Spectrum Pharmaceuticals (SPPI) is off to a good start in the second half of the year after a disappointing first half as far as its oncology drug, Fusilev, is concerned. The drug performed miserably in the first half of the year due to lower shipments to wholesalers.
Spectrum Pharma reported third quarter of 2013 loss (including stock-based compensation but excluding other special items) of 2 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The company had reported earnings of 37 cents per share in the year-ago quarter. Results were affected by lower revenues.
Spectrum Pharma’s revenues in the reported quarter came in at $42.4 million, down 38.5% year over year. The massive decline in total revenues was primarily due to lower product sales. Revenues in the third quarter were however above the Zacks Consensus Estimate of $41 million.
Quarter in Details
Spectrum Pharma recorded quarterly revenues from product sales and licensing fees during the quarter. Product revenues in the reported quarter were down 37.1% year over year to $41.4 million. This consisted of revenues from Fusilev, Folotyn, Zevalin and Marqibo.
Fusilev’s performance has improved in the third quarter of 2013, after a disappointing first half this year. The drug is approved for the treatment of metastatic colorectal cancer. Spectrum Pharma recorded Fusilev sales of $23.1 million in the reported quarter, up from $12 million and $13 million in the first and second quarters, respectively. The improvement in Fusilev sales was primarily due to higher shipments to wholesalers, which were sluggish earlier in the year.
Spectrum Pharma expects Fusilev sales to remain in the range of $20−$25 million per quarter in the forthcoming quarters.
Sales from Folotyn, which was added to Spectrum Pharma’s portfolio following its acquisition of Allos Therapeutics, Inc. in Sep 2012, came in at $10.5 million in the third quarter of 2013, down 16.7% sequentially. Folotyn is available in the U.S. for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma (PTCL).
Zevalin sales during the reported quarter came in at $7.8 million. In Apr 2012, Spectrum Pharma acquired the licensing rights to market Zevalin outside the U.S. Zevalin is currently marketed for the treatment of non-Hodgkin's lymphoma. Spectrum Pharma is looking to expand the drug’s label. Zevalin is being studied in a phase III study for the treatment of patients suffering from diffuse large B-cell lymphoma.
Marqibo, launched in the U.S. for the treatment of adults suffering from Philadelphia chromosome-negative (Ph-) acute lymphoblastic leukemia (ALL) during late third quarter 2013, contributed $0.1 million to the company’s net revenues. Spectrum Pharma gained worldwide rights to Marqibo following the completion of the acquisition of California-based Talon Therapeutics in Jul 2013. Marqibo is also being developed for the treatment of non-Hodgkin's lymphoma.
Spectrum Pharma also received $1.0 million as licensing fees during the quarter, compared with $3.2 million in the year-ago quarter.
The company’s adjusted research and development (R&D) expenses of $12.2 million during the quarter shot up 28.8% year over year. The increase in R&D expenses during the quarter was primarily due to higher clinical expenses. Adjusted selling, general and administrative (SG&A) expenses in the third quarter of 2013 came in at $23.2 million, up 21.3% year over year.
Other Developments
Spectrum Pharma also revealed that it is all set to file a New Drug Application (NDA) for its pipeline candidate, Belinostat (relapsed or refractory peripheral T-cell lymphoma), later in the year. The company expects to launch Belinostat next year. Furthermore, the company plans to file for Captisol-enabled melphalan (a conditioning agent for stem cell transplant and multiple myeloma) by mid 2014.
Our Take
We are encouraged by Fusilev’s turnaround after a disappointing first half this year. Fusilev has been the key revenue generator for Spectrum Pharma. Moreover, the addition of Marqibo is expected to boost the company’s top-line further. We are also encouraged by the company’s efforts to expand its product portfolio and pipeline.
Spectrum Pharma currently carries a Zacks Rank #3 (Hold). Other stocks like Jazz Pharmaceuticals (JAZZ), Shire (SHPG) and Actelion Ltd. (ALIOF) presently look more attractive with a Zacks Rank #1 (Strong Buy).
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