Replies to post #2600 on Spectrum Pharmaceutecals Inc (SPPI)

[muchogusto]

Great analysis! Thanks.

[antihama]

At 6x the MV is 2B...at 12x...it’s 4B

That's the Price to Sales Ratios I used in coming up w a market value for Spectrum Pharma. So, are they reasonable or unreasonable? Looking at the yesterday's news of Pfizer buying Array for $11.4B, it seems justified. Using a back of the envelope calculation, I see that Array had 35M in drug sales the last Q or $140M/yr, let’s call it 200M/yr (assuming a 30% growth rate). So, at today’s sales that’s a price to sales (1 year out) multiple of 57. But let’s say, for the sake of argument, that their sales in 5 yrs reaches 1B/year. It seems I’m being generous w that expectation but maybe it should be more but as I said, for the sake of argument. So Pfizer is buying Array at a multiple of 11. That makes the 12 times sales I used for Spectrum as being justified. Just saying.

A patient Long

[antihama]

Slightly off-topic; Folotyn is a damn expensive drug! When I saw an article today under Spectrum related articles titled "The 5 Most Expensive Drugs In US: What You Should Know" I was puzzled on what that has to do w Spectrum. Per the article

4. Folotyn

Folotyn, which is now under the stable of Aurobindo Pharma USA Inc's subsidiary Acrotech Biopharma, is indicated for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma.

It was approved by the FDA in September 2009.

Folotyn was originally developed by Allos Therapeutics, which was acquired by Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) in 2012. Recently, Spectrum sold the drug to Acrotech.

The drug costs $745,785 annually.

Yikes! So when I used $200,000 as the price for the annual cost of pozi, well, relatively, that's not as expensive as it appears.

Per Spectrum’s Presentation, there are 7700 NSCLC EGFR and HER2 combined patients who could take pozi. Fifty-eight % of those have the NSCLC EGFR exon 20 mutation (cohort 1 in the Zenith 20 trial) or ~5000 patients. At $200,000 per treatment (Loxo's Vitrakvi is $400,000/year), that’s $1B.