Sepracor Shares Up on CMS Analysis
Thursday December 21, 4:19 pm ET
Sepracor Shares Jump on News of Medicare Analysis on Class of Drugs Including Xopenex
NEW YORK (AP) -- Shares of Sepracor Inc. jumped Thursday after a decision by federal health officials allayed fears of a cut in Medicare reimburse rates for a key product.
The Centers for Medicare and Medicaid Services said it will conduct an analysis of nebulized levalbuterol, which includes the company's Xopenex inhalable Asthma drug. The review will determine when treatment with the drug is necessary for patients with chronic obstructive pulmonary disease. The agency is scheduled to render a decision in June, which could affect reimbursement rates.
The stock gained $4.93, or 8.6 percent, to reach $62.30 on the Nasdaq in afternoon trading, as volume was more than triple the daily average. Shares hit a new 52-week high during the session.
Analysts said the review will delay any possibility of a cut in Medicare reimbursement rates for Xopenex until at least halfway through 2007, and may eliminate chances of a reduction altogether.
"This is a win-win situation for Sepracor," said A.G. Edwards analyst Aaron S. Reames, in a note to investors. "Xopenex reimbursement rate will remain unchanged for at least the next 3 quarters, keeping usage intact while allowing Brovana usage to take hold."
Brovana is the company's recently approved treatment for chronic obstructive pulmonary disease.
Merrill Lynch analyst Gregg Gilbert said Medicare had been considering a move that had the potential to cut the reimbursement rates for Xopenex. About 25 to 30 percent of the revenue Sepracor brings in from Xopenex comes from Medicare reimbursement.
He raised his price target for the stock to $75 from $65, citing the CDC decision.
Deutsche Bank analyst David M. Steinberg also raised his price target to $75, in his case from $61, citing the news, and at least three full quarters of normalized revenue from Xopenex. |
