Sepracor

Sepracor, Inc.

Type	Public
Founded	1984
Headquarters	Marlborough, Massachusetts
Key people	Timothy J. Barberich, Chairman
Industry	Pharmaceuticals
Products	Lunesta, Xopenex, Brovana
Employees	2,400 (2009)[1]
Website	http://www.sepracor.com

Sepracor, Inc. ( former NASDAQ: SEPR ) is a pharmaceutical company founded in 1984 by Tim Barberich. It was originally located in Princeton, New Jersey and then re-located to Marlborough, Massachusetts.^[2]

History

The company's initial focus was on the development of single isomers and active metabolites. This concept allowed Mr. Barberich and Doug Reedich, PhD, JD (Chief Patent Council) to generate an impressive patent estate that served the company well for many years. Therapeutically, Sepracor's products were focused on the treatment of central nervous system and respiratory disorders, under the direction of Gunnar Aberg, PhD (VP of Research and Development) and John McCullough, PhD (Director of Research). The primary source of its revenue is the approximately $600 million annually from its Xopenex franchise of drugs, launched under the marketing leadership of John Simon, with the direct involvement of Medical Communications, under Dean Handley, PhD, MBA. It is available as a multi-dose inhaler (MDI) or nebulized (UDV) form. However, the insomnia drug Lunesta, which was discovered by Tom Jerussi, PhD, approved by the U.S. Food and Drug Administration (FDA) in December 2004 and launched in April 2005 under the marketing leadership of Tim Healy, is on pace to exceed $1 billion in annual sales.^{[citation needed]} In addition, on February 13, 2006, Sepracor filed a new drug application (NDA) for Brovana, patented by Gunnar Aberg and John Morley, PhD (also launched under John Simon) to treat Chronic Obstructive Pulmonary Disease (COPD). All of the launch drugs were manufactured under the leadership of Walter Piskorski.^{[citation needed]}

Sepracor has broad exposure to generic competition, as both Xopenex inhalation solution and Lunesta brands will face expiring patents at nearly the same time in Q3-2012, leaving Omnaris, Alvesco, Brovana and Stedesa to fill in the revenue gaps.^{[citation needed]} Sepracor has suffered five recent set backs. The first was the announcement that it had completed the analysis and validation of the preliminary results of a Phase II study evaluating the efficacy and safety of SEP-225289 for the treatment of Major Depressive Disorder where Sepracor determined that SEP-225289 did not meet the primary efficacy endpoint (a reduction in symptoms of depression following eight weeks of treatment). However, the positive control in the study (venlafaxine extended-release)did achieve separation from placebo that was statistically significant on the primary endpoint. Dr Corrigan, responsible for the study, could not explain why clinical study of his design has failed ^[3] SEP-225289 is the single isomer active metabolite of racemic venlafaxine. Secondly, Sepracor has announced patent interference between Sepracor and Wyeth.^[4] The interference seeks to determine the priority of inventorship of claims directed to racemic O-desmethylvenlafaxine (ODMV) succinate. Wyeth markets racemic ODMV succinate (the active racemic metabolites of venlafaxine while Sepracor is developing only one of the active isomer metabolites as SEP-225289) in the U.S. under the brand name PRISTIQ® for the treatment of major depressive disorder in adults. Thirdly, the FDA has notified Sepracor that two clinical studies on eszopiclone in children have been put on clinical hold due the FDAs concerns regarding non-clinical data that could be relevant to the administration of eszopiclone in children.^[5] Fourthly, the European Medicines Agency, the European Union’s version of the U.S. Food and Drug Administration, has approved Lunesta for sale, but didn’t grant the request by Sepracor to designate it as a new active substance. Because of the EMA decision, Sepracor and GSK are terminating completely their plan to market the drug in the EU.^[6] Lastly, Sepracor recently announced it has reached a licensing agreement and settled litigation with a division of Teva Pharmaceuticals USA to make a generic version of Sepracor’s inhaled asthma drug Xopenex.^[7]

Beneficiaries, partners, and subsidiaries

Acadia Pharmaceuticals

On January 11, 2005, Sepracor partnered to advance a joint muscarinic-1 receptor agonist program for neuropathic pain.

Schering-Plough

In December 1997 Schering-Plough obtained exclusive worldwide rights to Sepracor's patents relating to desloratadine, discovered and patented by Drs. Gunnar Aberg, John McCullough, Emil Smith and Dean A. Handley. In January 2002, Schering-Plough launched the product as Clarinex for the treatment of seasonal allergic rhinitis (SAR).

Sanofi-Aventis

Sepracor earns royalties from patents relating to fexofenadine which is marketed as Allegra by Sanofi-Aventis. Fexofenadine is a nonsedating antihistamine for the treatment of allergic rhinitis. In December 1993, Sepracor licensed the United States patent for the use of fexofenadine to Hoechst Marion Roussel (HMRI). HMRI developed the drug and launched it in late 1996 as Allegra brand fexofenadine hydrochloride.

Sepracor Canada (Nova Scotia) Ltd.

Sepracor Canada (Nova Scotia) Ltd. is a 50,000-square-foot (4,600 m²) facility located in Windsor, Nova Scotia, Canada. Sepracor Canada is a pilot and commercial plant operation and the commercial manufacturing site since launch for levalbuterol HCl, the active ingredient in XOPENEX; eszopiclone, the active ingredient in LUNESTA; and arformoterol tartrate, the active ingredient in Brovana.

GlaxoSmithKline

On September 11, 2007, Sepracor signed a marketing deal with British pharmaceutical company GlaxoSmithKline over the rights to sell Lunesta in Europe.^[8] If all stipulations are met, Sepracor is expected to receive approximately 155 million dollars in compensation for supplying the drug.^[8] Currently, Lunesta, known as Lunivia in Europe, is under review by the European Union's equivalent of the U.S. Food and Drug Administration for regulatory purposes.^[8]

Nycomed

On January 28, 2008, Sepracor and Nycomed announced an exclusive development, marketing and commercialization agreement for ciclesonide in the United States.^[9]

BIA 2-093

In 2008, Bial agreed with Sepracor that its antiepileptic BIA 2.093 would be produced in Sepracor's facilities and supervised by Bial. ^[10]

Omnaris and Alvesco

The company recently acquired Omnaris and Alvesco for $150M upfront and an addition $280M in potential milestones. Alvesco revenues for Q4'08 were -$0.3 million because returns from the "stocking" in Q3'08 exceeded the demand in Q4'08. The company disclosed a 2009 forecast of $25-$40M for Omnaris and $10-15M for Alvesco; yielding a combined total of $35M-$55M in year 2 of a launch. However, revenues continue to be dismal, prompting criticisms and concerns over the purchase price relative to minuscule income.

2009 layoffs and stock incentive plan

In January 2009, Sepracor announced a series of layoffs due to the challenging economic environment for both the country and the pharmaceutical industry.^[11] However, current CEO, Mr. Adrian Adams, accepted a pay increase to put him at around $6.5 million annually, and was the seventh highest paid CEO in Massachusetts in 2007.^[12] Furthermore, the management has awarded top executives with a new 2009 stock incentive plan that will allow executives to receive a maximum of 500,000 shares per year before any performance objectives are reached. The exact number of shares for each executive will be determined by the board compensation committee, but typical grants for a company this size are 50,000 to 125,000 for each executive and could be a mixture of stock and stock options.

Takeover bid by Dainippon Sumitomo

On September 2, 2009, shares of Sepracor were halted on the Nasdaq due to pending news of a takeover bid by Japanese drugmaker Dainippon Sumitomo. According to the Associated Press, Dainippon plans to offer $2.6 billion for Sepracor, a nearly 28% premium over the stock's closing price on September 1.^[13] Aside from acquiring drugs like Lunesta and Xopenex, analysts say the acquisition will give Dainippon access to "Sepracor's sales force of roughly 1,200", which would open an avenue for the Japanese company to market its drugs in the United States.^[14] And given that Sepracor is set to face stiff generic competition from expiring patents (Xopenex in 2012 and Lunesta in 2014), has failed to discover any viable drugs in nearly 10 years ^[15], has failed at its recent clinical trials and partnerships, having the shareholders accept the takeover bid seems as a very desperate attempt by management to exit a failing organization with a much money as possible.^[16] Understandably, Sepracor shareholders are suing to block the deal ^[17] adn feel the current offer is well below Sepracor's true market value and that Adrian Adams and others have breached their fudiciary responsibilities and agreed to terms designed to prevent anyone from making a superior offer ^[18]. Sepracor directors failed to conduct an appropriate sales process and implemented preclusive deal protections that will inhibit an alternate transaction and Spracor directors “did not undertake to canvas the market prior to entering into the proposed merger and thus failed to inform themselves of the inherent fair value of the company. ^[19] Furthermore, Sepracor's growth is expected to be crimped in the future because of competition from generic drug producers, as well as a meager pipeline due to the failure of R&D to identify any developmental compounds of value ^[20].

See also

• Lunesta
• Xopenex
• Brovana

References

External links

• Sepracor, Inc.
• Sepracor on Yahoo! Finance
• Sepracor at The Motley Fool