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Spectrum (SPPI) Misses Earnings Estimates in Q4, Tops Sales

Zacks Equity Research

Spectrum Pharmaceuticals, Inc. SPPI incurred adjusted loss of 30 cents per share in the fourth quarter of 2018, wider than the Zacks Consensus Estimate of a loss of 20 cents as well as the year-ago quarter loss of 23 cents per share.

Quarterly revenues came in at $29.4 million, up 2.9% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $25.97 million.

Spectrum Pharma’s shares have declined 48.2% in the past year.

Quarter in Detail

Total product sales came in at $28 million, up 0.4% year over year. Sales were generated by seven marketed products — Fusilev ($0.4 million), Folotyn ($12.2 million), Zevalin ($0.9 million), Marqibo ($2.3 million), Beleodaq ($3.7 million), Evomela ($7.5 million) and recently launched Khapzory ($0.9 million).

License fees and service revenues were $1.4 million compared with $0.6 million in the prior-year quarter.

Adjusted research & development (R&D) expenses were $33.6 million, up 57.7% from the year-ago quarter due to higher costs related to regulatory application and commercial initiatives for Rolontis. Adjusted selling, general and administrative (SG&A) spending was up 4.2% to $19.9 million.

2018 Results

Spectrum Pharma’s total sales for the full year were down 14.8% to $109.3 million, which comprises product revenues of $104.5 million and license fees and service revenues of $4.9 million. Adjusted loss for the period was 84 cents per share, wider than the year-ago loss of 61 cents per share.

2019 Guidance

The company expects SG&A expenses to decrease 30% in 2019 as the company remains on track to divest its marketed portfolio. However, R&D expenses are expected to increase marginally due to higher costs related to pre-commercial supply and tech transfer activities for Rolontis and poziotinib. Its cash, including the amount from sale of assets, is enough to fund operations for at least three years.

In January 2019, the company signed an agreement to sell its portfolio of marketed drugs to privately-held Acrotech Biopharma. Spectrum Pharma will receive $160 million in upfront fees and is eligible to receive $140 million in future milestone payments. The transaction is expected to close in March.

Pipeline Update

Spectrum Pharma successfully completed two phase III studies on its pipeline candidate, Rolontis, which showed that the candidate was non-inferior to Amgen Inc.’s AMGN Neulasta in improving duration of severe neutropenia in patients with breast cancer.

In December 2018, Spectrum Pharma submitted a Biologics License Application (“BLA”) for Rolontis to the FDA.

The company is developing another key pipeline candidates, poziotinib, as monotherapy or in combination with other drugs for the treatment of lung cancer and breast cancer. A phase II study – ZENITH20 – is evaluating poziotinib in previously-treated non-small cell lung cancer (“NSCLC”) patients with an exon 20 mutation in EGFR or HER2. Data from EGFR cohort is expected in the fourth quarter of 2019. However, in December, the FDA denied breakthrough therapy designation to poziotinib for NSCLC with EGFR exon 20 mutations.

Spectrum Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

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

Zacks Rank & Stocks to Consider

Spectrum Pharma currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the healthcare sector include Celgene Corporation CELG and Genomic Health, Inc. GHDX. While Celgene sports a Zacks Rank #1 (Strong Buy), Genomic Health carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Celgene’s earnings estimates have been revised 5.3% upward for 2019 and 9.2% for 2020 over the past 60 days. The stock has rallied almost 29.7% so far this year.

Genomic Health’s earnings estimates have moved north 17.9% for 2019 and 13.9% for 2020 over the past 60 days. The stock has gained 17.9% so far this year.

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