Sepracor-Looks very promising Message Board

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Biotech / Medical : Sepracor-Looks very promising

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To: Peter Kerling who wrote (3210)	6/4/1999 2:15:00 PM
From: Biomaven	Read Replies (1) of 10280

There are about 5m outstanding options, with a weighted average exercise price of around $30. The dilutive effect of these depends on the stock price - at $60 the diluted equivalent is 2.5m shares; at $150, it is 4m shares. The convertible is more complicated. It becomes dilutive only when the after tax interest per common share obtainable on conversion exceeds basic EPS. Once it becomes dilutive, you have to add its interest payments back on to earnings, which partially offsets its dilutive effect on EPS. In general, people substantially exaggerate the dilutive effect of options and convertibles by forgetting to include the offsetting payments the company gets on exercise or conversion. All investors in biotechs should remember that while a company is making a loss, it does not report diluted shares as different from basic shares, because it would be anti-dilutive (more shares = smaller loss per share). Thus you can't trust the diluted share numbers reported by most biotechs. Peter Peter

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