UPDATE 3-Sepracor profit falls, plans to cut sales force

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By Toni Clarke

BOSTON, Oct 30 (Reuters) - Sepracor Inc (SEPR.O: Quote, Profile, Research, Stock Buzz) posted lower third-quarter earnings on Tuesday, hurt by a decline in sales of its respiratory drug Xopenex, but the company's shares rose more than 16 percent after it said it would cut 300 people from its sales force.

Sepracor said it expects the sales force reduction -- which represents roughly 16 percent of the total -- and other cost-cutting to lower sales and marketing expenses by $90 million to $100 million next year.

The company said the cuts will help bolster its resources as it competes with other drugmakers to acquire or license experimental products in late-stage development.

Sepracor's shares have fallen 57 percent since the beginning of the year, compared with a gain of 11 percent in the Nasdaq Biotech Index , amid increased competition to its insomnia drug Lunesta and a reduction in the level of reimbursement for Xopenex.

In July, Medicare, the U.S. government health plan for the elderly, cut reimbursement levels for Xopenex after the Centers for Medicare and Medicaid Services applied the same reimbursement code to Xopenex and generic albuterol, the active ingredient in Xopenex.

The Marlborough, Massachusetts-based drug company said net profit in the quarter fell to $42.9 million, or 37 cents a share, compared with $64.4 million, or 56 cents a share, a year earlier. Revenue fell 1.9 percent to $283.9 million.

The earnings beat the average estimate from analysts of 26 cents a share, according to Reuters Estimates, mainly due to lower sales and marketing expenses and lower research and development costs.