Two Sepracor drugs suffer setback, shares tumble

NEW YORK (Reuters) - U.S. biotechnology company Sepracor Inc SEPR.O on Wednesday suffered a double setback as its experimental depression drug failed a mid-stage study and U.S. regulators halted two pediatric studies of its blockbuster Lunesta insomnia pill, sending shares down 15 percent.

The biotechnology company said its experimental depression medicine, called SEP-225289, failed to reduce symptoms of depression following eight weeks of treatment in a Phase II study involving 514 patients.

Sepracor said the levels of the drug that reached the bloodstream were lower than expected and well below those seen in earlier trials. Moreover, side effects of the drug were inconsistent with those seen in the earlier studies, the company said.

"While we are clearly disappointed with the findings from the analysis of the preliminary study results, we are in the process of further analysis of the dose response and secondary endpoints to determine how or if we will take this novel mechanistic approach forward," Mark Corrigan, Sepracor's executive vice president of research and development said in a release.

The depression drug is a member of a fairly new class of medicines designed to maximize the presence in the brain of three messenger chemicals: serotonin, norepinephrine and dopamine. Standard medicines maximize only serotonin or serotonin and norepinephrine.

The other setback involved Lunesta, the company's top-selling medicine, with annual revenue of over $500 million.

The Marlborough, Massachusetts-based company had already completed two pediatric studies of Lunesta in 2008 and 2009, aimed at winning a 6-month extension of its U.S. patent on the sleeping pill.

It began two additional pediatric studies in April at the request of the FDA, but those studies have been put on "clinical hold" due to FDA concerns about non-clinical data that could be relevant to use of the medicine in children, Sepracor said.

Sepracor, in its release, did not identify the issues. Company officials could not immediately be reached for comment.

The company said the clinical hold does not relate to any findings observed in the pediatric studies, nor does it affect any ongoing trials of the medicine in adults.

Shares of Sepracor fell to $15.60 in after-hours trading, from their closing price Wednesday of $17.89 on the Nasdaq.

(Reporting by Ransdell Pierson; editing by Gunna Dickson)