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

To: Robert L. Ray who wrote (2778)	5/15/1999 6:58:00 AM
From: John Bloxom	Read Replies (1) \| Respond to of 10280

I concur. One would expect the net present value of the royalty stream to JNJ assuming co-promotion to be the same as the net present value of the same stream without co-promotion (in that case, at a reduced royalty percentage), since if it had been structured otherwise, exercise or non-exercise of the option would have been a certainty, and that would be silly. In that sense, the decision whether to co-promote or not is exactly like the decision whether to buy down the rate on a home mortgage by paying points; once you do the present value computations, you will readily see that a zero point deal at a given APR is exactly the same deal as a 3 point deal at the lesser APR quoted by the lender - the only difference is when you pay, not if. This suggests that JNJ's decision might not have been related to efficacy or market acceptance issues at all, and SEPR's 5/17 conf call announcement would seem to support this view. I haven't read the licensing agreement and therefore cannot be sure of the accuracy of this analysis. I did, however, add a substantial number of shares (to an already very substantial position) at $81 or so. Regards, John