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.