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SEP-158/Q3-2001-v11-rev 12/18/01 10:00 AM Page 1 SEP-158/Q3-2001-v11-rev 12/18/01 10:00 AM Page 3 In September 2001, UCB announced that EU Member States granted a positive opinion for levocetirizine, a single isomer of ZYRTEC®, for thetreatment of symptoms of seasonal allergic rhinitis, perennial allergic Clinical Update
rhinitis and chronic idiopathic urticaria in adults and children aged 6 years During the quarter, Sepracor initiated two large-scale clinical trials and older. Marketed in Germany since February 2001 under the brand on XOPENEX® in a hydrofluoroalkane (HFA) metered dose inhaler (MDI) name XUSAL™, levocetirizine is expected to be launched in 15 other in children, adolescents and adults. Sepracor believes that the successful European countries in the coming months under the brand name XYZAL®.
completion of these trials will be supportive of the package necessary for the Sepracor continues to earn royalties on product sales in Germany and New Drug Application (NDA) submission to the Food and Drug expects to earn royalties on sales in EU Member States upon launch. Administration (FDA) for the XOPENEX MDI.
On January 19, 2001, Schering-Plough Corporation received an approvable Also during the quarter, Sepracor’s ESTORRA™ brand esopiclone completed letter from the FDA for CLARINEX™ Tablets (desloratadine), an active pivotal Phase III studies for the treatment of sleep disorders. All pivotal studies metabolite of CLARITIN®, for the treatment of seasonal allergic rhinitis.
necessary for inclusion in the New Drug Application are now completed and Schering-Plough also reported that the FDA has advised the company that Good Manufacturing Practices deficiencies cited in facility inspection reportsmust be resolved prior to granting approval of the company’s pending NDA for (R,R)-Formoterol inhalation solution moved into Phase III studies during the CLARINEX Tablets. Schering-Plough has stated that there are no outstanding quarter for the treatment of bronchospasm in patients with chronic obstructive scientific or clinical issues that would affect approval of the product and that airway disease. In Sepracor’s Phase II program, (R,R)-formoterol exhibited they are ready to launch CLARINEX into the U.S. market upon approval.
a rapid onset of action comparable to the short-acting bronchodilator, Sepracor is entitled to receive royalties on sales of CLARINEX upon launch of VENTOLIN®, as well as a duration of action of up to 24 hours. In a Phase II 340-patient multi-dose asthma trial, (R,R)-formoterol, at a range ofdoses, significantly improved lung function (p<0.001 versus placebo). Commercialization
These changes, measured as FEV1 increases from baseline, ranged from Sepracor continues to expand its primary care sales organization to support 24 percent to 27 percent. In these studies, (R,R)-formoterol had a side effect profile comparable to other beta-agonists. Currently marketed long-actingbeta-agonists require twice-a-day dosing and are not currently available as an Financial Performance
For the three months ended September 30, 2001, Sepracor’s consolidated revenues were $36.7 million, of which revenues from pharmaceutical sales were SEP174559 entered Phase I clinical trials for the treatment of acute and $31.6 million, and the net loss applicable to common shares was chronic anxiety. The compound has been shown in preclinical studies to $36.4 million, or $0.47 per share. These consolidated results compare with have the potential to provide anxiolytic (anxiety reducing) effect at doses far consolidated revenues of $11.5 million, of which revenues from pharmaceuti- cal sales were $9.6 million, and a net loss applicable to common shares of $45.2 Sepracor initiated Phase I clinical trials for (S)-amlodipine during the third million, or $0.62 per share, for the three months ended September 30, 2000. quarter. Preclinical models have indicated that (S)-amlodipine could be For the nine months ended September 30, 2001, Sepracor’s consolidated effective for treatment of hypertension and may demonstrate significantly revenues were $114.8 million, of which revenues from pharmaceutical sales less edema (swelling of the legs and ankles) than racemic amlodipine. were $90.0 million, and the net loss applicable to common shares was Also during the quarter, Sepracor continued to advance its clinical $121.7 million, or $1.57 per share. This compares with consolidated revenues programs for (S)-oxybutynin, the (R)-sibutramine metabolite, and the of $60.9 million, of which revenues from pharmaceutical sales were $32.6 million, and a net loss applicable to common shares of $130.6 million, Sepracor submitted an NDA for SOLTARA™ brand tecastemizole in March or $1.80 per share, for the nine months ended September 30, 2000.
2001 for the treatment of allergic rhinitis. The NDA is currently under As of September 30, 2001, Sepracor had approximately $479 million in consolidated cash, cash equivalents and marketable securities.
Also under FDA review is a supplemental NDA for XOPENEX inhalationsolution at lower dosage strengths for the treatment or prevention of Corporate News
Sepracor continued to earn royalties from Aventis for sales of ALLEGRA®
brand fexofenadine HCl, a nonsedating antihistamine for the treatment of
allergies, in the U.S., Japan, Europe, Canada, Australia, and other countries Chairman of the Board and Chief Executive Officer in which Sepracor’s patents have been issued. SEP-158/Q3-2001-v11-rev 12/18/01 10:00 AM Page 5 Late-Stage Compounds Address Large and Growing Indications Sepracor’s Phase III programs address large and growing indications, includ- Urinary Incontinence Treatments
ing insomnia, urinary incontinence, and chronic obstructive airway disease.
Prescriptions
ESTORRA™ for the treatment of sleep disorders, recently completed Phase Approx. $700M US Market
Approx. 12.5M US Market
III clinical studies and preparation of the New Drug Application (NDA) is underway. (S)-Oxybutynin for the treatment of overactive bladder advanced into Phase III studies in June 2001. (R,R)-Formoterol for the treatment of bronchospasm, such as that which occurs in patients suffering from asthma or chronic obstructive pulmonary disease (COPD), moved into Phase III studies during the third quarter 2001. ESTORRA™ Brand Esopiclone
Sleep agents generated sales of approximately $850 million in the United States in 2000. Affecting approximately 85 million Americans, sleep disorders can be caused by a number of factors, including stress, 2001 estimated based on Sept. YTD figures. Source: IMS NPA; Sepracor Analysis anxiety, jet lag, medication side effects, or may be associated with aging.
(R,R)-Formoterol
Nineteen clinical trials, including three pivotal studies, were completed Chronic obstructive pulmonary disease (COPD) is characterized by for Sepracor’s sleep disorder candidate, ESTORRA, and the drug has been airflow obstruction due to chronic bronchitis or emphysema. The successful in achieving the targeted endpoints of hypnotic efficacy in obstruction is generally progressive, may be accompanied by airway all studies. ESTORRA was also well tolerated with no evidence of any hyperreactivity, and may be partially reversible1. COPD is a widespread problem in the U.S., with the estimated number of those suffering fromCOPD increasing by 41.5% between 1982 and 19951. Also characterized Sleep Agents
by airflow obstruction, asthma affects approximately 17 million Americans, Prescriptions
Approx. $1B US Market
Approx. 29M US Market
including 5 million children, and the incidence of asthma is increasing. We successfully completed a Phase II program for obstructive airway disease, in which (R,R)-formoterol exhibited a rapid onset of action comparable to the short-acting bronchodilator, VENTOLIN®, as well as a duration of action of up to 24 hours. (R,R)-Formoterol is being studied in an inhalation Long-Acting Bronchodilators
Prescriptions
Approx. $1B US Market
Approx. 11M US Market
2001 estimated based on Sept. YTD figures. Source: IMS NPA; Sepracor Analysis (S)-Oxybutynin
Over 17 million people in the United States suffer from urinary inconti- nence, a disorder characterized by sudden and involuntary bladder contractions. Of those, an estimated 5 to 8 million suffer from urge urinary incontinence, described as an urgent desire to urinate accompanied by an inability to control the bladder. Sepracor’s Phase III program studying (S)-oxybutynin in a sustained-release formulation will 2001 estimated based on Sept. YTD figures. Source: IMS NPA; Sepracor Analysis include approximately 850 patients at 70 sites throughout the U.S. The sustained-release formulation was designed to provide a more (1) American Thoracic Society. 1995. Standards for the Diagnosis and Care of Patients with constant level of drug therapy and should permit once-a-day dosing with Chronic Obstructive Pulmonary Disease. American Journal of Respiratory and Critical Care less peak-to-trough variability and an improved therapeutic profile.
SEP-158/Q3-2001-v11-rev 12/18/01 10:00 AM Page 7 Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts) Operating expenses:Research and development General and administrative and patent costs Basic and diluted net loss per common share Shares used in computing basic and diluted (A) Includes $7,497 in expenses relating to prepaid interest and fees for the conversion of 6 1/4% convertible debentures for the nine months ended September 30, 2000.
(B) Represents Sepracor’s gain on the sale of 2.6 million shares of BioSphere Medical Inc. stock for the three and nine months ended September 30, 2001. (C) Represents Sepracor’s portion of HemaSure Inc. losses and a gain of $5,000 resulting from the removal of a HemaSure loan guarantee for the three and nine months ended September 30, 2000 and Sepracor’s portion of BioSphere Medical Inc. losses for the three and nine months ended September 30, 2001. Condensed Consolidated Balance Sheets (Unaudited)
Assets:Cash, short and long-term investments Liabilities and Stockholders’ Equity (deficit):Accounts payable and accrued expenses Total liabilities and stockholders’ equity (deficit) (A) Includes $16,800 and $20,734 of net unamortized deferred financing costs relating to the convertible debenture offerings and $29,835 and $31,789 of net unamortized intangible assets in 2001 and 2000, respectively. (B) Balance in 2001 consists of $299,960 of 7% convertible debentures due 2005, and $460,000 of 5% convertible debentures due 2007.

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