Sunovion Pharmaceuticals Inc. – ‘10-K/A’ for 12/31/99

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Amendment to Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      Amendment to Annual Report                            25    138K 
 2: EX-13       Annual or Quarterly Report to Security Holders        43    234K 

10-K/A   —   Amendment to Annual Report
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
------------------------

FORM 10-K/A 

AMENDMENT NO.1

FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 

(MARK ONE)                                                                      

                                                                [Download Table]
                                                            
/X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934                     

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 
OR

                                                                [Download Table]
                                                                
/ /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934                         

FOR THE TRANSITION PERIOD FROM ______________ TO ______________ 

COMMISSION FILE NUMBER 0-19410
------------------------
SEPRACOR INC. 

(Exact Name of Registrant as Specified in its Charter)

                                                                [Download Table]
                                                           
            DELAWARE                        22-2536587     
(State or Other Jurisdiction of)         (I.R.S. Employer  
 Incorporation or Organization)         Identification No.)

 111 LOCKE DRIVE, MARLBOROUGH,                 01752       
         MASSACHUSETTS                      (Zip Code)     
(Address of Principal Executive                            
            Offices)                                       

Registrant's telephone number, including area code: (508) 481-6700

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: 
COMMON STOCK, $.10 PAR VALUE
(Title of class)
------------------------

Indicate by check mark whether the registrant: (1) has filed all reports        
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of   
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days. Yes /X/  No / /                       

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-K is not contained herein, and will not be contained, to the    
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to the 
Form 10-K. / /                                                                  

The aggregate market value of voting Common Stock held by nonaffiliates of the  
registrant was approximately $4,989,957,000 based on the last reported sale     
price of the Common Stock on the Nasdaq consolidated transaction reporting      
system on April 12, 2000.                                                       

Number of shares outstanding of the registrant's class of Common Stock as of    
April 12, 2000: 72,581,191 shares.                                              

DOCUMENTS INCORPORATED BY REFERENCE 

1999 Annual Report to Stockholders--Part II 
Proxy Statement for the 2000 Annual Meeting of Stockholders--Part III 

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PART I

ITEM 1. BUSINESS.                                                               

THE COMPANY                                                                     

Sepracor Inc. ("Sepracor" or the "Company") is a leading specialty              
pharmaceutical company focused on the cost-effective development of safer, purer
and more effective drugs that are improved versions of widely-prescribed        
pharmaceutical compounds. Typically, these Improved Chemical Entities ("ICEs")  
are patented, single-isomer or active-metabolite forms of the parent compound.  
The Company selects for development compounds with the potential to offer       
improvements over existing therapies with respect to efficacy, side-effect      
profile or both. The Company develops and markets these drugs by leveraging its 
expertise in conducting preclinical and clinical trials and seeking regulatory  
approvals for new drugs. Sepracor's drug development program has yielded an     
extensive portfolio of pharmaceuticals and drug candidates intended to treat a  
broad range of indications. Sepracor is concentrating its product development   
efforts in three major therapeutic areas: respiratory, urological and central   
nervous system disorders. To date, certain of these candidates have been, and   
are being developed at lower cost and in less time than the New Chemical        
Entities ("NCEs") that characterize traditional drug development. The Company   
believes that the probability of the United States Food and Drug Administration 
("FDA") approval of its ICE drug candidates is increased because the parent     
drugs have previously been approved.                                            

In May 1999, Sepracor introduced Xopenex-TM-, a beta agonist for the    
treatment of reversible bronchospasm. Xopenex is a single-isomer form of the    
leading bronchodilator, albuterol. Xopenex is the first pharmaceutical product  
developed and commercialized by Sepracor.                                       

CORPORATE COLLABORATIONS                                                        

The Company's strategy for commercializing its ICE pharmaceuticals includes     
licensing and co-promotion collaborations with major pharmaceutical companies   
and direct marketing through one or more specialty sales forces.                

XOPENEX-TM-.  In November 1999, Abbott Laboratories ("Abbott") and Sepracor     
announced a co-promotion agreement for Xopenex (levalbuterol HCl). Under terms  
of the agreement, Abbott's Ross Products Division will provide expanded coverage
for Xopenex with pediatricians in the United States through its sales force of  
over 500 professionals. This will supplement Sepracor's sales force of          
approximately 200 persons (including Innovex, described below), which will      
continue to market Xopenex to hospitals, pulmonologists, allergists and primary 
care physicians. All sales will be for Sepracor's account and Abbott will       
receive a commission on sales generated by its sales force. The agreement is for
a term of six years but can be terminated earlier by Abbott if certain specified
development or sales objectives are not achieved. In September 1999, Sepracor   
established a relationship with Innovex, a division of Quintiles Transnational  
Corporation. Innovex has provided Sepracor with a contract sales organization of
approximately 155 Xopenex territory representatives to complement Sepracor's    
respiratory specialty sales force. Sepracor's commercial launch of Xopenex was  
in May 1999.                                                                    

(+)-ZOPICLONE.  In October 1999, Sepracor announced that it had entered into an 
agreement with Rhone Poulenc Rorer, a unit of Rhone Poulenc SA (now Aventis)    
("RPR"), whereby Sepracor obtained an exclusive royalty-bearing license to RPR's
preclinical, clinical and post-marketing surveillance data package relating to  
zopiclone, its isomers and metabolites, to develop, make, use and sell          
(+)-zopiclone in the United States. (+)-Zopiclone, marketed by RPR under the    
brand names of Imovane-Registered Trademark- and Amoban-Registered Trademark-,  
is available in approximately 80 countries worldwide and is not registered for  
the U.S market. Pursuant to the agreement, RPR retains the right under the      
licensed data package to manufacture (+)-zopiclone in the U.S. for use and sale 
in non-U.S. markets.                                                            

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LEVOCETIRIZINE.  In June 1999, Sepracor announced a license agreement with UCB  
Farchim SA, an affiliate of UCB ("UCB"), relating to levocetirizine, an isomer  
of ZYRTEC-Registered Trademark- (racemic cetirizine), an antihistamine. UCB has 
announced that it intends to file a Marketing Authorization application, the    
European equivalent of a New Drug Application ("NDA"), for levocetirizine in    
early 2000. Levocetirizine is currently in Phase III clinical trials in Europe. 
Sepracor believes, based on a review of preclinical and clinical studies, that  
the levocetirizine isomer offers the opportunity for an improved treatment for  
patients with allergies. Sepracor has issued patents on levocetirizine in the   
United States and Europe that expire in 2013, and pending patent applications in
other major countries. Under the terms of the agreement, Sepracor has           
exclusively licensed to UCB all of Sepracor's issued patents and pending patent 
applications regarding levocetirizine in Europe and all other countries, except 
the United States and Japan. Under the agreement, UCB will begin to pay Sepracor
royalties upon first product sale, and royalties will escalate upon achievement 
of sales volume milestones.                                                     

(R)-FLUOXETINE.  In December 1998, Sepracor announced an exclusive license      
agreement with Eli Lilly and Company ("Lilly") relating to development and      
commercialization of (R)-fluoxetine, an isomer of fluoxetine, which is marketed 
as Prozac-Registered Trademark- by Lilly. (R)-fluoxetine is currently in        
Phase II clinical development in the United States. Under the terms of the      
agreement, Lilly will have the worldwide, exclusive right to develop and market 
products containing (R)-fluoxetine. Lilly will be responsible for all subsequent
development, regulatory submissions, product manufacturing, marketing, and sales
relating to (R)-fluoxetine. Upon the effective date of the agreement, Sepracor  
is entitled to receive a milestone payment and license fee totaling             
$20 million. Sepracor also may receive up to $70 million in milestone payments  
based on the progression of (R)-fluoxetine through development. In addition,    
Sepracor is entitled to royalties on worldwide sales of (R)-fluoxetine beginning
upon first commercial sale. Effectiveness of the agreement is subject to the    
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act").   
See "Factors Affecting Future Operating Results" and "Legal Proceedings" for    
information concerning the Federal Trade Commission's ("FTC") review of the     
(R)-fluoxetine agreement with Lilly.                                            

(+)-NORCISAPRIDE.  In July 1998, Sepracor entered into a development and license
agreement with Janssen Pharmaceutica, N.V., a wholly-owned subsidiary of        
Johnson & Johnson ("Janssen"), relating to (+)-norcisapride, an isomer of the   
active metabolite of cisapride, which is marketed by Janssen as                 
Propulsid-Registered Trademark-. Propulsid is indicated for the symptomatic     
treatment of patients with nocturnal heartburn due to gastroesophageal reflux   
disease. Under the terms of the agreement, Janssen will have worldwide exclusive
rights to develop and market products containing norcisapride enantiomers.      
Sepracor is entitled to royalties on product sales beginning upon the first     
commercial sale, and royalties will escalate upon achievement of sales volume   
milestones. Under certain circumstances, Sepracor may co-promote the product in 
the pediatric market.                                                           

DESLORATADINE.  In December 1997, Sepracor licensed to Schering-Plough          
Corporation ("Schering") worldwide rights to develop and market desloratadine,  
an active-metabolite form of loratadine. Currently, Schering markets loratadine 
as Claritin-Registered Trademark-, the world's leading non-sedating             
antihistamine. On October 26, 1999, Schering announced that it had submitted an 
NDA to the FDA seeking clearance to market desloratadine for the treatment of   
seasonal allergic rhinitis ("SAR"). Schering also announced that it has         
submitted a centralized Marketing Authorization application for desloratadine to
the European Union's ("EU") EMEA. Approval of the centralized Marketing         
Authorization for desloratadine would result in unified labeling that would be  
valid in all 15 EU member states.                                               

FEXOFENADINE.  In July 1993, Sepracor licensed to Hoechst Marion Roussel, Inc.  
("HMRI") its U.S. patent rights covering fexofenadine. In October 1996, HMRI    
introduced Allegra-Registered Trademark- as an improved version of the          
non-sedating antihistamine Seldane-Registered Trademark-. In July 1997, the     
United States Patent and Trademark Office (the "PTO") informed Sepracor that it 
had declared an interference between Sepracor's previously issued patent and    
HMRI's use patent application on the anti-histaminic effects of fexofenadine on 
hepatically impaired patients. On September 1, 1999, HMRI and Sepracor announced
that they have amended their                                                    

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business arrangement related to fexofenadine. The amended arrangement settles   
patent issues between the two companies involving the non-sedating antihistamine
developed and marketed by HMRI. Under the terms of one agreement entered into by
Sepracor and HMRI, Sepracor transferred to HMRI Sepracor's use patent on        
fexofenadine to treat allergic rhinitis and another similar patent application  
of Sepracor. HMRI has also obtained an exclusive license to various other       
Sepracor U.S. patent applications related to fexofenadine. Sepracor will receive
royalties on any fexofenadine sales in the U.S. following expiration of HMRI's  
composition of matter patent in mid-February 2001. Under the terms of a separate
agreement, HMRI has obtained an exclusive license to Sepracor's patents that had
been the subject of litigation in Europe, as well as various other patent       
oppositions between the two companies outside the U.S. Under this agreement, all
legal actions outside the U.S. have been settled and Sepracor has received      
royalties on fexofenadine products since March 1, 1999 in countries where       
Sepracor holds issued patents on fexofenadine.                                  

BACKGROUND                                                                      

CHIRAL COMPOUNDS                                                        

Approximately 500 currently available drugs are chiral compounds. Chiral        
compounds frequently exist as mixtures of mirror-image molecules known as       
isomers. Although these isomers are identical in chemical composition, their    
three-dimensional structures differ and, as a result, often interact differently
with cell receptors in a living organism. This interaction between the drug and 
the receptor either stimulates or inhibits a biological function of the receptor
and thereby initiates the therapeutic effect. In some cases, only one of the    
isomers is the desired active ingredient while the other isomer is inactive or  
may cause undesirable side effects. When a chiral compound contains equal       
amounts of both isomers, it is a racemic mixture. These two isomers are         
generally referred to as (S)-isomers (left) and (R)-isomers (right). Typically, 
in its product development process, Sepracor purifies racemic mixtures of two   
isomers into compounds containing only one isomer.                              

ACTIVE METABOLITES                                                      

A metabolite is a compound resulting from the chemical modification of a drug   
after it is administered. Like the different isomers of a chiral drug, the      
activity of metabolites and the isomers of metabolites may vary from the        
activity of the parent compound depending upon their interaction with specific  
receptors or differences in absorption, excretion, metabolism or distribution   
within the body. These changes in activity may result in a compound that        
demonstrates improved safety or efficacy as compared to the parent compound.    
Sepracor and its licensees are developing certain compounds in active-metabolite
form in an effort to improve the parent drug.                                   

ICE DEVELOPMENT PROGRAM                                                         

The following products are being commercialized or are in development:          

RESPIRATORY--ASTHMA                                                     

Xopenex-TM-, the first pharmaceutical product developed and commercialized by   
Sepracor, is a single-isomer form of the leading bronchodilator, albuterol. In  
addition, the Company is currently conducting Phase II clinical trials with     
(R,R)-formoterol, a single-isomer bronchodilator, that has been shown in        
Phase II human clinical trials to combine a more rapid onset of action with a   
longer duration of effect as compared to currently marketed bronchodilators.    

Xopenex was launched by Sepracor in May 1999 through a direct specialty sales   
force, following the approval of its NDA in March 1999. In September 1999,      
Sepracor entered into a contract with Innovex to                                

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supplement its 65-person direct sales force with approximately 155 contract     
salespersons. In November 1999, the Company entered into a co-promotion         
agreement with the Ross Products Division of Abbott Laboratories, which will    
market Xopenex through its pediatric sales force of over 500 professionals.     

The clinical portion of Sepracor's NDA for Xopenex is based on nine clinical    
studies conducted with over 500 patients. In a 362-patient, four-week pivotal   
study, patients who received Xopenex were shown to have a greater improvement in
lung function than those who received racemic albuterol. Xopenex taken          
chronically showed equivalent or greater changes in forced expiratory volume    
over one second (FEV(1)), compared to the marketed dose of racemic albuterol. At
doses demonstrating equivalent efficacy to albuterol, Xopenex demonstrated      
significant decreases in beta-mediated side effects. These include an increase  
in pulse rate, muscular tremor, a decrease in blood potassium levels, and an    
increase in blood glucose levels. In addition, Phase III clinical trials        
undertaken by Sepracor for Xopenex suggested a superior long-term effect on lung
function of patients, as compared to albuterol, particularly in those patients  
not receiving concomitant steroid therapy. In a controlled double-blind,        
single-dose study, Xopenex showed fewer changes in heart rate, glucose and      
potassium levels at doses causing clinically relevant bronchodilation in        
children ages three to eleven years old.                                        

Sepracor is also developing Xopenex for use in oral and other delivery systems. 
Sepracor has four issued U.S. patents for the use of Xopenex for the treatment  
of asthma, three that expire in 2011 and one that expires in 2013.              

(R,R)-formoterol is a single-isomer form of Foradil-Registered Trademark- and   
Atock-TM-. Foradil is marketed in Canada and Europe by Novartis, and Atock is   
marketed in Japan by Yamanouchi Pharmaceuticals. Sepracor is developing         
(R,R)-formoterol as a bronchodilator intended to offer benefits over existing   
long-acting bronchodilators, including rapid onset and longer duration of       
action. If successfully developed, the Company intends to market                
(R,R)-formoterol through its direct sales force. Sepracor has an issued U.S.    
patent covering the use of (R,R)-formoterol that expires in 2012. In            
April 1999, Sepracor announced the results of a Phase IIA, 49-patient           
single-dose study comparing four doses of (R,R)-formoterol with the marketed    
dose of Ventolin-Registered Trademark- and placebo. This randomized,            
double-blind, placebo-controlled six-way cross-over study was designed to       
evaluate the duration and onset of improvement in forced expiratory volume in   
one second (FEV(1)), as well as the beta-agonist effects at the doses tested.   
The mean baseline FEV(1) of patients tested was 60% of the predicted value. The 
four doses of (R,R)-formoterol studied were 12, 24, 48 and 72 mcg and the       
marketed dose of Ventolin is 2.5 mg. (R,R)-formoterol demonstrated an immediate 
increase in FEV(1) after administration at all doses tested, with comparable    
peak FEV(1) improvement. After 24 hours, patients receiving higher doses of     
(R,R)-formoterol showed improvements in FEV(1) greater than 15%, and these      
improvements were greater than those exhibited by patients on Ventolin or       
placebo, (p (LESS THAN).05). The study indicated that beta-mediated side effects
of patients on doses of (R,R)-formoterol were equivalent to or less than those  
of patients on Ventolin. These side effects include an increase in pulse rate   
and blood glucose levels, and tremor. Sepracor is currently conducting a        
Phase IIB clinical trial of (R,R)-formoterol.                                   

RESPIRATORY--ALLERGIES                                                  

Sepracor is currently conducting Phase III clinical trials of norastemizole.    
Phase I and Phase II clinical trials conducted by Sepracor have indicated that  
norastemizole is potentially a safe and potent non-sedating antihistamine with  
rapid onset and long duration of action. The Company believes, on the basis of  
these clinical trials, that this profile, if reflected in the labeling of the   
drug, could give norastemizole a competitive advantage versus currently marketed
non-sedating antihistamines. In addition, Phase I and Phase II clinical trials  
conducted by Sepracor have indicated that there have been no observed           
differences in incidence and severity of side effects, including cardiac events 
as measured by an electrocardiogram (ECG), between norastemizole and placebo.   
Sepracor and Janssen have entered into an agreement for norastemizole whereby   
Sepracor has worldwide rights to all Johnson & Johnson intellectual property    
covering norastemizole, including the right in exchange for royalty payments on 
sales of                                                                        

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norastemizole to reference data from the astemizole NDA, for manufacture,       
development, and marketing of prescription norastemizole products. Sepracor     
anticipates selling this compound, if approved, through its respiratory sales   
force.                                                                          

Desloratadine is an active metabolite of Claritin-Registered Trademark-, a      
leading non-sedating antihistamine. In December 1997, Sepracor and Schering     
entered into a license agreement granting Schering-Plough exclusive worldwide   
rights to Sepracor's patents covering desloratadine. Sepracor's preclinical     
studies have indicated that desloratadine may be more potent than other         
commercially available antihistamines. Sepracor's patent portfolio for          
desloratadine includes U.S. patents covering the use of desloratadine to treat  
allergic rhinitis and allergic asthma that expire in 2014 and U.S. patent       
applications pending covering pharmaceutical formulations and additional uses.  
Sepracor received $5 million as an upfront license fee and is entitled to       
royalty payments upon the sale of desloratadine, at a rate increasing over time 
and upon the achievement of specified sales volume and other milestones. On     
October 26, 1999, Schering announced that it had submitted an NDA to the FDA    
seeking clearance to market desloratadine for the treatment of seasonal allergic
rhinitis. Schering is currently conducting Phase III clinical trials with       
desloratadine for the treatment of urticaria.                                   

Fexofenadine, marketed by Aventis, is a leading non-sedating antihistamine.     
Sepracor entered into a license agreement with HMRI (now Aventis) under which   
Sepracor licensed its patents on fexofenadine to HMRI. This agreement was       
amended in September 1999. See "--Corporate Collaborations." In October 1996,   
HMRI commercially introduced fexofenadine, marketed as a second-generation      
non-sedating antihistamine under the name Allegra. Sepracor currently receives  
royalties on European sales of fexofenadine in countries where Sepracor holds   
issued patents on fexofenadine. Under this agreement, Sepracor is expected to   
receive royalties on fexofenadine sales in the U.S. upon expiration of Aventis' 
composition of matter patent in mid-February 2001.                              

Sepracor has licensed to UCB rights to (-)-cetirizine, a single-isomer form of  
cetirizine for manufacture, marketing and sale in Europe. Cetirizine, an        
antihistamine, is marketed by UCB and Pfizer in the U.S. as ZYRTEC. UCB Pharma  
is currently conducting Phase III clinical trials in Europe on (-)-cetirizine.  

UROLOGY                                                                 

(S)-oxybutynin, a single-isomer form of Ditropan-Registered Trademark-, marketed
by Alza, is currently under development for the treatment of urge incontinence. 
Urinary incontinence affects approximately 17 million people in the U.S. In a   
186 patient, double blind placebo controlled Phase IIA trial conducted by       
Sepracor indicated that (S)-oxybutynin significantly improved both urinary      
frequency (18% better than placebo) and urinary incontinence (30% better than   
placebo) while being well tolerated (15% incidence of moderate/severe dry       
mouth). The Company is currently conducting a Phase IIB dose-ranging trial for  
(S)-oxybutynin. Sepracor has two issued U.S. patents for (S)-oxybutynin covering
methods of treating urinary incontinence and pharmaceutical compositions that   
expire in 2015.                                                                 

(S)-doxazosin is a single-isomer form of Cardura-Registered Trademark-, marketed
by Pfizer Inc. Cardura is used primarily to treat benign prostatic hyperplasia  
("BPH"), or enlargement of the prostate, a condition that is estimated to affect
a majority of males over the age of 55. A side effect of doxazosin is           
orthostatic hypotension, the lowering of blood pressure that can cause severe   
dizziness or fainting. As a result of this side effect, initial doses of the    
drug are generally administered in a doctor's office over several visits.       
Sepracor's preclinical studies indicate that (S)-doxazosin exhibits potential   
for a significant reduction in orthostatic hypotension and is more potent than  
the parent drug. Sepracor believes that an improved version could reduce the    
cost of treatment by reducing the number of required doctor's visits. While     
further extensive studies and clinical work are needed to determine the efficacy
and safety profile of this compound, Sepracor believes this compound may offer a
significant pharmacoeconomic benefit as compared to the parent drug. Sepracor   
has submitted an investigational new drug application ("IND") and plans to      
commence Phase I human                                                          

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clinical trials in the first quarter of 2000. Sepracor has an issued U.S. patent
for the use of (S)-doxazosin to treat BPH that expires in 2013.                 

(-)-Desmethylsibutramine is a single-isomer metabolite form of                  
Meridia-Registered Trademark-. Meridia is marketed by Knoll Pharmaceutical Co., 
a division of BASF AG ("Knoll"), for the treatment of obesity. (-)-             
Desmethylsibutramine is a norepinephrine and dopamine reuptake inhibitor that is
being investigated by Sepracor for urological disorders such as erectile        
dysfunction and urinary stress incontinence.                                    

GASTROENTEROLOGY                                                        

(+)-Norcisapride is a metabolite of Propulsid-Registered Trademark-, marketed by
Janssen for treatment of gastroesophageal reflux disease ("GERD"). Propulsid    
carries a "black box" label warning of the potential for fatal cardiac toxicity.
In preclinical studies, norcisapride has been found by Sepracor to have the     
potential to treat GERD and other indications, including emesis, bulimia, and   
irritable bowel syndrome without the risk of cardiac toxicity. The Company has  
an issued U.S. patent for the use of (+)-norcisapride to treat Central Nervous  
System ("CNS") disorders and emesis, which expires in 2015, and pending patent  
applications for the use of (+)-norcisapride to treat GERD. In July 1998, the   
Company exclusively licensed its norcisapride rights to Janssen, and is entitled
to receive royalties on product sales beginning upon the first commercial sale, 
and roylaties escalate upon achievement of sales volume milestones.             
(+)-Norcisapride is in Phase II clinical development.                           

(S)-lansoprazole is a single-isomer form of Prevacid-Registered Trademark-,     
marketed in the U.S. by TAP Pharmaceuticals. This proton pump inhibitor drug is 
used to treat diseases associated with excess gastric acid secretions, primarily
GERD. Based on preclinical studies, Sepracor believes that (S)-lansoprazole may 
offer more consistent dosing and improved efficacy, as compared to Prevacid. The
Company has a patent application pending for (S)-lansoprazole.                  

(-)-Pantoprazole is a single-isomer form of Pantozol-TM-, marketed by Byk-Gulden
and American Home Products for the treatment of GERD. Sepracor's preclinical    
work suggests that (-)-pantoprazole has the potential for more consistent dosing
and improved efficacy. The Company has an issued U.S. patent for                
(-)-pantoprazole that expires in 2013.                                          

CENTRAL NERVOUS SYSTEM--PSYCHIATRY/NEUROLOGY                            

(R)-fluoxetine is a single-isomer form of Prozac-Registered Trademark-. Prozac, 
marketed by Lilly, is a leading selective serotonin reuptake inhibitor for the  
treatment of depression. Based on preclinical studies, Sepracor believes that   
the unique pharmacology of (R)-fluoxetine offers the potential for more rapid   
onset of relief, greater efficacy for treatment of depression, and fewer side   
effects such as sexual dysfunction, and additional indications including        
anxiety. In addition, Sepracor believes based on these preclinical studies, that
improvements in its pharmacokenetic profile should allow for shorter washout and
reduced drug-interaction. Sepracor has an issued U.S. patent for (R)-fluoxetine 
for the treatment of depression that expires in 2015. Sepracor filed a U.S. IND 
in October 1998 and completed single and multiple dose Phase I clinical trials  
for (R)-fluoxetine.                                                             

On December 7, 1998, Sepracor announced a proposed license agreement with Lilly 
relating to development and commercialization of (R)-fluoxetine. Under the terms
of the agreement, Lilly will have the worldwide, exclusive right to develop and 
market products containing (R)-fluoxetine. Lilly will be responsible for all    
subsequent development work on (R)-fluoxetine, regulatory submissions, product  
manufacturing, marketing, and sales. Upon the effective date of the agreement,  
Sepracor is entitled to receive a milestone payment and license fee totaling    
$20 million. Sepracor also may receive up to $70 million in milestone payments  
based on the progression of (R)-fluoxetine through development. In addition,    
Sepracor is entitled to royalties on (R)-fluoxetine worldwide sales beginning   
upon first commercial sale. This license agreement is subject to approval by the
FTC. See "Corporate Collaborations," "Factors Affecting Future Operating        
Results" and "Legal Proceedings."                                               

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(+)-Desmethylsibutramine ("DMS") is a single-isomer metabolite form of          
Meridia-Registered Trademark-. Meridia is marketed by Knoll for the treatment of
obesity. In January 2000, Sepracor announced that it had initiated a Phase I    
clinical trial on DMS and plans to commence clinical studies on multiple        
indications for central nervous system disorders in the second half of 2000.    
Sepracor's preclinical studies indicate that DMS is a potent serotonin,         
norepinephrine and dopamine reuptake inhibitor. This unique triple mechanism of 
action may offer improvement in the treatment of disorders including depression 
and attention deficit hyperactivity disorder.                                   

CENTRAL NERVOUS SYSTEM--SLEEPING DISORDERS                              

(+)-Zopiclone is a single-isomer form of Imovane-TM-. Zopiclone, marketed by RPR
under the brand names of Imovane-Registered Trademark- and                      
Amoban-Registered Trademark-, is available in approximately 80 countries        
worldwide and has never been marketed in the U.S. Sepracor has entered into an  
agreement with RPR under which Sepracor has exclusively licensed RPR's          
preclinical, clinical and post-marketing surveillance data package relating to  
zopiclone, its isomers and metabolites, for the United States market. In        
January 2000, Sepracor announced that it has initiated a 400-patient clinical   
efficacy trial for (+)-zopiclone in the treatment of insomnia. Sepracor recently
completed two clinical trials that demonstrated the activity of (+)-zopiclone in
surrogate models of insomnia. These studies demonstrated that the               
pharmacological effects of (+)-zopiclone occur rapidly and can be seen for up to
six hours. This duration of action may result in better maintenance of sleep    
with a lower incidence of nocturnal awakening. Based on the results of clinical 
trials done to date and subject to the results of additional clinical trials,   
the Company believes that lower doses of (+)-zopiclone have the potential to    
induce sleep when a shorter duration of action is required. The Company has an  
issued U.S. patent relating to the use of (+)-zopiclone to treat sleep disorders
and other indications that expires in 2015.                                     

CENTRAL NERVOUS SYSTEM--ANXIETY                                         

(+)-Deszopiclone is a single isomer metabolite of zopiclone. Sepracor is seeking
to develop this compound as a treatment for anxiety and epilepsy syndrome.      
Preclinical studies have indicated that (+)-deszopiclone has potent anxiolytic  
and antiepileptic activities without demonstrating significant sedation.        

CENTRAL NERVOUS SYSTEM--MIGRAINE                                        

(S)-fluoxetine is a single-isomer form of Prozac. Sepracor has conducted        
Phase II clinical trials on the use of the (S)-isomer of fluoxetine as a        
treatment to prevent migraine. Migraine affects approximately 23 million people 
in the U.S. Sumatriptan, marketed as Imitrex by GlaxoWellcome, is approved for  
acute, but not prophylactic, treatment of migraine, and is the leading          
prescription antimigraine drug on the market. In Phase II trials, Sepracor      
demonstrated a statistically significant decrease in the frequency of migraine  
attacks for patients receiving (S)-fluoxetine. Sepracor has an issued U.S.      
patent for (S)-fluoxetine for the prevention of migraine that expires in 2013.  

OTHER INDICATIONS                                                               

The Company is also developing (R)-ondansetron, a single-isomer form of         
Zofran-Registered Trademark-, marketed by GlaxoWellcome, for the treatment of   
emesis.                                                                         

DRUG DISCOVERY                                                                  

The Company is broadening its development focus to include discovery and        
development of NCEs. The accessibility and widespread use of the new            
technologies of combinatorial chemistry and ultra high throughput screening     
provide an opportunity for Sepracor to participate in the area of NCE discovery.
Sepracor's approach to the discovery of NCEs is identifying novel compounds     
which are of strategic interest to Sepracor, with in vitro and in vivo          
biological activity in the anti-infective, anti-inflammatory, pain and          
behavioral disease therapeutic areas.                                           

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SUBSIDIARIES                                                                    

In 1994, Sepracor established and independently financed BioSepra Inc.          
("BioSepra") as a subsidiary, through an initial public offering of its common  
stock. From 1994 to 1999, the company operated as BioSepra, developing          
proprietary microsphere beads used as chromatography media in the production of 
pharmaceuticals. In February 1999, BioSepra determined that it would refocus on 
embolotherapy, which is the occlusion of the blood supply to fibroids and       
vascular defects, BioSepra sold its chromatography business and acquired a 51%  
interest in French-based BioSphere Medical, S.A. ("BioSphere France"), with an  
option to purchase the remaining 49% interest; and changed its corporate name to
BioSphere Medical, Inc ("BioSphere"). The acquisition enabled BioSphere to gain 
ownership of product know-how and European regulatory approval of               
Embosphere-Registered Trademark- Microspheres. As of December 31, 1999,         
Sepracor's ownership of BioSphere was 64%. Following BioSphere's $5,900,000     
private placement of common stock and warrants in February 2000, Sepracor's     
ownership of BioSphere decreased to 59%.                                        

BioSphere is an endovascular medical device company focused on embolotherapy,   
which is the occlusion of the blood supply to fibroids and vascular defects.    
Embolization is a procedure performed primarily by interventional radiologists  
to treat cancer, hypervascularized tumors and arteriovenous malformations and to
control hemorrhage. BioSphere is pioneering the use of patented and proprietary 
bioengineered microspheres as a new class of embolotherapy devices.             

BioSphere's objective is to achieve a significant market share in the emerging  
market for high-volume procedures, including the growing uterine artery         
embolization market in the U.S., for its lead product,                          
Embosphere-Registered Trademark- Microspheres. Embosphere-Registered Trademark- 
Microspheres are precisely calibrated, spherical, hydrophilic, micro-porous     
beads made of a cross-linked acrylic co-polymer, which is then embedded with    
gelatin. BioSphere believes that Embosphere-Registered Trademark- Microspheres  
may potentially have certain competitive advantages over first-generation       
embolization products because they eliminate aggregation in the catheter,       
unwanted proximal embolization and unpredictable distal embolization due to     
particle fragmentation, common with first-generation products. Clinical results 
in Europe achieved over six years highlight the potential advantages of         
Embosphere-Registered Trademark- technology. BioSphere's research indicates that
Embosphere-Registered Trademark- Microspheres may be less likely to cause       
catheter blockage and aggregates than first generation embolization products. At
least one clinical study of pre-surgical embolization of brain tumors has       
suggested that Embosphere-Registered Trademark- Microspheres have the capacity  
to achieve a more controlled and targeted embolization than first generation    
embolization products, thus minimizing blood loss.                              

BioSphere has already received a CE Mark which allows it to market              
Embosphere-Registered Trademark- Microspheres in the 19 countries of the        
European Economic Area. In early 2000, the Company received similar marketing   
approval in Canada and Australia. Over 10,000 vials of                          
Embosphere-Registered Trademark- Microspheres have been sold since 1994.        

BioSphere is currently seeking approval from the FDA to market                  
Embosphere-Registered Trademark- Microspheres in the United States. In          
May 1999, BioSphere filed a 510(k) application with the FDA. In October 1999,   
BioSphere filed an Investigational Device Exemption with the FDA to begin       
clinical studies in the U.S. for specific uterine artery embolization labeling. 

AFFILIATES                                                                      

HEMASURE                                                                

In 1994, Sepracor established and independently financed HemaSure Inc.          
("HemaSure") as a subsidiary. Through two public offerings of HemaSure's common 
stock, HemaSure became first a subsidiary, and ultimately, an affiliate of the  
Company. HemaSure is applying its proprietary filtration technology to develop  
products to increase the safety of donated blood and to improve certain blood   
collection and transfusion procedures. In February 1999, Sepracor entered into  
an agreement with HemaSure pursuant to which the Company invested $2,000,000 in 
HemaSure in exchange for 1,333,334 shares of HemaSure                           

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common stock and warrants to purchase 667,000 additional shares of HemaSure     
common stock. As a result of these transactions, Sepracor's ownership of        
HemaSure became approximately 42% as of February 1999.                          

In May 1999, HemaSure completed a private placement financing with COBE         
Laboratories, Inc. ("COBE Labs"), a wholly-owned subsidiary of Gambo AB. COBE   
Labs, purchased 4.5 million shares of HemaSure common stock for an aggregate    
purchase price of $9.0 million. The agreement also provided COBE Labs with an   
option to purchase an additional $3 million of HemaSure common stock, which it  
exercised in October 1999. As a result of these transactions, Sepracor's        
ownership of HemaSure was reduced to 27% and Sepracor recorded a gain of        
$820,000, which was recorded through additional paid-in-capital.                

In March 2000, HemaSure sold 3,700,000 shares of common stock in a private      
placement financing, thereby reducing Sepracor ownership to approximately 22%.  

VERSICOR                                                                

   Versicor Inc. ("Versicor") was formed as a majority-owned subsidiary of the
Company in May 1995 to develop novel drug candidates principally for the        
treatment of infectious diseases. In December 1997, Versicor announced the      
completion of a private equity financing for approximately $22,000,000.         
Following this financing, Sepracor had an approximately 22% equity ownership in 
Versicor.                                                                       

In 1999, Versicor completed various transactions resulting in the issuance of   
three series of preferred stock, and as a result, Sepracor's ownership of       
Versicor has been reduced to approximately 10%. As a result of these equity     
investments in Versicor, Sepracor recorded a gain of $1,077,000, which was      
recorded through additional paid-in-capital, and, effective April 1999, Sepracor
changed its accounting for its investment in Versicor from the equity method of 
accounting to the cost method.                                                  

RESEARCH AND DEVELOPMENT                                                        

The Company's research and development activities are primarily directed toward 
discovering and developing potentially improved versions of widely-prescribed   
drugs.                                                                          

The Company's total research and development expenses were $122,400,000,        
$61,797,000, and $41,230,000 for 1999, 1998, and 1997, respectively.            
Collaborative research and development revenues totaled $2,390,000, $4,761,000, 
and $0 in 1999, 1998, and 1997, respectively. BioSphere's portion of total      
research and development expenses was $968,000, $34,000, and $34,000 in 1999,   
1998 and 1997, respectively.                                                    

In 2000, the Company expects research and development expenditures to increase  
significantly over 1999, as activities are expanded to accommodate the          
development of its portfolio of pharmaceuticals and drug candidates.            

MARKETING AND SALES                                                             

The Company's marketing strategy includes arrangements with corporate marketing 
partners, outlicensing product rights in exchange for royalties and marketing   
through its direct and third party sales forces. The Company believes that      
corporate partnering arrangements allow the Company to market its ICEs more     
quickly and to use the partner's marketing expertise. The Company currently has 
collaborative agreements with Lilly, Schering, HMRI, RPR, Janssen and UCB. In   
each of these collaborative agreements, the Company is dependent upon the       
efforts of its collaboration partner and these efforts may not be successful.   

The Company has established a direct sales force consisting of representatives  
and technical specialists to market its single isomer form of albuterol,        
Xopenex, introduced in 1999. The sales representatives demonstrate the use of   
the Company's products while educating physicians as to the clinical benefits of
the ICEs. The technical specialists act as a resource to provide physicians with
relevant information regarding the Company's products.                          

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The Company has also established contract sales arrangements with Innovex, a    
division of Quintiles Transnational Corporation, and with Abbott Laboratories.  
Innovex has provided Sepracor with a contract sales organization of             
approximately 155 Xopenex territory representatives. Abbott's Ross Products     
Division will promote Xopenex to pediatricians in the United States through its 
sales force of over 500 professionals.                                          

As the Company begins to enter into co-promotion arrangements or market and sell
additional products directly, the Company will need to significantly expand its 
direct sales force which will require substantial efforts and significant       
management and financial resources. The Company's business and future operating 
results will depend in significant part upon its ability to attract and retain  
skilled sales and marketing personnel. Competition for such personnel is        
intense, and the Company may not be successful in attracting or retaining such  
personnel. The Company may not be successful in building a marketing staff or   
sales force, and it cannot be assumed that establishing such a marketing staff  
or sales force will be cost-effective or that the Company's sales and marketing 
efforts will be successful.                                                     

Customers accounting for more than 10% of total revenues in 1999 include HMRI   
(16%), with respect to license and royalty revenue, and McKesson (15%), Cardinal
Healthcare (11%), and Bergen Brunswig (11%), with respect to sales of Xopenex.  

In 2000, the Company expects marketing and sales expenditures to increase       
significantly over 1999, as the Company increases activities relating to sales  
and marketing of Xopenex and efforts relating to corporate partnering           
arrangements.                                                                   

MANUFACTURING                                                                   

The Company prepares its drug compounds primarily at its laboratories in        
Marlborough, Massachusetts. The Company also owns and operates a current Good   
Manufacturing Practices ("cGMP") compliant 39,000 square foot fine chemical     
manufacturing facility in Windsor, Nova Scotia, which the Company believes has  
sufficient capacity to support the production of its drugs in quantities        
required for its clinical trials. If additional product candidates of Sepracor  
become approved for sale, the Company will need to either manufacture such drugs
itself or license the manufacturing and marketing rights to third parties. While
the Company believes that it has the capability to scale up its manufacturing   
process to support the production in commercial quantities of certain of the    
drugs which it intends to market and sell directly, the production of a         
substantial portion of those drugs must be contracted out to third-party        
manufacturers. Prior to December 31, 2001, the Company is obligated to purchase 
from ChiRex Inc. ("ChiRex"), a Delaware corporation, all of the pharmaceutical  
active ingredients (other than commercial quantities of its drugs which Sepracor
is capable of producing at its Nova Scotia manufacturing plant) of those drugs  
which Sepracor intends to directly market and sell, subject to certain pricing, 
supply and quality control conditions.                                          

COMPETITION                                                                     

The Company's principal competitors are generic drug companies that seek to     
market the racemic mixture of a compound following expiration of the innovator's
composition-of-matter patent and also pharmaceutical companies which develop new
patented therapies to treat the disease indications that the Company is         
targeting. The Company expects that these companies will seek to compete against
Sepracor's differentiated products with lower pricing, which could adversely    
affect the prices charged by Sepracor. In addition, any ICE developed by the    
Company is likely to encounter competition from the original brand-name parent  
drug, potentially in a generic form, following expiration of the innovator's    
composition-of-matter patent. Many competitors and potential competitors have   
substantially greater resources, manufacturing and marketing capabilities,      
research and development staff and production facilities than Sepracor and its  
subsidiaries.                                                                   

In its ICE program, the Company expects to compete primarily by obtaining use   
patents on the single-isomer or active-metabolite forms of existing, widely-sold
racemic drugs and by establishing, through                                      

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preclinical and clinical tests, that such products in single-isomer or          
active-metabolite form offer benefits over the racemic compounds, such as       
reduced side effects, improved therapeutic efficacy, new indications or improved
dosage forms. Any such patents obtained by the Company should exclude others    
from marketing the targeted single-isomer compound for the indications claimed  
in Sepracor's issued use patents.                                               

GOVERNMENT REGULATION                                                           

The Company and its customers are required to obtain the approval of the FDA and
similar health authorities in foreign countries to test clinically and sell     
commercially pharmaceuticals and biopharmaceuticals for human use.              

Human therapeutics are normally subject to rigorous preclinical and clinical    
testing. The standard process required by the FDA before a drug may be marketed 
in the U.S. includes (i) preclinical laboratory tests with toxicity and, often, 
carcinogenicity testing, (ii) submission to the FDA of an application for an    
IND, which must be approved before human clinical trials may commence,          
(iii) adequate and well-controlled human clinical trials to establish the safety
and efficacy of the drug for its intended indication, (iv) submission to the FDA
of an NDA, and (v) FDA approval of the NDA prior to any commercial sale or      
shipment of the drug. In the past, the Company has attempted to shorten the     
regulatory approval process of its ICEs by relying on preclinical and clinical  
toxicology data already on file with the FDA with respect to the parent drug.   

Typically, clinical evaluation involves a three-phase process. In Phase I, the  
initial introduction of the drug to humans, the drug is tested for safety       
(adverse effects), dosage tolerance, absorption, distribution, metabolism and   
excretion. Phase II involves studies in a limited patient population to         
(i) determine the efficacy of the drug for specific targeted indications,       
(ii) determine dosage tolerance and optimal dosage and (iii) identify possible  
adverse effects and safety risks. When a compound is found to be effective and  
to have an acceptable safety profile in Phase II evaluations, Phase III trials  
are undertaken to evaluate further clinical efficacy and to test further for    
safety within an expanded patient population at geographically dispersed        
clinical study sites. The process of completing clinical testing, obtaining FDA 
regulatory approval and commencing commercial marketing is likely to take a     
number of years. There can be no assurance that Phase I, Phase II or Phase III  
testing will be completed successfully within any specified time period, if at  
all, with respect to any of the Company's products subject to such testing.     
Furthermore, there can be no assurance that the FDA will accept the Company's   
evidence that a particular product meets the Company's claims of superiority.   

FDA regulations pertain not only to healthcare products, but also to the        
processes and production facilities used to produce such products. Although the 
Company has designed the required areas of its U.S. facility to conform to cGMP,
the FDA will not review the facilities for compliance until the Company produces
a product for which FDA commercial approval has been sought. Environmental      
legislation provides for restrictions and prohibitions on releases or emissions 
of various substances produced in, and waste by-products from, Sepracor's       
operations.                                                                     

The FDA also imposes requirements relating to the marketing of drug products    
after approval, including requirements relating to the promotion of drug        
products to buyers and to the reporting to the FDA of adverse drug experiences  
known to companies holding approved applications. Failure of the Company to     
adhere to these requirements could lead to regulatory action by the FDA.        
Information reported to the FDA in compliance with these requirements could     
cause the FDA to withdraw drug approval or to require modification of labeling  
(e.g., to add warnings or contraindications). The FDA has the statutory         
authority to seek judicial remedies and sanctions and to take administrative    
corrective action for violation of these and other FDA requirements and         
standards.                                                                      

BioSphere faces similar regulatory requirements before it can market and sell   
Embosphere-Registered Trademark- Microspheres in the U.S. Approvals must be     
received by the FDA and these necessary approvals may not be obtained           

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within a reasonable period of time, if at all. Any difficulty or delay in       
commercializing Embosphere-Registered Trademark- Microspheres could harm the    
ability to generate revenues in the future.                                     

PATENTS AND PROPRIETARY TECHNOLOGY                                              

Sepracor (including its affiliates and subsidiaries) has filed patent           
applications in the U.S. relating to the use of, and compositions containing,   
single-isomer or metabolite compounds, chiral synthesis and separations and     
membrane affinity separations. As of December 31, 1999, approximately 94 U.S.   
patents have been issued to the Company and approximately 180 patent            
applications are pending in the PTO. Sepracor has filed many patent applications
in selected countries other than the U.S. In addition, the Company has licensed 
from third parties certain rights under various patents and patent applications.

To the extent that Sepracor invents or discovers a new, useful and non-obvious  
invention and files a U.S. patent application for such invention, a composition 
or method-of-use patent may be issued. The Company has been issued U.S. patents 
on the use of single-isomer or active-metabolite forms of drugs currently       
marketed as racemic mixtures. The Company is currently pursuing a policy of     
aggressively seeking patent protection for the use of single-isomer forms of    
certain existing drugs now sold as racemic mixtures.                            

Many of the ICEs for which the Company has obtained method-of-use patents or    
filed patent applications may be subject to composition-of-matter or other      
patents held by third parties. For example, each of the following ICEs is       
claimed by third party U.S. patents or patent applications as indicated:        

 - (S)-doxazosin, third party patent claiming doxazosin and pharmaceutical
formulations that expires in 2000;                                  

- fexofenadine, third party patent claiming fexofenadine that expires in
  2001 and a third party patent claiming substantially pure fexofenadine
expiring in 2013;                                                   

    - (R)-fluoxetine, third party patents claiming fluoxetine and methods of use
that expire in 2001 and 2003, respectively;                         

    - (S)-fluoxetine, third party patents claiming fluoxetine and methods of use
that expire in 2001 and 2003, respectively;                         

- (S)-lansoprazole, third party patents claiming lansoprazole,          
    pharmaceutical formulations and methods of use that expire in 2009, 2008
and 2005, respectively;                                             

    - (+)-norcisapride, third party patent claiming norcisapride that expires in
2009 and a third party patent application claiming the use of       
(+)-norcisapride to treat GERD;                                     

    - (+)-desmethylsibutramine, third party patent claiming desmethylsibutramine
and methods of treating depression that expires in 2002;            

  - (+)-hydroxyitraconazole, third party patent claiming hydroxyitraconazole
expiring in 2005;                                                   

 - (R)-ondansetron, third party patent claiming ondansetron and methods of
use to treat emesis expiring in 2005 and 2006, respectively;        

   - (-)-pantoprazole, third party patent claiming pantoprazole and methods of
use expiring in 2005; and                                           

- (-)-cetirizine, third party patent claiming cetirizine that expires in
2007.                                                               

There are foreign equivalents to a number of the U.S. patents identified above, 
the scope and expiration of which vary from country to country. Even if a patent
is issued to the Company for the use of a single-isomer or active-metabolite    
form of a racemic mixture that is currently claimed by one or more third party  
patents, products based on any such patent issued to the Company may not be sold
until the expiration of all of such third party patents (unless a license is    
obtained to such third party patents or such third party patents are determined 
to be invalid, unenforceable, or not infringed by a court of proper             
jurisdiction). In addition, there may be pending additional third party patent  
applications covering the Company's ICEs which, if issued, may preclude the sale
of an ICE.                                                                      

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BioSphere holds several patents and patent applications. The patent positions of
companies in the biopharmaceutical industry are highly uncertain, involve       
complex legal and factual questions and recently have been the subject of much  
litigation. A significant number of patents have been applied for by and issued 
to other companies in BioSphere's industry, and other companies may have filed  
applications for, may have been issued patents for, or may obtain additional    
patents and proprietary rights relating to products competitive with those of   
BioSphere.                                                                      

In addition, BioSphere's products may give rise to claims that they infringe the
proprietary rights of others. No assurance can be given that any license        
required under any such patents or rights would be made available on terms      
acceptable to BioSphere, if at all. If BioSphere does not obtain such licenses, 
it could encounter delays in product introductions while it attempts to design  
around such patents, or could find that the development, manufacture or sale of 
products requiring such licenses could be precluded. Litigation may be necessary
to defend against or assert claims of infringement, to enforce patents issued to
BioSphere, to protect trade secrets or know-how owned by BioSphere, or to       
determine the scope and validity of the proprietary rights of others, and could 
result in substantial costs to and diversion of effort by, and may have a       
material adverse impact on, BioSphere.                                          

EMPLOYEES                                                                       

On March 1, 2000, Sepracor and its wholly-owned subsidiaries, excluding         
BioSphere, employed 338 persons. Of these 338 employees, 170 were primarily     
engaged in research, development and engineering activities, 29 were primarily  
engaged in manufacturing, and the remainder were primarily engaged in marketing,
sales, administration, finance and accounting.                                  

On March 1, 2000 BioSphere employed 39 persons.                                 

ITEM 2. PROPERTIES.                                                             

Sepracor's facilities, including those used by BioSphere, are located in        
Marlborough, Massachusetts, Windsor, Nova Scotia, and Louvres, France. In       
Massachusetts, the Company leases a total of 101,292 square feet of space in two
buildings. Approximately 5,000 square feet is devoted to manufacturing          
operations and the remainder to research and development and administration. The
two leases currently in effect extend to June 2007 for 32,477 square feet and   
June 2007 for 68,815 square feet. In Nova Scotia, Sepracor's primary            
manufacturing location is a 39,000 square-foot fine chemical manufacturing      
facility located on a four-acre site in Windsor, Nova Scotia. The facility was  
acquired by the Company in March 1994. Production at the Nova Scotia facility   
began in February 1995.                                                         

BioSphere's facilities are located in Marlborough, Massachusetts and Louvres,   
France. In Massachusetts, BioSphere subleases approximately 13,000 square feet  
of office space from Sepracor. At its facility in Louvres, France, BioSphere    
leases approximately 10,000 square feet, with 7,000 square feet used for        
manufacturing and the balance for research and development and administration.  
Effective April 1, 2000, BioSphere will relocate from Marlborough, Massachusetts
to Rockland, Massachusetts, where it will lease approximately 8,000 square feet 
of office and laboratory space pursuant to a lease for a term of five years.    

ITEM 3. LEGAL PROCEEDINGS.                                                      

On February 12, 1999, the FTC issued a request for additional information or    
documentary materials relating to the Company's exclusive license agreement with
Lilly relating to (R)-fluoxetine (the "Lilly Agreement"). The purpose of the    
request was to investigate whether or not the Lilly Agreement constitutes a     
violation of Section 5 of the Federal Trade Commission Act or Section 7 of the  
Clayton Act. The Company is in the process of responding to the request. At the 
conclusion of its investigation, the FTC could institute proceedings seeking to 
modify the Lilly Agreement or to prevent it from becoming effective. While the  
Company believes that the Lilly Agreement does not constitute a violation of the
above-mentioned laws, the Company is unable to predict the outcome of the       
proceeding.                                                                     

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An interference declared on June 30, 1999 between Sepracor and RPR relating to  
(+)-zopiclone was dissolved by Sepracor's agreement with RPR on October 7, 1999,
under which RPR's involved patent application was assigned to Sepracor.         

All legal proceedings between Sepracor and HMRI relating to fexofenadine,       
including foreign litigation and the interference between Sepracor and HMRI,    
have been settled by Sepracor's agreement with HMRI of September 1, 1999.       

HemaSure is a defendant in a lawsuit brought by Pall Corporation ("Pall")       
regarding its LeukoNet System, which is no longer made or sold by HemaSure. In a
complaint filed in November 1996, Pall alleged that HemaSure's manufacture, use 
and/or sale of the LeukoNet System infringed upon two patents held by Pall. Pall
dropped its allegations concerning infringement of one of the patents and       
alleges only that HemaSure's LeukoNet System infringed U.S. Patent              
No. 4,952,572 (the "'572 Patent").                                              

With respect to the allegations concerning the '572 Patent, HemaSure has        
answered the complaint stating that it does not infringe any claim of the       
asserted patent. Further, HemaSure has counterclaimed for declaratory judgment  
of invalidity, noninfringement and unenforceability of the '572 Patent. Pall has
amended its complaint to add Lydall, Inc. ("Lydall"), whose subsidiary supplied 
filter media for the LeukoNet product, as a co-defendant. HemaSure has filed for
summary judgment of noninfringement, and Pall has cross-filed for summary       
judgment of infringement at the same time. Lydall supported HemaSure's motion   
for summary judgment of noninfringement, and has filed a motion for summary     
judgment that the asserted claims of the '572 Patent are invalid as a matter of 
law. Discovery has been completed in the action. The court has not acted on the 
summary judgment motions.                                                       

On April 5, 1999, HemaSure and Gambro BCT, Inc. ("Gambro BCT") filed a complaint
for declaratory relief against Pall in the U.S. District Court of Colorado.     
HemaSure and Gambro BCT seek declaratory relief that the '572 Patent and Pall's 
U.S. Patent No's. 5,451,321, 5,229,012, 5,344,561, 5,501,795 and 5,863,436 are  
invalid and not infringed by HemaSure's r\LS filter and methods of using the    
r\LS filter. Pall moved to dismiss or transfer to the Eastern District of New   
York or, in the alternative, to stay this action. HemaSure and Gambro opposed   
Pall's motion. On July 16, 1999, the United States District Court of Colorado   
denied Pall's motion to transfer or, in the alternative, to stay the action, and
the action is proceeding. On September 30, 1999, the Court denied Pall's motion 
to dismiss the action and the case is proceeding. On October 20, 1999, Pall     
submitted a counterclaim alleging that HemaSure's r/LS System infringes its '572
patent and that HemaSure and Gambro BCT tortiously interfered and unfairly      
competed with Pall's business. On March 22, 2000, Pall filed its second amended 
answer and counterclaims alleging infringement of all the patents-in-suit. Pall 
also added counterclaims against Gambro A.B.                                    

On April 23, 1999, Pall filed a complaint against HemaSure and Gambro BCT in the
U.S. District Court of the Eastern District of New York alleging that HemaSure's
r\LS filter infringes Pall's '572 Patent, and tortiously interfered and unfairly
competed with Pall's business. On May 19, 1999, Pall filed an amended complaint 
adding Sepracor, Gambro, Inc. and Gambro, A.B., a Swedish company, of which     
Gambro Inc. is a business unit, as defendants. Sepracor, HemaSure and Gambro BCT
have moved to dismiss, transfer, or stay the action, and Pall has opposed the   
motion. There has been no decision on the motion.                               

A prior lawsuit brought by Pall in February 1996 has concluded. In June 1999,   
the U.S. Court of Appeals for the Federal Circuit determined that the LeukoNet  
System did not infringe claim 39 of U.S. Patent No. 5,451,321 and Pall has not  
appealed that decision.                                                         

HemaSure has engaged patent counsel to investigate the pending litigations.     
HemaSure believes, based upon its review of these matters, that a properly      
informed court should conclude that the manufacture, use and/or sale by HemaSure
or its customers of the LeukoNet System and the r\LS System does not infringe   
any valid enforceable claim of the Pall patents. However, there can be no       
assurance that HemaSure will prevail in the pending litigation, and an adverse  
outcome in a patent infringement action would have a material adverse effect on 
HemaSure's financial condition and future business and operations, including    

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the possibility of significant damages in the litigations and an injunction     
against the sale of the r/LS System if HemaSure does not prevail in the         
litigations.                                                                    

Sepracor believes, based on advice of its legal counsel, that a properly        
informed court should conclude that Pall's suit against Sepracor should be      
dismissed. However, there can be no assurance that this suit will be dismissed  
or that Sepracor will prevail in the pending litigation.                        

In January 1997, HemaSure entered into a Restructuring Agreement of the debt    
related to HemaSure's acquisition of Novo Nordisk A/S's plasma products unit. In
January 1998, HemaSure elected to convert all indebtedness under the            
approximately $11,700,000 promissory note which was issued to Novo Nordisk A/S  
in connection with the Restructuring Agreement into common stock at a conversion
price of $10.50 per share, or 827,375 shares. HemaSure also elected to treat as 
forgiven $3,000,000 in principal amount of the note, pursuant to the terms of   
the note. Novo Nordisk A/S has contested the conversion of the note, including  
the forgiveness of the $3,000,000 amount. This dispute, with or without merit,  
could be time-consuming and expensive to litigate or settle if brought into a   
court of law, and could divert management attention from administering          
HemaSure's core business. If Novo Nordisk A/S succeeds on its dispute and       
HemaSure is deemed to have wrongfully converted the original note, then the     
827,375 shares of common stock issued to Novo Nordisk A/S may no longer be      
outstanding and HemaSure may be obligated to repay certain indebtedness under   
the original note.                                                              

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                    

No matters were submitted to a vote of security holders of the Company, through 
solicitation of proxies or otherwise, during the last quarter of the year ended 
December 31, 1999.                                                              

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the names, ages and positions of the current     
executive officers of the Company as of December 31, 1999.                      

                                                        [Enlarge/Download Table]

NAME                           AGE                             POSITION                     
----                         --------                          --------                     
                                                                                            
Timothy J. Barberich........    52     Chairman, Chief Executive Officer                    

William J. O'Shea...........    50     President, Chief Operating Officer                   

David P. Southwell..........    39     Executive Vice President; Chief Financial Officer and
                                       Secretary                                            

Paul D. Rubin, M.D. ........    46     Executive Vice President, Drug Development and ICE   
                                       Research                                             

James R. Hauske, Ph.D. .....    46     Senior Vice President, Discovery                     

Robert F. Scumaci...........    40     Senior Vice President, Finance and Administration and
                                       Treasurer                                            

Douglas E. Reedich,             42     Senior Vice President, Legal Affairs and Chief Patent
  Ph.D. ....................           Counsel                                              

MR. BARBERICH, a founder of the Company, has been a director of the Company and 
its Chief Executive Officer since the Company's organization in 1984.           
Mr. Barberich also served as President of the Company from 1984 to              
October 1999. Prior to founding the Company, Mr. Barberich served in a number of
executive and managerial capacities at Millipore Corporation, which he joined in
1973. Most recently, prior to founding Sepracor, Mr. Barberich served as Vice   
President and General Manager of Millipore's Medical Products Division and as   
General Manager of Millipore's Laboratory Products Division. Mr. Barberich is   
Chairman of the Board of Directors of BioSphere and is a director of HemaSure   
and Versicor.                                                                   

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MR. O'SHEA has served as President and Chief Operating Officer of the Company   
since October 1999. Prior to joining the Company, Mr. O'Shea was Senior Vice    
President of Sales and Marketing and Medical Affairs for Zeneca Pharmaceuticals,
a business unit of Zeneca, Inc. Mr. O'Shea joined Zeneca in the U.K. in 1975 and
held management positions in the U.K. and the U.S. in the areas of international
sales and marketing.                                                            

MR. SOUTHWELL has served as Executive Vice President, Chief Financial Officer of
the Company since October 1995 and served as Senior Vice President and Chief    
Financial Officer of the Company from July 1994 to October 1995. From           
August 1988 until July 1994, Mr. Southwell was associated with Lehman           
Brothers Inc., a securities firm, in various positions with the investment      
banking division, most recently in the position of Vice President.              
Mr. Southwell is a director of BioSphere.                                       

DR. RUBIN has served as Executive Vice President, Drug Development and ICE      
Research of the Company since January 1999. He was Senior Vice President, Drug  
Development of the Company from April 1996 until January 1999. He was formerly  
Vice President and Worldwide Director of Clinical Pharmacology for              
Glaxo-Wellcome, a pharmaceutical company, from 1993 until 1996 and Vice         
President, Immunology and Metabolic Disease for Abbott Laboratories, a          
pharmaceutical company, from 1987 until 1993. Dr. Rubin was responsible for     
early clinical development of Glaxo-Wellcome's entire portfolio. While at Abbott
Laboratories, Dr. Rubin was responsible for the development of the              
5-lipoxygenase inhibitor, zileuton. Dr. Rubin is a director of Endorex Corp.    

DR. HAUSKE has served as Senior Vice President, Discovery of the Company since  
October 1995. Prior to joining the Company, from June 1994 to October 1995,     
Dr. Hauske was employed by Arris Pharmaceuticals, a pharmaceutical company, as  
Director of Combinatorial Chemistry and Receptor Chemistry. Before joining Arris
Pharmaceuticals, Dr. Hauske worked for Pfizer Central Research in Groton,       
Connecticut. While, at Pfizer, Dr. Hauske was a member of the project management
team that discovered Pfizer's azamacrolide antibacterial,                       
Zithromax-Registered Trademark-.                                                

MR. SCUMACI has served as Senior Vice President, Finance and Administration and 
Treasurer of the Company since March 1996. He was Vice President and Controller 
of the Company from March 1995 until March 1996. From 1987 to 1994, Mr. Scumaci 
was employed by Ares-Serono Group, a multinational pharmaceutical company, most 
recently as Vice President, Finance and Administration of North American        
Operations. Previously, he was associated with Revlon and Coopers & Lybrand in  
various finance and accounting capacities.                                      

DR. REEDICH has served as Senior Vice President, Legal Affairs and Chief Patent 
Counsel of the Company since January 1999 and has served as the Company's Chief 
Patent Counsel since June 1995. From October 1987 to June 1995, he was employed 
by 3M Company ("3M"), most recently as patent counsel for 3M's Pharmaceuticals  
Division. Prior to joining 3M, Dr. Reedich was employed as a chemist by Eli     
Lilly.                                                                          

PART II 

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.  

Incorporated by reference from the Company's 1999 Annual Report to Stockholders 
(the "1999 Annual Report") under the headings "Supplemental Stockholder         
Information--Price Range of Common Stock" and "Supplemental Stockholder         
Information--Dividend Policy."                                                  

The Company did not sell any equity securities during the quarter ended         
December 31, 1999 that were not registered under the Securities Act of 1933, as 
amended.                                                                        

ITEM 6. SELECTED FINANCIAL DATA.                                                

Incorporated by reference from the 1999 Annual Report under the heading         
"Sepracor Inc. Selected Financial Data."                                        

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS.                                                              

Incorporated by reference from the 1999 Annual Report under the heading         
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations."                                                                    

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK              

Incorporated by reference from the 1999 Annual Report under the heading         
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations."                                                                    

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                            

The financial statements filed as part of this Annual Report on Form 10-K are   
incorporated by reference from the 1999 Annual Report under the headings        
"Consolidated Financial Statements and Notes Thereto" and are listed under Item 
14 below.                                                                       

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE.                                                       

There have been no disagreements on accounting and financial disclosure matters.

PART III

ITEMS 10-13.                                                                    

   The information required for Part III in this Annual Report on Form 10-K is
incorporated by reference from the Company's definitive proxy statement for the 
Company's 2000 Annual Meeting of Stockholders. Such information will be         
contained in the sections of such proxy statement captioned "Stock Ownership of 
Certain Beneficial Owners and Management", "Proposal 1--Election of Directors", 
"Board and Committee Meetings", "Compensation for Directors", "Compensation of  
Executive Officers", "Certain Relationships and Related Transactions",          
"Employment Agreements" and "Section 16(a) Beneficial Ownership Reporting       
Compliance." Information regarding executive officers of the Company is also    
furnished in Part I of this Annual Report on Form 10-K under the heading        
"Executive Officers of the Registrant."                                         

PART IV 

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.      

(a) The following documents are included or incorporated by reference from the  
1999 Annual Report.                                                     

1.  The following financial statements (and related notes) of the Company are   
incorporated by reference from the 1999 Annual Report:                  

                                                                [Download Table]

                                                               PAGE*  
                                                              --------
                                                                      
Report of Independent Accountants...........................       23*
Consolidated Balance Sheets at December 31, 1999 and 1998...       24*
Consolidated Statements of Operations for the Years Ended          25*
  December 31, 1999, 1998 and 1997..........................          
Consolidated Statements of Stockholders' Equity (deficit)          26*
  and Comprehensive Income for the Years Ended December 31,           
  1999, 1998 and 1997.......................................          
Consolidated Statements of Cash Flows for the Years Ended          27*
  December 31, 1999, 1998 and 1997..........................          
Notes to the Consolidated Financial Statements..............       28*

*   Refers to page number of the 1999 Annual Report. The consolidated financial 
  statements (and related notes) are incorporated by reference from the 1999
Annual Report.                                                          

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2.  The schedule listed below and the Report of Independent Accountants on      
financial statement schedule are filed as part of this Annual Report on 
Form 10-K:                                                              

                                                                [Download Table]
                                                                      
Report of Independent Accountants on Financial Statement           S-1
  Schedule..................................................          
Schedule II--Valuation and Qualifying Accounts..............       S-2

All other schedules are omitted as the information required is inapplicable or  
the information is presented in the consolidated financial statements or the    
related notes.                                                                  

3.  The Exhibits listed in the Exhibit Index immediately preceding the Exhibits 
filed as a part of this Annual Report on Form 10-K.                     

(b) No current reports on Form 8-K were filed by the Company during the quarter 
ended December 31, 1999;                                                

The following trademarks are mentioned in this Annual Report on Form 10-K:      

Sepracor, ICE and Xopenex are trademarks of Sepracor. BioSphere and             
Embosphere-Registered Trademark- Microspheres are trademarks of BioSphere.      
HemaSure and LeukoNet are trademarks of HemaSure. This Annual Report on         
Form 10-K also contains trademarks of other companies.                          

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act of 1934, the registrant has duly caused this report to be signed on its     
behalf by the undersigned, thereunto duly authorized.                           

                                                                [Download Table]
                                              
SEPRACOR INC.                                 

By:  /s/ TIMOTHY J. BARBERICH                 
     -----------------------------------------
     Timothy J. Barberich                     
     CHAIRMAN AND CHIEF EXECUTIVE OFFICER     

Date: April 18, 2000                                                            

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REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES 

To the Board of Directors of Sepracor Inc.                                      

Our audits of the consolidated financial statements referred to in our report   
dated January 27, 2000, except as to the information in Note V for which the    
date is March 9, 2000 appearing on page 23 of the 1999 Annual Report to         
Stockholders of Sepracor Inc. (which report and consolidated financial          
statements are incorporated by reference in this Annual Report on Form 10-K)    
also included an audit of the financial statement schedule listed in Item       
14(a)(2) of this Form 10-K. In our opinion, based upon our audits and the       
reports of other auditors, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in           
conjunction with the related consolidated financial statements.                 

                                 /s/PricewaterhouseCoopers LLP

Boston, Massachusetts                                                           
January 27, 2000, except as to the information in                               
Note V for which the date is March 9, 2000                                      

S-1 

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SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

                                                        [Enlarge/Download Table]

                                        BALANCE AT              CHARGED TO                  BALANCE AT
                                        BEGINNING   CHARGED TO    OTHER                       END OF  
                                        OF PERIOD    EXPENSES    ACCOUNTS   DEDUCTIONS (1)    PERIOD  
                                        ----------  ----------  ----------  --------------  ----------
                                                                                                      
Year ended December 31, 1999 Accounts                                                                 
  Receivable Reserves.................. $      --    $174,853   $      --      $10,184       $164,669 
Year ended December 31, 1998 Accounts                                                                 
  Receivable Reserves (2).............. $      --    $     --   $      --      $    --       $     -- 
Year ended December 31, 1997 Accounts                                                                 
  Receivable Reserves (2).............. $      --    $     --   $      --      $    --       $     -- 

------------------------                                                        

(1) Collections and bad debt write-offs.                                        

(2) 1998 and 1997 reserves were restated to zero due to discontinued operations 
of BioSphere Medical, Inc.                                              

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                                                      EXHIBIT INDEX                          
EXHIBIT NO.                                            DESCRIPTION                           
-----------                    ------------------------------------------------------------  
                                                                                             
             (**)3.1      --   Restated Certificate of Incorporation of the Registrant, as   
                               amended.                                                      

                 3.2(1)   --   Amended and Restated By-Laws of the Registrant.               

                 4.1(1)   --   Specimen Certificate for shares of Common Stock, $.10 par     
                               value, of the Registrant.                                     

                 4.2(5)   --   Form of 6 1/4% Convertible Subordinated Debenture due 2005.   

                 4.3(5)   --   Global 6 1/4% Convertible Subordinated Debenture payable to   
                               Cede & Co. due 2005.                                          

                 4.4(6)   --   Global 7% Convertible Subordinated Debenture payable to Cede  
                               & Co. due 2005.                                               

             (**)4.5      --   Form of 5% Convertible Subordinated Debenture due 2007.       

             (*)10.1(7)   --   The Registrant's 1991 Amended and Restated Stock Option       
                               Plan.                                                         

             (*)10.2(6)   --   The Registrant's 1991 Director Stock Option Plan, as amended  
                               and restated.                                                 

             (*)10.3(4)   --   The Registrant's 1996 Employee Stock Purchase Plan, as        
                               amended and restated.                                         

             (*)10.4(5)   --   The Registrant's 1997 Stock Option Plan.                      

             (*)10.5(6)   --   The Registrant's 1998 Employee Stock Purchase Plan.           

             (*)10.6(7)   --   The Registrant's 1999 Director Stock Option Plan              

                10.7(3)   --   Lease as to Marlboro Industrial Park, dated December 12,      
                               1995, between Valerie A. Colbert, Trustee of Second Marlboro  
                               Development Trust under Declaration of Trust dated September  
                               15, 1972, and the Registrant (the "Marlboro Lease").          

                10.8(5)   --   First Amendment to Marlboro Lease, dated February 1, 1997,    
                               and Second Amendment to Marlboro Lease, dated July 1, 1997.   

                10.9(6)   --   Technology Transfer and License Agreement dated as of         
                               January 1, 1994, between the Registrant and BioSepra Inc.     

                10.10(6)   --  Technology Transfer and License Agreement dated as of         
                               January 1, 1994, between the Registrant and HemaSure Inc.     

                10.11(6)   --  Technology Transfer and License Agreement, effective January  
                               1, 1995, between the Registrant and SepraChem Inc.            

             (*)10.12(2)   --  Letter Agreement, dated September 30, 1993, between the       
                               Company and David S. Barlow.                                  

             (*)10.13(2)   --  Letter Agreement, dated June 10, 1994, between the            
                               Registrant and David Southwell.                               

             (*)10.14(4)   --  Letter Agreement, dated February 23, 1996, between the        
                               Registrant and Paul D. Rubin.                                 

             (*)10.15(4)   --  Letter Agreement, dated February 23, 1995, between the        
                               Registrant and Robert F. Scumaci.                             

                10.16(5)   --  Put Agreement, dated as of December 30, 1997, between the     
                               Registrant and Fleet National Bank.                           

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                                                        EXHIBIT INDEX                          
EXHIBIT NO.                                              DESCRIPTION                           
-----------                      ------------------------------------------------------------  
                                                                                               
                10.17(5)+    --  Agreement, dated as of December 5, 1997, by and between the   
                                 Registrant and Schering-Plough Ltd.                           

                10.18(5)+    --  License Agreement, dated January 30, 1998, by and between     
                                 the Registrant and Janssen Pharmaceutica N.V.                 

                10.19(6)+    --  Norcisapride Development and License Agreement, dated as of   
                                 July 20, 1998, between Janssen Pharmaceutica N.V. and the     
                                 Registrant.                                                   

                10.20(6)+    --  Exclusive License Agreement by and between Eli Lilly and      
                                 Company and the Registrant.                                   

                10.21(5)    --   Indenture, dated as of February 10, 1998, between the         
                                 Registrant and The Chase Manhattan Bank, as trustee,          
                                 relating to the 6 1/4% Convertible Subordinated Debentures    
                                 due 2005.                                                     

                10.22(5)    --   Registration Rights Agreement, dated as of February 5, 1998,  
                                 by and among the Registrant, Morgan Stanley & Co.             
                                 Incorporated, Lehman Brothers Inc., Smith Barney Inc. and     
                                 Vector Securities International, Inc.                         

                10.23(6)    --   Indenture, dated as of December 15, 1998, between the         
                                 Registrant and The Chase Manhattan Bank, as trustee,          
                                 relating to the 7% Convertible Subordinated Debentures due    
                                 2005.                                                         

                10.24(6)    --   Registration Rights Agreement, dated as of December 10,       
                                 1998, by and among the Registrant, Morgan Stanley & Co.       
                                 Incorporated and Salomon Smith Barney, Inc.                   

                10.25(7)    --   Assignment Agreement, dated as of August 25, 1999, by and     
                                 between the Registrant and Georgetown University.             

                10.26(7)    --   Registration Rights Agreement, dated as of August 25, 1999,   
                                 by and between the Registrant and Georgetown University.      

            (**)10.27      --    Indenture, dated as of February 14, 2000, between the         
                                 Registrant and the Chase Manhattan Bank, as trustee,          
                                 relating to the 5% Convertible Subordinated Debentures due    
                                 2007.                                                         

            (**)10.28      --    Registration Rights Agreement, dated as of February 14,       
                                 2000, by and among the Registrant and Deutsche Bank           
                                 Securities Inc.                                               

            (**)10.29      --    Second Amended and Restated Revolving Credit Agreement Among  
                                 Fleet National Bank, Sepracor Inc. and BioSphere Medical,     
                                 Inc. dated as of December 22, 1999, as amended on             
                                 February 14, 2000.                                            

            (**)10.30++    --    License Agreement, dated August 31, 1999, by and between the  
                                 Registrant and Hoechst Marion Roussel, Inc.                   

            (**)10.31++    --    EX-US License Agreement, dated August 31, 1999, by and        
                                 between the Registrant and Hoechst Marion Roussel, Inc.       

            (**)10.32++    --    License and Assignment Agreement, dated September 30, 1999,   
                                 by and between the Registrant and Rhone-Poulenc Rorer SA.     

            (**)10.33++    --    License Agreement, dated May 27, 1999, by and between UCB     
                                 Farchim S.A. and the Registrant.                              

            (**)10.34++    --    Co-Promotion Agreement, dated as of November 18, 1999, by     
                                 and between Ross Products Division of Abbott Laboratories     
                                 Inc. and the Registrant.                                      

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                                                  EXHIBIT INDEX                          
EXHIBIT NO.                                        DESCRIPTION                           
-----------                ------------------------------------------------------------  
                                                                                         
         (**)(*)10.35  --  Summary of Plan regarding "Parachute Payments" and Section    
                           280G Gross-Up Payments.                                       

                13     --  Selected portions of the 1999 Annual Report to Stockholders   
                           (which shall be deemed filed only with respect to those       
                           portions specifically incorporated by reference herein).      

            (**)21     --  Subsidiaries of the Company.                                  

            (**)23.1   --  Consent of PricewaterhouseCoopers LLP.                        

            (**)23.2   --  Consent of Arthur Andersen LLP.                               

            (**)27     --  Financial Data Schedule.                                      

            (**)99     --  Report of Arthur Andersen LLP.                                

 (*) Management contract or compensatory plan or arrangement filed as an exhibit
to this Form pursuant to Item 14(c) of Form 10-K.                       

(**) previously filed.                                                          

(+) Confidential treatment granted as to certain portions.                      

(++)Confidential treatment requested as to certain portions.                    

(1) Incorporated herein by reference from the Registrant's Registration         
Statement on Form S-1 (File No. 33-41653).                              

(2) Incorporated by reference from the Registrant's Annual Report on Form 10-K  
for the year ended December 31, 1994.                                   

(3) Incorporated by reference from the Registrant's Annual Report on Form 10-K  
for the year ended December 31, 1995.                                   

(4) Incorporated by reference from the Registrant's Annual Report on Form 10-K  
for the year ended December 31, 1996.                                   

(5) Incorporated by reference from the Registrant's Annual Report on Form 10-K  
for the year ended December 31, 1997.                                   

(6) Incorporated by reference from the Registrant's Annual Report on Form 10-K  
for the year ended December 31, 1998.                                   

(7) Incorporated by reference from the Registrant's Quarterly Report on         
Form 10-Q for the quarter ended September 30, 1999.                     

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K/A’ Filing		Date		First		Last			Other Filings
		12/31/01		11					10-K
Filed on:		4/18/00		20
		4/12/00		1
		4/1/00		14
		3/22/00		15
		3/9/00		21
		3/1/00		14
		2/14/00		24					8-K,  SC 13G,  SC 13G/A
		1/27/00		21
For Period End:		12/31/99		1		22			10-K
		12/22/99		24
		11/18/99		24
		10/26/99		3		6
		10/20/99		15
		10/7/99		15
		9/30/99		15		25			10-Q
		9/1/99		3		15
		8/31/99		24
		8/25/99		24					424B3
		7/16/99		15
		6/30/99		15					10-Q
		5/27/99		24
		5/19/99		15					DEF 14A,  PRE 14A
		4/23/99		15
		4/5/99		15
		3/1/99		4
		2/12/99		14					SC 13G
		12/31/98		18		25			10-K,  10-K/A
		12/15/98		24
		12/10/98		24					8-K
		12/7/98		7					8-K
		7/20/98		24
		2/10/98		24
		2/5/98		24					8-K
		1/30/98		24
		12/31/97		18		25			10-K,  10-K/A
		12/30/97		23
		12/5/97		24
		7/1/97		23
		2/1/97		23
		12/31/96		25					10-K
		2/23/96		23					SC 13D/A
		12/31/95		25
		12/12/95		23
		2/23/95		23
		1/1/95		23
		12/31/94		25
		6/10/94		23
		1/1/94		23
		9/30/93		23
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