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Susquehanna Lowers Sepracor Rating

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surf1944   Thursday, 04/03/08 10:41:48 PM
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Susquehanna Lowers Sepracor Rating
Thursday March 27, 4:46 pm ET
Susquehanna Financial Analyst Downgrades Sepracor, Says Revenue to Fall Short of Estimates

NEW YORK (AP) -- Shares of Sepracor Inc. fell Thursday, as a Susquehanna Financial analyst cut her rating on the drug developer, citing a lack of confidence in company's revenue guidance.
Analyst Angela Larson said that while there is no new news out on Sepracor, a continued review of her financial assumptions, recently reported prescription trends, and the stock's valuation led her to lower her rating on the Marlborough, Mass.-based company to "Negative" from "Neutral.

Sepracor makes asthma drug Xopenex, sleeping pill Lunesta and Brovana, which treats chronic lung diseases such as bronchitis and emphysema.

Sepracor has forecast 2008 total sales of $1.29 billion to $1.39 billion, but based on prescription trends and market dynamics Larson only models revenue of $1.20 billion, since Xopenex HFA sales haven't proved as strong as was hoped.

"Additionally, we have been disappointed by the launch of Brovana, and are concerned that the launch of newly acquired products (Omnaris and Alvesco) will move Brovana and other more mature products down in the sales force priorities and lead to disappointing sales," Larson wrote in a note to clients.

She also cited R&D spending as a concern, given that only $24 million out of $190 million being spent is supporting products that are highlighted as key pipeline assets, and 60 percent appears to be allocated for overhead, discovery, or other activities.

Larson noted that Sepracor is cash flow positive and has a strong cash balance of more than $1 billion, but said this is balanced out by the company's roughly $725 million of long-term debt.

Shares fell $1.05 cents, or 6 percent, to $17.72. Shares have fallen from a year-ago high of $57.11 to reach a low of $16.85 earlier this month.

surf's up......crikey

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