Sepracor has posted lower-than-expected earnings for the third quarter as sales for its top two products, the sleep drug Lunesta and the asthma treatment Xopenex. continued to decline and operating expenses rose sharply.
Net income fell 51.1% to $19.4 million, as operating expenses climbed 19.8% to $268.7 million, although total revenues were up 9.6% to $307.7 million. Sepracor’s biggest-seller Lunesta (eszopiclone) declined 3.7% to $154.7 million, but that figure should rise considerably in the near future given that the European Medicines Agency has just issued a positive opinion on the drug, which will be marketed as Lunivia in Europe.
Xopenex (levalbuterol), which is indicated for the treatment of chronic obstructive pulmonary disease and asthma, fell 14.9% to $77.9 million, while Brovana (arformoterol) for COPD brought in $14.8 million, up from $2.4 million for the same period last year. Royalties from out-licensed antihistamine products, which include Schering-Plough’s Clarinex (desloratadine), Sanofi-Aventis’ Allegra (fexofenadine) and UCB’s Xyzal/Xusal (levocetirizine), were up almost 90% to $16.5 million.
Sepracor has also recently launched Novartis’ ciclesonide, the active ingredient in both the asthma treatment Alvesco and Omnaris AQ nasal spray for allergic rhinitis, and they had revenues of $17.1 million and $1.3 million, respectively.
Chief executive Adrian Adams said the firm had delivered a solid quarter, “particularly in light of the challenges our industry, and the economy, are currently facing”. He added that Sepracor is making progress “in delivering enhanced sales force productivity in addition to broadening and deepening our R&D pipeline, a pipeline that we believe is among the best in our sector”.
In a conference call, Mr Adams noted that in order to advance that pipeline, the firm is looking for partners, preferably outside the USA, and it is also looking to acquire or license new products. “We continue to assess the potential for opportunistic M&A opportunities to give us the opportunity to leverage the organisation,” he added. The company had cash and investments of $787.4 million at the end of the quarter.
Sepracor has also tightened its 2008 net income guidance to $4.20-$4.40 per share versus an earlier forecast of $4.20-$4.60. Revenue is now expected to be $1.28- $1.33 billion, from its prior forecast of $1.28-$1.38 billion.
