Sepracor's (SEPR) Shares Now Cut In Half

Being in the pharmaceutical development business has always been rough, and investors in Sepracor (SEPR) learned that lesson again today. The company’s shares are down after earnings, off 17% to $31.85. The stock has a 52-week high of $63.24.

For the three months ended June 30, 2007, total revenues increased to approximately $278.1 million, which reflected a 5.2% increase from second quarter 2006 revenues of $264.4 million. Net income for the quarter was approximately $6.1 million, or $0.05 per diluted share compared to $11.0 million, or $0.10 per diluted share for the second quarter of 2006.

Both sales and earnings missed Wall St. hopes.

According to Reuters: Revenue from Lunesta, the company’s popular insomnia drug, grew just slightly, to $143.0 million from $139.1 million a year ago as generic competition weighed.

Generics will hurt a company like SEPR more than its Big Pharma rivals because it has fewer drugs on the market and less in the pipeline. If one product starts to get hit by competition, revenue can be hit hard, and for a long time.

The prospects here look none too good, but neither does the stock price

Douglas A. McIntyre