Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) has been an awfully tough nut to crack for traders. First off, the stock put in a clear sentiment high back in August when we noted that a consensus of analysts on the Street were putting out bullish price forecasts and ratings. That is always a dangerous moment for any stock in the biotech space because you quickly start to price for perfection.
At that point, if anything goes wrong at all, you tend to see the worst kind of reaction. And now, here we are. Things started to go wrong, and the stock has had an awful run of luck. The latest problem is the company’s failure to secure Breakthrough Therapy Designation (BTD) from the FDA for poziotinib for the treatment of non-small cell lung cancer (NSCLC). BTD is designed to expedite the review of drugs to treat serious or life threatening conditions. Shares are getting smacked again in response, down under the $7/share level in after hours trading.
Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) promulgates itself as biopharma name that develops and commercializes oncology and hematology drug products.
The company markets six drug products, including FUSILEV for patients with metastatic colorectal cancer and rescue after high-dose methotrexate therapy in osteosarcoma, and to diminish toxicity and counteract the effects of impaired methotrexate elimination and of inadvertent overdosage of folic acid antagonists; FOLOTYN, a folate analogue metabolic inhibitor for peripheral T-cell lymphoma (PTCL); ZEVALIN injection for patients with B-cell non-Hodgkin’s lymphoma; MARQIBO, a sphingomyelin/cholesterol liposome-encapsulated formulation for adult patients with Philadelphia chromosome-negative acute lymphoblastic leukemia; BELEODAQ injection for PTCL; and EVOMELA for use as a conditioning treatment prior to autologous stem cell transplant in multiple myeloma patients.
It is also developing POZIOTINIB for treating breast and lung cancer; ROLONTIS for chemotherapy-induced neutropenia; and QAPZOLA for intravesical instillation in post-transurethral resection of bladder tumors in patients with non-muscle invasive bladder cancer.
The company sells its drugs through group purchasing organizations, wholesalers, and directly in the United States; and through distributors in Europe. Spectrum Pharmaceuticals, Inc. has licensing and development agreement with Cell Therapeutics, Inc.; license agreement with Merck & Cie AG, Sloan-Kettering Institute, and Cydex Pharmaceuticals, Inc.; development and commercialization collaboration agreement with Allergan, Inc.; collaboration agreement with Nippon Kayaku Co., LTD.; licensing and collaboration agreement with Onxeo DK; and co-development and commercialization agreement with Hanmi Pharmaceutical Company.
The company was formerly known as NeoTherapeutics, Inc. and changed its name to Spectrum Pharmaceuticals, Inc. in December 2002.
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As we discussed earlier, SPPI just announced the company’s failure to secure Breakthrough Therapy Designation (BTD) from the FDA for poziotinib for the treatment of non-small cell lung cancer (NSCLC).
The main question now for traders is this: are we finally at the point where all the weak hands have been kicked off the bus?
In other words, given the enthusiasm and consensus bullish expectations that marked the highs in the stock in August, a correction had a specific job to do: to clear the stock of that enthusiasm and reset the score back to flat or to push it to a point where the tape is dominated by bears, which primes it for the next run back to the upside.
This gap-down may hit tomorrow morning’s bell with an air of “capitulation”. We have basically given back all of the stock’s breakout run trend higher during the second half of last year. We would look for signs of stability tomorrow morning and the possibility that the bus has been nicely cleared at this point.
“Our enthusiasm for poziotinib, our commitment to the program, and our overall development plan remain unchanged,” said Joe Turgeon, President and Chief Executive Officer of Spectrum Pharmaceuticals. “We will continue to work with the FDA to achieve the fastest route to approval of poziotinib based on our ZENITH20 study.”
Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), for those interested in immediate dilution potential, has a strong balance sheet, with cash levels far exceeding current liabilities ($220.6M against $100.9M).