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UPDATE 3-Sepracor falls as Lilly pulls plug on version of Prozac
THURSDAY, OCTOBER 19, 2000 6:34 PM
- Reuters
(updates percentage share decline in lead, adds closing share prices, paragraph 3)
By Ransdell Pierson
NEW YORK, Oct 19 (Reuters) - Sepracor Inc. (NASDAQ NM:SEPR), one of the country's highest-profile biotech companies, lost over
a fourth of its market value on Thursday after it and partner Eli Lilly and Co. dropped plans to develop Sepracor's second-generation
version of Lilly's blockbuster antidepressant Prozac.
The two companies decided to abandon further development of the compound, which is closely related to the key chemical in Prozac
(fluoxetine), following clinical studies in which a heart irregularity was detected using high doses of the drug.
Shares of Sepracor fell $33-3/4, or nearly 28 percent, to $87-1/16, on Nasdaq. Lilly (NYSE:LLY), a far larger firm which earlier
Thursday reported higher third-quarter profits that matched Wall Street forecasts, slipped 3/4 to $88-1/2 on the New York Stock
Exchange.
Sepracor said it will lose out on annual royalties of up to $100 million it had expected from Lilly by 2003 on sales of the
still-experimental drug, R-fluoxetine, now that Lilly has bailed out.
"Clearly that is going away. There is no way to sugar coat that that disappears from our (earnings) model," a Sepracor official said in a
telephone conference with analysts.
Prozac boasted global sales of $2.6 billion in 1999, but its U.S. patent expires in August 2001. The Sepracor version would have
allowed Lilly to offer a patent-protected alternative to generic forms of Prozac expected to hit the market late next year.
Sepracor said the heart irregularity, called QTc prolongation, was statistically significant, meaning it was likely related to the drug. But
the company described it as a "clinically insignificant effect."
Nevertheless, further development was not being considered because trials to prove its safety would delay Lilly's marketing
application for the drug at least another two years, Sepracor said.
Lilly's key Prozac patent is slated to expire next year following a court ruling in August that trimmed its life by two years.
Corey Davis, an analyst for Chase Hambrecht & Quist, said on Thursday that Lilly and Sepracor had hoped to get R-fluoxetine to
market by 2002 -- in time to convince millions of patients taking Prozac to switch to the follow-up drug.
But Davis said, the court ruling threw a monkey wrench into their strategy because generic rivals to Prozac will probably now spring up
years before Sepracor and Lilly would be able to complete new clinical trials of R-fluoxetine to verify its safety.
Lilly licensed rights to R-fluoxetine in 1998 from Sepracor, a Marlborough, Mass.-based firm that specialises in making slightly altered
versions of currently marketed drugs, which are intended to be safer than the original versions.
Although Sepracor has abandoned R-fluoxetine, the company said it plans to become profitable by 2003 -- enabled by its planned
launch in the next four years of 10 new drugs that will be sold by Sepracor's own salesforce.
They include a different anti-depression compound called R-DDMS, which Sepracor is testing in Phase II trials, as well as treatments
for allergies, incontinence and hypertension.
It said QTc prolongation has not cropped up as a side effect in trials of other drugs in its extensive pipeline.
R-fluoxetine is a so-called "chiral" version of Prozac, meaning that the original molecule has been split, with removal of the half
suspected of causing side effects.
Sepracor has patents on altered forms of a score of existing compounds, including Prozac and Schering-Plough Corp.'s (NYSE:SGP)
top-selling allergy drug Claritin.
The company's share price had skyrocketed in the past two years after Sepracor licensed its version of Prozac to Lilly and rights to a
derivative of Claritin to Schering-Plough.
Analysts are expecting Schering-Plough to win U.S. marketing approval this year for the follow-up version of Claritin, desloratadine.
Rtr 18:34 10-19-00
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Copyright 2000, Reuters News Service
