held back a bit by the continued strength of Provigil.

Cephalon said it was concentrating efforts to grow Nuvigil by expanding its use for drowsiness caused by shift work disorder.

Sales of Cephalon’s new cancer drug Treanda nearly doubled to $103.9 million. That was roughly in line with expectations and only about $4 million higher than in the prior quarter.

Cephalon shares rose to $67 in extended trading from their Nasdaq close at $66.52. (Reporting by Bill Berkrot; editing by Gunna Dickson, Bernard Orr)