On October 1, 2008 Zacks.com released a list of five companies (including SEPR) that have a Zacks' rating of 5 (a strong sell recommendation). 5% of all Zacks-ranked stocks have such a rating. Reasons Zacks currently ranks Sepracor a 5 include SEPR's missed Q2 revenue projections (see Annotation C), Xopenex's lower-than-market-rate reimbursement through Medicare, and the increasing generic competition against Lunesta (which Zacks believes will make it tough for Sepracor to increase U.S. sales of the drug). Since inception in 1988, the S&P 500 has outperformed the Zacks #5 Rank List by 81% annually (+2% versus +11%).
On September 24, 2008 at the 8th European Congress of Epileptology in Berlin, Sepracor announced positive data from 3 different FDA Phase III studies of their experimental anti-epilepsy drug eslicarbazepine acetate. The studies reported that SEPR's drug significantly reduces the frequency of partial seizures in patients (when combined with other anti-epileptics), dereases their depressive symptons and increases their overall quality of life.
Sepracor reports Q2 earnings that were lower than analyst expectations. Combined sales of Xopenex fell 14% to $99.5 Million (down from $115.9 Million a year ago), due primarily to the effect the current below-market-rate Medicare Part B Reimbursement had on sales of the drug. Additionally, even though SEPR's sales, general and administrative expenses fell to $207.8 million, this figure was still higher than many analysts predicted it would be. Total Q2 Revenues for Sepracor were $294.1 million, while analysts predicted at least $302.6 million. SEPR also reduced its annual earnings forecast, saying that its 2008 revenue would come in between $1.28 billion and $1.38 billion, rather than $1.35 billion and $1.45 billion it projected earlier in the year.
GlaxoSmithKline agreed to sell Sepracor’s insomnia drug Lunivia in the European Union. Sepracor will pay an initial amount of $20 million to GlaxoSmithKline. The total deal value can go up to $155 million, which will depend on the drug’s progress in EU.
