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Spectrum Pharma's (SPPI) Loss Narrows in Q2, Stock Rises

Zacks Equity Research

Shares of Spectrum Pharmaceuticals, Inc. SPPI were up 5.3% on Aug 9 after it announced encouraging bottom-line numbers. Adjusted loss of 23 cents per share in the second quarter of 2019 was narrower than the Zacks Consensus Estimate of a loss of 32 cents and the year-ago quarter loss of 28 cents.

Spectrum Pharma’s shares have decreased 8.5% so far this year against the industry’s rise of 8.9%.

Quarter in Detail

Please note that in March, the company completed the sale of its marketed portfolio to privately-held Acrotech Biopharma for an upfront payment of $158.8 million.

However, the company reported negative revenues of $1.3 million mainly from its discontinued operations. Revenues reflected sales of Evomela to a single customer under an active contract completely offset by government chargeback claims. The company reported Evomela sales as Acrotech is yet to assume the particular customer following the acquisition of Spectrum Pharma’s marketed portfolio. The Zacks Consensus Estimate for revenues was a negative $1 million.

Adjusted research & development (R&D) expenses were $13.2 million, down 14.3% from the year-ago quarter.

Adjusted selling, general and administrative (SG&A) expense was down 0.7% to $13.7 million.

Pipeline Update

Spectrum Pharma is developing its pipeline candidates, poziotinib, as monotherapy or in combination with other drugs for the treatment of lung cancer and breast cancer and Rolontis for the management of chemotherapy-induced neutropenia.

A phase II study — ZENITH20 — is evaluating poziotinib in non-small cell lung cancer (“NSCLC”) patients with an exon 20 mutation in EGFR or HER2. The company completed enrollment in the two cohorts of the ZENITH20 study — previously treated NSCLC patients with EGFR or HER2 exon 20 insertion mutation — during the second quarter. Data from EGFR cohort is expected in the fourth quarter of 2019 and that from the HER2 cohort is expected in mid-2020. The study is enrolling NSCLC patients in the cohorts evaluating the candidate in treatment-naive patients with EGFR or HER2 mutation, previously treated patients with atypical EGFR or HER2 mutation, and patients treated with AstraZeneca’s AZN Tagrisso in first-line setting who have acquired EGFR mutations.

In March, Spectrum Pharma withdrew the biologics license application (“BLA”) for Rolontis due to requirement of additional manufacturing-related data. On its second-quarter earnings call, the company stated that it anticipates to re-file the BLA in the fourth quarter.

In May, the company completed an asset purchase and license agreement with privately-held ImmunGene. The agreement grants Spectrum Pharma exclusive license to the novel immuno-oncology platform Focused Interferon Therapeutics(“FIT”), an antibody-interferon fusion technology drug delivery platform,  and two early-stage assets derived from the FIT platform. The FIT platform has potential for broad application in oncology.

One of the assets targeting CD20 is in phase I development for treating relapsed or refractory non-Hodgkin lymphoma, including diffuse large b-cell lymphoma. Another candidate, targeting GRP94, has potential for treating both solid and hematologic malignancies.

Spectrum Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Spectrum Pharmaceuticals, Inc. Price, Consensus and EPS Surprise
Spectrum Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

Spectrum Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | Spectrum Pharmaceuticals, Inc. Quote

Zacks Rank & Stocks to Consider

Spectrum Pharma currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech/drugs sector are Neurocrine Biosciences NBIX and Theravance Biopharma TBPH, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Estimates for Neurocrine have improved from a loss of 31 cents to earnings of 80 cents for 2019 over the past 30 days. For 2020, estimates have increased from $3.01 to $3.36 over the said time frame.

Theravance’s loss estimates narrowed from $4.74 to $4.28 for 2019 and from $4.27 to $4.01 for 2020 over the past 30 days.

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