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Sepracor Shares Fall as Profit Falls Short, 2007 Forecast Cut

Sepracor posted lower-than-expected results Friday and cut its 2007 outlook amid competition for its insomnia drug and reduced reimbursement for its asthma drug, sending its shares down 20 percent.

The Marlborough, Massachusetts-based drug company said net profit fell to $6.1 million, or 5 cents a share, from $11 million, or 10 cents a share, a year ago.

Revenue rose 5 percent to $278.1 million. Analysts, on average, expected revenue of $327.2 million.

Revenue from Lunesta, the company's insomnia drug, grew 3 percent to $143.0 million, falling short of expectations on competition from a generic version of rival Ambien.

"The numbers are a disaster," said Ian Sanderson, an analyst at Cowen & Co.

Last month Medicare, the U.S. government health plan for the elderly, cut reimbursement levels on Sepracor's asthma drug Xopenex, with the cut going into effect July 1.

Under the plan, the Centers for Medicare & Medicaid Services is applying the same reimbursement code to Xopenex, which is an altered form of albuterol, as cheaper, generic albuterol.

Sales from Xopenex inhaled solution fell to $104.9 million from $115.7 million a year ago, also short of expectations.

"The outlook for Lunesta is difficult, the outlook for Xopenex is difficult, and they don't have much in their pipeline," Sanderson said.

Sepracor's shares had already fallen nearly 40 percent this year before their decline on Friday, compared to a 2 percent gain in the Nasdaq Biotechnology Index, as the company faces multiple competitive and regulatory challenges.

The company said it now expects 2007 earnings per share of $1.00 to $1.30 including a 28-cent-per-share charge for settlement of litigation.

In April, the company said it expected 2007 earnings per share of $2.11, excluding one-time items.

The company said it now expects 2007 revenue of $1.23 billion to $1.3 billion. Previously it forecast revenue of $1.43 billion to $1.49 billion.

Analysts on average had expected 2007 earnings excluding one-time items of $1.99 a share and revenue of $1.36 billion.

The company's shares fell 20 percent to $30.41 in early trading on Nasdaq.

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