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

To: j_fir2 who wrote (1845)	2/25/1999 8:24:00 PM
From: Biomaven	Respond to of 10280

I agree that other companies are most certainly patenting the chiral versions of any new compounds they come up with, and/or looking very closely at the active metabolites. Everyone expected the SEPR strategy to be transient - the amazing thing is just how long it has lasted, with new and significant ICE patents still being granted to SEPR. The Forbes guy seemed to be saying something different. He might possibly be referring to other ways of extending the life - e.g., by combining the original with some other drug to produce a combination. Not something I'm going to lose sleep over. I agree with your other point about the ICE's. Prozac II will ultimately have to compete with generic Prozac, and this will certainly hurt it price-wise. I suspect we will see SGP and Lilly trying to switch people to Claritin II and Prozac II while their original patents are still in force - that way the improved version doesn't have to compete on price at the beginning. Your point is why I don't expect Prozac II to be a $3 billion drug. Of course, a lot will depend on just how much better Prozac II is than Prozac I. Peter

To: j_fir2 who wrote (1845)	2/25/1999 9:42:00 PM
From: David Howe	Read Replies (1) \| Respond to 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

To: j_fir2 who wrote (1845)	2/25/1999 9:52:00 PM
From: David Howe	Read Replies (1) \| Respond to of 10280

So what market will the ICEs get? That is a good question. I'd say that with Allegra it took 100% of Seldane's market. Why? Because the FDA took Seldane off the market once a comparable drug was available that didn't have the dangerous side effects that Seldane did. This could happen with many of the products, we'll see. Xopenex, from what I've heard, it could take 100% of the market (isn't that what Southwell said, he's the CFO by the way, not the CEO). Prozac, wouldn't a patient want the "improved Prozac" not a generic replacement of the old Prozac. It is difficult to predict. Each situation is different. Because SEPR has so few shares outstanding, ANY share of the market has a huge impact on their share price. Also, the market as a whole is growing. The population is getting older. More and more drugs are sold each year. 1/2 of the future market for each of these products could very well equal 100% of today's market. Long SEPR, I'm sure you figured that out <g> Dave

To: j_fir2 who wrote (1845)	2/26/1999 11:19:00 AM
From: rkrw	Respond to of 10280

Allegra is selling well and has served its purpose of providing a safe and equally effective alternative to Seldane. Considering its been on the market for but two years and considering that sales of Seldane had crashed prior to Allegra's introduction to levels well below current Allegra sales, I'd call Allegra's launch successful. Should Sepracor begin earning royalties on sales at the rumored to be 8% level, they should see royalty streams of at least $40M based on a conservative $500M in 2002 sales, which is essentially the sales level today. Take a still conservative $600-$700M in 2002 sales and royalties jump to $48-$56M. Of course, the patent interference case has yet to be resolved. From Albany Molecular's S1: Sales of fexofenadine HCl in the U.S. were approximately $212 million for the year ended December 31, 1997 and approximately $339 million for the nine months ended September 30, 1998.