The CEO of Spectrum Pharmaceuticals Inc. (NASDAQ: SPPI), Dr. Rajesh Shrotriya announced high expectations for 2013 and predicted revenue growth for the year. During his presentation at the JPMorgan’s healthcare investor event, Shrotriya announced that his company had recently gone through major changes, and was about to add RenaZorb, a developmental cancer drug, to their catalogue. RenaZorb will be the fourth drug added to the company’s profile, with Fusilev, Folotyn, and Zevalin already going strong.
Apart from RenaZorb, which has cleared phase 1, Spectrum Pharmaceuticals Inc. is also developing Belinostat, a drug for treatment of relapsed/refractory peripheral T-cell lymphoma. The drug has cleared phase 2 and the data from BELIEF study is largely positive.
Spectrum Pharmaceuticals Inc. had total assets of 265.72 million dollars as announced at the end of the third quarter of 2012. The numbers for the fourth quarter are yet to come in but based on the sales of their marketed drugs, their steadily rising stock price ($12.14 on 30th January 2013), and their growing developmental research; it can be safely predicted that the fourth quarter numbers will be much higher than the third quarter.
During his presentation at the JPMorgan event, Shrotriya announced his company held an advantage over competitors such as Sagent (NASDAQ: SGNT) because of the enormous potential for growth. Currently Sagent stock prices are over 16 dollars, but Shrotriya beliefs 2013 to be the year where Spectrum finally gains the lion’s share of the billion dollar market.
As far as other recent developments are concerned, Spectrum also offered a dividend to their shareholders in December 2012, which was a first for the company. The company has also been authorized by its board of directors to buy back and retire its shares, but detailed information on how much they are authorized to buy during 2013 are not available yet.
Shrotriya also announced that the company has 10 developmental drugs in the pipeline, and their three marketed drugs are expected to bring in revenue of over 300 million dollars this year.
Currently, the consensus recommendation on NASDAQ is to buy the company shares. The company’s reported earnings have been higher than estimated earnings for the last couple of years consistently, and with Fusilev still going strong, Spectrum Pharmaceuticals Inc. is worth the investment.
The only concern we have about the company at this point is that Fusilev accounts for about 80% of the company’s total revenue, and Sagent has already released Leucovorin, a drug directly in competition with Fusilev. For the past couple of months, Fusilev sales have increased despite the increased competition. If Leucovorin gains popularity in the next couple of months, the first quarter of 2013 can turn into a nightmare for Spectrum Pharmaceuticals. However, if Fusilev holds its own, and it seems like it will, then there will be exponential growth in the company’s stock value.
For now, we strongly recommend buying and holding onto Spectrum’s shares. If the company carries its past momentum in 2013, Dr. Shrotriya’s predictions will come true.
What is your opinion on Spectrum Pharmaceuticals Inc.? Will you be buying, selling, or simply holding onto the SPPI shares? We would love to hear all about it in the comments section.