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Biotech / Medical : Sepracor-Looks very promising
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To: j_fir2 who wrote (1845)2/25/1999 9:42:00 PM
From: David Howe  Read Replies (1) of 10280
 
Absolutely, anyone can and will patent the ICE of their own compounds. If, SEPR doesn't already have the patent.

The key here is that SEPR has the patents for around 40 blockbuster drugs. SEPR is a small company with around 29 million shares outstanding (34 million fully diluted I believe).

It only takes one of these drugs to make SEPR a good investment, but they have 40 !!

For example. If the Prozac ICE ends up with $2 billion in sales per year, SEPR gets an (estimated) 12% royalty. 12% of $2 billion is $240 million. Divide that by 34 million shares and you get $7 per share in earnings. Multiply that by a PE of 40 (conservative these days) and you get 280 bucks per share.

That's only one drug. They have 4 similar deals already signed and many more on the way, IMO. They also have the potential to bring these products to market on their own (ie. Xopenex). In that scenario, they don't get 12%, they get 100% (of course not all of that goes to the bottom line, but gross margins for these companies are pretty good.

Imagine the potential this company has when you can value SEPR at 240 based on only one of their products.

I realize that this is an oversimplification and that with only one product none of us would be paying 120 per share. I'm just trying to explain that the fact that other companies can do what SEPR does is irrelevant.

It's irrelevant because SEPR is up to their eyeballs in patents on huge drugs.

Phizer isn't the only company that's been making dual-isomer drugs and they've done ok.

Dave
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