Sepracor Inc. Announces Third Quarter 2007 Results and Planned Reduction in Operating Expenses for 2008
Tuesday October 30, 7:00 am ET
Financial Highlights
-- Third quarter total revenues were $283.9 million
-- Generated net income of $42.9 million or $0.37 per diluted share
-- Total revenues increased 6.4% for Nine Months 2007 to $893.5 million vs. Nine Months 2006
-- Cash and short- and long-term investments grew to $932.3 million
-- Anticipated 2008 fully diluted earnings per share range of approximately $2.35-$2.45 per share
Other Operational Highlights
-- Established partnerships for development and commercialization of eszopiclone with Eisai Co. Ltd. for Japan and GlaxoSmithKline for all markets outside of North America and Japan
-- Planned reduction in sales and marketing expenses of approximately $90-$100 million for 2008, including an anticipated reduction of approximately 300 sales force positions
MARLBOROUGH, Mass.--(BUSINESS WIRE)--Sepracor Inc. (Nasdaq: SEPR - News) today announced its consolidated financial results for the third quarter and nine months ended September 30, 2007.
For the three months ended September 30, 2007, total revenues were approximately $283.9 million, which reflects a 1.9% decrease from third quarter 2006 revenues of $289.3 million. Net income for the quarter was approximately $42.9 million, or $0.37 per diluted share compared to $64.4 million, or $0.56 per diluted share for the third quarter of 2006, which reflects a 34% decrease per diluted share.
Total revenues for the nine months ended September 30, 2007 increased to $893.5 million, which reflects a 6.4% increase from revenues of $839.4 million for the same period in 2006. Net income for the nine months ended September 30, 2007 was approximately $71.6 million, or $0.61 per diluted share, compared to $85.5 million, or $0.74 per diluted share, for the nine months ended September 30, 2006. Included in the results for the nine months ended September 30, 2007 is an after-tax charge of $32.9 million, or $0.28 per share, that was applied during the first quarter and relates to the settlement of two class action lawsuits related to tecastemizole.
As of September 30, 2007, Sepracor had approximately $932.3 million in cash and short- and long-term investments, an increase of $71.4 million from the second quarter 2007.
Sepracor recently completed an evaluation of its sales force structure, sizing and allocation that was initiated in the second quarter of 2007. This evaluation has resulted in a decision to reduce the number of sales force positions by approximately 300. This, together with other anticipated cost reduction initiatives across the business, has resulted in a projected reduction in sales and marketing expenses of approximately $90-$100 million for 2008. Sepracor’s overall guidance for 2007 remains unchanged from the last quarter with anticipated total revenues for 2007 of between $1.23-$1.30 billion. Sepracor has narrowed the fully diluted earnings per share (EPS) range to $1.05-$1.15 for 2007 from the previous guidance of $1.00-1.30, based on 118 million weighted average shares outstanding. This range not only includes the after-tax charge relating to the settlement of the tecastemizole litigation of $0.28 per share, but also includes expected restructuring charges during the fourth quarter of 2007 that the company will incur related principally to the sales force reorganization during the fourth quarter of 2007. Sepracor anticipates returning to earnings momentum in 2008 with a projected fully diluted EPS range of approximately $2.35-$2.45 per share, based on 119 million weighted average shares outstanding.
“This past quarter we made substantial progress securing corporate partnerships for LUNESTA outside the U.S., which we believe will add significant long-term value to the franchise. These partnership milestones, together with the ongoing development of a more focused, targeted and productive commercial organization, are key components that we believe will help us to execute our future growth strategy,” said Adrian Adams, President and Chief Executive Officer of Sepracor. “We are looking forward to the next phase of growth for Sepracor, a phase during which we intend not only to improve cost structures, but also more fully leverage our product franchises, grow and differentiate our research and development pipeline and aggressively pursue synergistic corporate development and licensing opportunities.”
LUNESTA brand eszopiclone revenues grew to $160.9 million in the third quarter of 2007 compared to $141.6 million for the same quarter in 2006, which was a 13.6% increase. LUNESTA is indicated for the treatment of insomnia. Year to date (January-September 2007) prescriptions grew by 10.6% to approximately 5.24 million compared with the same period in 2006. Unrestricted coverage of LUNESTA under managed care also grew to 85% of managed care lives compared to 77% for AMBIEN CR®.
XOPENEX® brand levalbuterol HCl Inhalation Solution, which is a short-acting beta-agonist indicated for the treatment or prevention of bronchospasm in patients with reversible obstructive airway disease, had revenues of $94.4 million for the third quarter, compared to $125.4 million for the same quarter in 2006. The reduction of XOPENEX Inhalation Solution revenues in the third quarter 2007 compared to the third quarter 2006 were primarily attributable to the impact of the decision made by the Centers for Medicare and Medicaid Services (CMS) during the second quarter 2007 to institute a new, bundled, payment amount for XOPENEX Inhalation Solution and generic albuterol inhalation solution products. The new reimbursement rate, which went into effect on July 1, 2007, translated into a significantly lower per-unit payment for the 1.25 mg dose of XOPENEX Inhalation Solution (the dose most commonly used by Medicare Part B beneficiaries), compared to the rate paid in the previous quarter. Historically, it has been estimated that approximately 25-30 percent of XOPENEX Inhalation Solution units were subject to reimbursement under Medicare Part B, and 70-75 percent of XOPENEX Inhalation Solution units sold were through retail, hospital-based and other channels.
XOPENEX HFA® brand levalbuterol tartrate Inhalation Aerosol, a metered-dose inhaler (MDI) formulation of levalbuterol, had revenues of $17.3 million during the third quarter, reflecting a 32.3% increase over revenues of $13.1 million for the same period in 2006. This increase we believe was principally due to the continued transition of patients previously using chlorofluorocarbon (CFC) albuterol MDIs. CFC-containing albuterol MDIs are required to be phased-out before the end of 2008, with patients increasingly transitioning to HFA MDIs. Almost one-half of the short-acting beta-agonist market is still comprised of CFC albuterol MDIs, representing a sizeable remaining market opportunity for the XOPENEX HFA product.
BROVANA® Inhalation Solution, a long-term, twice-daily maintenance treatment of bronchoconstriction in patients with chronic obstructive pulmonary disease (COPD), which was commercially introduced in April 2007, had revenues of $2.4 million for the quarter. A significant portion of patients with COPD are Medicare beneficiaries, and the majority of future BROVANA revenues are expected to come from non-retail channels such as home health care. During the second quarter, CMS announced its preliminary determination that BROVANA should be awarded a unique reimbursement, or J Code, for billing purposes under the Medicare Part B benefit. The final determination is expected in the fourth quarter of 2007 and, if favorable, would become effective on January 1, 2008. Prior to that time, CMS has instructed providers to bill BROVANA reimbursement claims under a miscellaneous J Code.
Sepracor continues to earn royalty revenues on sales of out-licensed antihistamine products, which include Schering-Plough’s CLARINEX® brand desloratadine, sanofi-aventis’ ALLEGRA® brand fexofenadine HCl and UCB’s XYZAL®/XUSAL™ brand levocetirizine. These products had combined royalty revenues of $8.7 million in the third quarter of 2007 compared to $9.2 million for the same quarter in 2006. In October 2007, UCB and sanofi-aventis launched XYZAL in the U.S., and Sepracor is entitled to earn royalties on product sales.
Sepracor’s early-stage portfolio continues to advance. SEP-225289, a novel triple reuptake inhibitor for the treatment of depression, began a Phase II proof-of-concept study during the fourth quarter of 2007. SEP-225441, a compound for the treatment of generalized anxiety disorder, is expected to initiate a Phase II proof-of-concept study during the fourth quarter 2007. SEP-227162, a dual reuptake inhibitor for the treatment of depression, is expected to begin a Phase II proof-of-concept study during the second quarter of 2008. Additionally, Sepracor anticipates submitting three new Investigational New Drug Applications during the fourth quarter 2007 for product opportunities in depression, and potentially broader clinical application to conditions such as pain, bipolar disease, fibromyalgia and panic disorder. |
