Opinion on  Spectrum Pharmaceuticals Inc. (SPPI)     Sector: Healthcare  >  Industry: Biotechnology & Drugs
Bullish on SPPI ...

SPPI just signed an exclusive collaboration agreement with Allergan, Inc. for the development and comercialization of aqaziuoine.  They will receive $41.5 million at closing and up to $304 million in milestone payments.  When they receive the $41.5 million they should have over $90 million in cash which should be almost $2.85 per share in cash. 

Also, they should be filing a supplemental NDA with the FDA  for their FUSILEV drug for colorectal cancer by the end of October 2008.

Spectrum Pharmaceuticals will probably be announcing their 2008 financial results and pipeline update by March 16.    They are currently trading below cash on hand per share.    This small biotech company will probaby be bought out by a large pharma company before the end of 2009 if they annonce favorable results from several drugs in various phases of preclinical trials. 

This company is a speculative investment but has the potential for superior market performance by year end if they can execute and deliver on their product pipeline.   

On March 26, 2009, the FDA accepted for filing and review the supplemental New Drug Application (sNDA) for FUSILEV™ (levoleucovorin) for Injection in combination with 5-FU containing regimens in advanced metastatic colorectal cancer. The user fee goal (PDUFA) date for the sNDA is October 8, 2009.

The FDA approved FUSILEV on March 7, 2008 for rescue after high-dose methotrexate therapy in osteosarcoma.

As of December 31, 2008, the company had cash, cash equivalents, and marketable securities of approximately $78 million. There were approximately 32 million shares issued and outstanding as of March 27, 2009.   At December 31, 2009, this equaled $2.44 in Cash.

On March 16, 2009, Spectrum Pharmaceuticals acquired 100% control of RIT Oncology, LLC™, to commercialize ZEVALIN ^® ([90Y]-ibritumomab tiuxetan) in the United States. In connection with the closing, Spectrum Pharmaceuticals will pay its former partner a total of $16.5 million, which is subject to further adjustments based on outstanding liabilities and obligations. Additionally, there will be no further payments or milestones to the former partner. Spectrum Pharmaceuticals now has 100% ownership of RIT Oncology, LLC, and will be responsible for all activities relating to ZEVALIN. Spectrum Pharmaceuticals will now book 100% of ZEVALIN revenues.

ZEVALIN is currently approved for the treatment of patients with relapsed or refractory, low-grade or follicular B-cell non-Hodgkin's lymphoma (NHL), including patients who have rituximab-refractory follicular NHL. ZEVALIN is under review by the FDA for use as a first line consolidation therapy for patients with NHL. The FDA recently established July 2, 2009 as a target date for a decision regarding the ZEVALIN sBLA.

The following are additional important milestones in 2009:

ZEVALIN ^®

• July approval decision by FDA regarding use in 1st line consolidation treatment for non-Hodgkin’s Lymphoma;

• 100% Ownership of U.S. Sales and Marketing Rights;
• Establish reimbursement standards in concert with Center for Medical Services (CMS) for ZEVALIN by the 2 ^nd quarter

  Apaziquone (EOquin ^® )

  • Complete enrollment in the two ongoing registrational Phase 3 clinical trials for non-muscle-invasive bladder cancer;
  • Initiate trials in BCG-Refractory bladder cancer

Every year the Russell Indices are reconstituted based on the market capitalization of stocks at the end of May.   Preliminary Additions and deletions will be announced on June 12.  On June 25, 2009 the reconsititution will be final.  Based on SPPI's market capitalization of greater than $160 million, it should be included in the Russell 2000 Index and possibly in the Russell Microcap Index.

Over the next month, we may see a further increase in share value due to inclusion in the Russell 2000.  With a July 2, 2009 PDUFA date, we have further impetus to a higher share price.

Russell announced today that SPPI is slated as a preliminary addition to the Russell 3000 Index at the end June 2009. 

The short-term direction of SPPI's stock price will be more affected by SPPI's conference call than its actual quarterly results.  The management of this company, in my opinion, is absolutely one of the worst when it comes to being transparent and straight with shareholders.  Since the end of May 2009, the company has raised over $100 million with no clear business objectives only to dilute existing shareholder value.  The stock is currently trading below the offering price of the lowest public offering.  In addition, there are warrants outstanding on the offerings which could further dilute existing shareholders.  Recently, they received FDA notice that an expanded use of it's Zevalin drug was unapproved at this time.  However, they have not offered any explanation or information regarding their plan of action in resolving the FDA issues. 

While I do believe that they have several promising market opportunities,  management has clearing demonstrated that its interests or priority to shareholders.  If you have a chance listen to their conference call and draw your own conclusions concerning the management team.