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

SPPI will be filing an ANDA before the end of October and should sign a agreement with a Pharma company before the end of 2008

SPPI is selling below it's cash value of almost $3 per share.  When they announce a deal for Asian rights it might be the impetus to see the stock move significantly higher. 

Year end tax selling might keep it sub $2.  Wait until the last trading day of December 2008 to buy.

SPPI closed today at $2.50 per share.  It was trading at $1.50 per share on March 25, 2009.  For the rest of 2009, SPPI has several significant events which could propel the stock to over $10 per share by year end.  Even though, it has made a nice move over the last month there is still a lot of upside opportunity. 

Patience pays off on this investment.

SPPI closed at $2.70 per share yesterday and today is trading at high of $3.65.  It has over $2 in cash and will be announcing earnings on May 12th.  The CEO has purchased 60,000 shares this week. 

I expect this company to run to over $5 per share next week and with FDA approvals coming in July this could be a $10-$15 stock by the summer.

SPPI broke key resistance above $4.40.  They came out with earnings of $.02 per shares versus estimates of ($.11).  As of March 31, 2009 they had approximately $64 million ($1.97 per share) of cash, cash equivalents, and marketable securities.  Around July 2, 2009 they have PDUFA action date by the FDA and another one in October 2009.  Based on the current stock price they should be included in one of the Russell indices that reconsitute in July 2009 based on market capitalization as of May 31, 2009.  Inclusion in one of the Russell indices will spark additional institutional buying in June 2009.  Also, once it breaks $5 per share additional institutional buying should occur. 

I expect the stock to be trading between $7-$8 before the July 2, 2009 PDUFA decision from the FDA.  This stock could easily be above $10 by the end of July 2009.

We are awaiting the FDA decision on Zevalin approval for first-line indications in NHL.  SPPI closed at $6.50 on Thursday after hiting a high of $8.15 on June 30.  The decline to $6.59 on Wednesday, July 1, 2008 might be attributed to their 2009 ESPP.  The Form 8-K filed on June 2, 2009 stated the following.."The 2009 ESPP provides that there shall be consecutive periods during which an option to purchase Common Stock under the 2009 ESPP may be exercised ("Offering Periods"), each of which will last approximately six months. The first Offering Period shall commence on the first trading day on or after July 1, 2009 and shall terminate on December 31, 2009. The purchase price per share for which shares of Common Stock will be sold pursuant to the 2009 ESPP is an amount equal the lesser of: (a) 85% of the fair market value of Common Stock on the first day of the Offering Period or (b) 85% of the fair market value of Common Stock on the last day of the Offering Period."

The original agreement between Cell Therapuetics, Inc. and Biogen, Inc. in December 2007 , stated that "CTI will pay royalties to Biogen Idec based on the net sales of Zevalin until at least December 2015, and has also agreed to pay up to an additional $20 million in milestone payments if the product receives approval from the FDA for certain first-line indications in NHL. CTI also has agreed to share the cost of certain clinical trials of Zevalin with Bayer Schering in the event such trials are undertaken."

When SPPI acquired 100% of Zevalin from CTIC in 2009, I am assuming that they will have to make these milestone payments if FDA approval is received on Zevalin for first-line indications in NHL. 

The recent issuance of additional shares of stock by SPPI might have been to raise cash for the milestone payments of $20 million if FDA approval is received.

Before the market opens on Monday, July 6, 2009, we should know if they got FDA approval.  If approved, I would expect SPPI to trade above $10.  If not, it will probably fall back below $5.  They have another FDA PDUFA date in October 2009 which provides another great opportunity.

Today, the FDA notified SPPI that Eoquin, their drug candidate intended to treat non-muscle invasive bladder cancer, was granted fast tract status.  SPPI expects to finish late-stage clinical trials by year end and to report the results two years later. 

SPPI is awaiting FDA decision set for Sept 7, 2009 for its experimental drug, Zevalin.  In July, the FDA had asked for more data on it's application of an additional use of Zevalin to treat non-Hodgkin's lymphoma (NHL).   Zevalin is already approved as a treament for patients with relapsed or refractory, low-grade or foilicular B-cell NHL.

Also, the next big PDUFA date for SPPI is the sNDA for Fusilev for injection in advanced metastic colorectal cancer is October 8, 2009.