Spectrum Pharmaceutecals Inc (SPPI)

[antihama]

Spectrum’s MC is WAY LOW compared to MacroGenics

In looking to see if Spectrum Pharma is undervalued I sometimes do a down and dirty comparison with other similar biotech companies (eg Kerx, Omeros come to mind) and after these mini exercises say to myself “Yeah, SPPI is undervalued” because SPPI has much higher sales, and at the same time having as good or better pipeline with a lower market cap but the street values these other companies higher since these other companies are perceived to have a higher sales growth potential (I’m guessing). So here is one done by Capital Market Labs using a computer-generated model doing a Head to Head Comparison of MacroGenics Inc vs Spectrum Pharma with MarcoGenics having less sales and sales growth than SPPI. I usually give these computer models lip service such as Capital Cube that throw a lot of gibberish in their comparisons but I like this CML comparison because it’s one company against the other, mano a mano. Note that CML states “Our research sits side-by-side with Goldman Sachs and Morgan Stanley on professional terminals” – that’s impressive. MacroGenics has a market cap of 678 M or 41.5% higher than Spectrum’s as of yesterday. Here’s some of the analysis but the link gives a little more color.

Spectrum Pharmaceuticals Inc has larger revenue in the last year than MacroGenics Inc. (~160M vs 95)

MGNX had a little less negative earnings over the last year than SPPI (~-52M vs -55M)

SPPI generates massively larger revenue per employee ($767,000) than MGNX ($375,000).

Both Spectrum Pharmaceuticals Inc and MacroGenics Inc generate an operating loss, although SPPI shows a remarkably better operating margin. (Revenue per Dollar of Expense ~.68 vs .09)

Both SPPI and MGNX generate a cash flow loss, although SPPI shows a notably better cash flow margin. (Free Cash Flow per Dollar of Revenue ~-.09 vs -.30)

Both companies have shrinking revenue. MacroGenics Inc revenue is shrinking faster than Spectrum Pharmaceuticals Inc, but not by a large amount. (~-3.2 vs -1.5)

For every $1 in revenue, the stock market prices in $7.53 in market cap for MGNX and $2.88 in market cap for SPPI.

Spectrum Pharma Inc defeats MacroGenics: 73 to 27


Well you don’t have to be a rocket scientist to figure it out but it seems to me that SPPIs market cap should be way north of MGNXs MC 678M. From using this model as a guide Spectrum MC should be double of where it’s at now. Hey, it’s hard to argue with the numbers presented here and that’s assuming MGNXs clinical pipeline is equal to SPPIs. I don’t know about MGNX but SPPIs pipeline could have some significant news within the next 12 months. Sooner or later Spectrum's MC will catch up. I'm patient.

http://news.cmlviz.com/2017/05/12/macrogenics-inc-and-spectrum-pharmaceuticals-inc-head-to-head-compare.html