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Spectrum Pharma Analyst Says Sell-Off May Have Been Overdone

Shanthi Rexaline

Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI), which plummeted 60% to $3.50 Thursday in reaction to a negative clinical readout, were rebounding Friday.

The Spectrum Pharma Analyst

B Riley FBR analyst Mayank Mamtani maintained a Buy rating on Spectrum and lowered the price target from $18 to $11.

The Spectrum Pharma Thesis

The topline overall response rate of 14.8% Spectrum reported for Cohort 1 in the Phase 2 study that evaluated poziotinib in previously treated exon 20 deletion EGFR mutant non-small cell lung cancer patients came in below the 20-30% consensus and the 43% reported in the single-center MD Anderson study, Mamtani said in a Friday note. (See his track record here.) 

This would mean the 115-patient study failed to meet the pre-specified threshold agreed upon with the FDA for accelerated approval, the analyst said. 

Yet the data offered evidence of monotherapy activity, and the 68.7% disease control rate and 7.4 months of response are clinically meaningful in a hard-to-treat patient population, he said. 

"While acknowledging cohort 1 results has readthrough to cohorts 2-7, we aren't convinced to take out pozi from our model as is reflected in today's sell-off, i.e., -60%, and believe incremental updates in 2020 to reaffirm confidence in pozi's place in NSCLC treatment paradigm." 

B Riley FBR said it sees a valuation floor in the form of more advanced ROLONTIS for treatment of neutropenia that is likely to be commercially launched in the fourth quarter of 2020 — and the $250 million in cash the company has for supporting advancement of earlier stage oncology candidates.

Spectrum Pharma Price Action

The stock was trading 2.29% higher at $3.58 at the time of publication Friday. 

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Latest Ratings for SPPI

Date Firm Action From To
Dec 2019 Maintains Buy
Dec 2019 Downgrades Buy Neutral
Dec 2019 Downgrades Overweight Neutral

View More Analyst Ratings for SPPI
View the Latest Analyst Ratings

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