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Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (3717)	9/22/1999 11:01:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 10280

Ed, Last insider transaction I see on Yahoo is in June - where are you looking? A 50k share exercise is unlikely to be of an ISO, because of the $100k per year limit on ISOs. (Unless the option price is just a few dollars a share - do you know the exercise price?). If it's not an ISO, then the only normal reason to exercise is if the grant is expiring. Very occasionally an executive might exercise a NQ grant that wasn't expiring and then hold the shares provided he/she thought there was going to be an explosive increase over the next year, so as to get capital gain treatment for the increase. If that is the case, it would be an exceedingly bullish sign indeed. It also requires a lot of cash now to pay the ordinary income tax on the spread. If it is an ISO, then ATM will indeed inflict a serious bite. ISO exercises and holds for a year to get LTCG are not uncommon (and are also bullish), but one with this much gain is pretty unusual. When executives realize how much ATM they are going to have to pay on a transaction like this (without any proceeds to pay it with) they often end up selling some of the shares prior to year end anyway. This causes a disqualifying disposition, the gain on the shares they sell all becomes ordinary income (for which the company gets a tax deduction), and the ATM on the shares goes away. Incidentally, a straight exercise (without sale) doesn't even have to be reported on a monthly basis any more - some companies do it voluntarily, anyway (perhaps so they don't forget to do it at year end). Peter