Spectrum Pharmaceutecals Inc (SPPI)

[antihama]

Seeking Alpha article article came out today titled "Disappointment Is Coming For Spectrum Pharmaceuticals"
http://seekingalpha.com/article/4007123-impending-disappointment-spectrum-pharmaceuticals?auth_param=mqj99:1bu0f8a:a8b0ebc481a3690b1ac0821826af10b8&uprof=44&dr=1#alt3

Here's my comment to the article

With regards to your statements

“Spectrum needs to overhaul its communication and management strategies”

And

“the management needs to straighten up their issues to better attract investors and also adopt TRANSPARENT communication.”

I whole heartily agree for some of the obvious reasons but I have to say that is a sypmtom of hiding behind a lack of Qs of substance at the quarterly’s from the Analysts regarding statements Spectrum management makes concerning their business. From their lack of Analyst inquiry into the details of the apaziquone application to inaccurate statements they make such as SPI-2012 will compete in a $6 billion market. Sure 6B is what it shows on Amgen’s spreadsheet but that includes the rest of the world and for both Neulasta and the non-PEGylated version Neupogen. If you look at Neulasta sales in the US (SPI-2012s competition) it’s a 3.7B market and that’s for ALL cancer indications not just Breast cancer patients that are being treated in the current trial (to be fair Spectrum did seem to suggest at Jeffries 2015 Healthcare conf that it will be considered for all indications but let’s get some clarity here folks). And then they state it’s more potent than Neulasta but when you do the calculation it turns out SPI-2012 will contain more G-CSF than Neulasta. So when Spectrum states that they have management on their team from Amgen and are confident of success well let’s start getting rid of the fussiness of their statements so we can start to believe them. Just because the Analyst’s don’t ask tougher Qs doesn’t mean they don’t need clarity with the investing public. And their Investor Relations need to respond to legitimate Qs that are e/vmailed to them if they want to gain credibility.

Where I disagree with you is about running the ongoing apaz P3 trial till the end and getting approval in the 2021-22 timeframe. The trial will show efficacy while being statistically significant I have no doubt based on the almost 2 IDENTICAL P3 trials when combined showing SS. I question why should they run the trial when the patents are weak or expiring around the same time. They should terminate the trial now, Now, NOW and/or give it to a Bladder cancer organization /charity to finish it if they want another (sharp) tool in the shed to fight NMIBC because pts could certainly use something better than the current standard of care. Spectrum would probably save over 50-70M that they could use in other areas if they terminated the trial.

OK, enough venting. You be surprised to know that I am invested with them. Reason? I like the concept of these ‘boring’ drugs they sell. There is less risk there to help pay the bills while some of their drugs in the clinic develop. But one of these drugs, Evomela, is a little more exciting than the others. Evomela will be competing in a $100M market, it has advantages over generic melphalan (easier preparation, stable for 4 hrs v 1 for generic, and doesn’t contain propylene glycol), and will be priced like generic. So I have no doubt that it will capture most of the market in the next couple of years. I don’t see it happening this year since Spectrum has explained in previous CCs that it has to get past the P&T (pharmacy and therapeutics) committees which only meet once or twice a year at each facility where it is sold (Note per their quarterly CC - over 90% of this market is concentrated in just over 100 accounts across the U.S. and over half of the business is concentrated in the top 20 transplant centers). I do see Evomela being their #1 drug in sales next year.

And here’s an example where the money from terminating the apaz trial could be used. There was some interesting papers that came out recently on a P2 study in Multiple Sclerosis where they carry out autologous Hematopoietic Stem Cell Transplants in pts w very aggressive MS that was very effective; one doctor used the ‘C’ word (Cure) (Note - The Multiple Sclerosis Foundation estimates that more than 400,000 people in the US have MS. The reference I posted indicates only 5% of pts are eligible for this treatment i.e. the sickest MS pts. So 5% of 400,000 is another 20,000 pts potentially using aHSCT). Of course with Autologous HSCT melphalan is one of the drugs used. Why not do a P3 study w Evomela in MS verifying the results in the P2 trial. That would almost double the pt population for this drug. Here’s the link to an article describing those results
tinyurl.com/hxr...

Let me stop with this last thought. I am really interested in what poziotinib will bring to the table. A non-blinded P2 Korean study in metastaic breast cancer should have results around the end of this year which would coincide w the San Antonio Breast Cancer Symposium in Dec. Back in Feb 2016 at the RBC Healthcare Conf Dr. Raj stated that these results looked “impressive” both in efficacy and safety. That would be great if Dr. Raj wasn’t exaggerating because if the results are anywhere near impressive, and even considering it still has a way to go, knowing that the drug works would give a lift to the stock price.

So while the stock is in the doldrums, I think for those who own this stock patience is in order. I’ve said that one to many times more than I’m comfortable with but I’ll wait till I see what Evomela does before I give up on this stock.