Will That GSK Insomnia Drug Deal Hurt Sepracor?

July 14, 2008

Ed Silverman at Pharmalot reported today that GSK will pay an “eyepopping” $3.3 billion for Actelion’s phase III sleep drug, almorexant. But I’m guessing that the eyes that are popping the most will be up in Massachussetts at Sepracor, maker of sleep drug Lunesta.

Why?

Because in September of last year Sepracor signed a deal with GSK to distribute Lunesta in “all markets worldwide (excluding the U.S., Canada, Mexico and Japan).” Which happen to be mostly the same markets covered by today’s deal.

And while the Actelion deal cost $3.3 billion, the Lunesta deal topped out at a modest $155 million. So someone here has been vastly overpaid or vastly underpaid. GSK is now touting almorexant as “first-in-class,” which raises a question about how serious GSK’s commitment to Lunesta is, especially as both drugs have yet to be approved in Europe.

Unsurprisingly, Sepracor’s stock declined this morning and after a recovery closed slightly down at 20.11.

Some advice in hindsight to GSK: While the ink is still wet on that contract, you might want to actually taste almorexant before writing more of those milestone checks … because apparently, in some patients, Lunesta/Lunivia a) tastes disgusting and then b) takes away your sense of taste completely.

It would be a bad thing to drop such a large lump of cash on a pill no one wants to eat twice…

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One Response to “Will That GSK Insomnia Drug Deal Hurt Sepracor?”

  1. Health Cover Says:

    I am in awe on how huge the market is and the amount of money involved in this industry. I actually never expected that it involves millions, make that billions of dollars to run it.


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