Spectrum Pharmaceuticals: a really undervalued biotechnology company

Spectrum Pharmaceuticals is one of the few biotechnology companies with a full pipeline, consisting of drugs already on the market and others in phase of advanced study.

Recently, the stock, after a long period of lateralization seems to be back on, apparently for some good news released at the annual meeting of the ASH. In fact SPPI, after a careful analysis, can be considered a company with significant potential, both in short and long term.

Let's see why.

The company has two drugs on the market: Zevalin a radioimmunotherapy drug approved for previously Untreated Follicular

Non-Hodgkin's lymphoma (NHL) who Achieve a partial or complete response to first-line chemotherapy and for Relapsed or refractory, low-grade or follicular B-cell NHL, for which SPPI owns the rights for the United States and Fusilev, approved and indicated for use after high-dose methotrexate therapy in osteosarcoma and also indicated to diminish the toxicity and counteract the effects of impaired methotrexate elimination and of inadvertent overdosage of folic acid antagonists.

In addition, within a pipeline that includes compounds in preclinical and Phase I, such as SPI-1620 (a highly selective peptide agonist of endothelin-B receptors, which Can Stimulate receptors on endothelial cells, used in adjunct therapy in solid tumors) and Renazorb (a lanthanum-based phosphate binding agent investigated for Hyperphosphatemia in End Stage Renal Diseaseand Potentially Chronic Kidney Disease), SPPI owns the rights for the HDAC inibhitor Belinostat in the U.S. and India, with a purchase option for China, which was acquired by the Danish company Topotarget, with which it shares the costs of research and development, and Eoquin, a synthetic bio-reductive prodrug that is being investigated in the treatment of non-invasive bladder cancer (now in phase III) in collaboration with Allergan.

In addition to the pipeline SPPI also boasts an enviable financial condition, with a cash of about $ 90 million, zero debt, and a market capitalization today of approximately $ 275 million, that brings the Enterprise Value of SPPI approximately $ 190 million, a value really attractive for any potential buyers.

Zevalin after a long period of disappointing sales, initially by Biogen, which led the drug to approval in 2002 and then by  Cell Therapeutics, which sold the rights of Zevalin to SPPI in 2007, seems to start to get back on top, having procured revenues of $ 7.7 million in Q3 2010, by far the best quarter since it was approved. This is also thanks to the new indication for first line in 2008.Zevalin is currently being studied for other schemes in aggressive and indolent NHL, and recent data showed at ASH demonstrated that the drug is far from declining, despite the competition of the blockbuster Rituxan and Chepalon's Treanda.In particular, in follicular NHL, the data of follow-up of the FIT trial demonstrated that the efficacy of Zevalin in terms of ORR and PFS are at least comparable to those of the R-CHOP + Rituxan maintenance regimen, which in the PRIMA trial has in fact showed comparable data to the Induction + Zevalin consolidation regimen.The major advantage of Zevalin however, is to be administered unatantum, compared to regular infusions of Rituxan during the maintenance regimen.To these considerations must now be added the new data, most notably those issued to ASH (preparatory regimen presented prior to autologous and allogeneic stem cell transplantation, monotherapy in follicular NHL) and other studies that demonstrate that Zevalin is effective in other regimens as a single agent or combined. There are also ongoing studies aimed at verifying the efficacy of Zevalin in aggressive NHL. Ultimately Zevalin, alone, can in effect justify the current capitalization of SPPI, being able to potentially bring into the cash of the company revenues in the order of $ 70-80 million per year by 2013.

Fusilev, despite being a drug that undergoes the competition from cheaper generic leucovorin, may likewise as a surprise in the coming months for SPPI, when the FDA could approve it by April 2011 for colorectal cancer. With a higher cost Fusilev has however fewer side effects in equal treatment with leucovorin and increasingly has been used off-label due to continued shortage of the generic by Teva and Bedford. In Europe, l-leucovorin is already approved and generate revenues in the order of $ 180 million a year. As a result $ 50 million a year for Fusilev actually seems conservatively attainable by 2013, considering that the FDA, during the shortage has encouraged the off-label use of the drug, it seems to be unlikely to not approve it for colorectal cancer in April 2011.

Belinostat is a remarkably interesting drug, which is investigated in different types of cancer, both solid and hematological. SPPI is currently conducting a pivotal trial in PTCL, which should give the final data by 2011. Topotarget should instead close the enrollment of a Phase II CUP (Cancer of Unknown Origin) in 2010; the companies are also planning a NSCLC trial, which should start shortly. To understand the potential of the drug, rather than venturing into uncertain estimates, is better to verify what happened for similar drugs already approved: Folotyn of Allos Therapeutics, approved for PTCL and Istodax of Celgene, approved for CTCL. In particular: Celgene acquired Gloucester, owner of Istodax, for $ 340 million in cash plus $ 300 million in future U.S. and international regulatory milestone payments. Allos, which owns a pipeline substantially reduced to only Folotyn, current capitalize$ 410 million. Therefore it is clear that eventually positive data of Belinostat, also only in PTCL, considering the ratings that Celgene considered to buy Istodax and because of the capitalization of Allos, could be very significant for an appreciation of the corporate value of SPPI.

Eoquin developed by SPPI in collaboration with Allergan, is an indolequinone that is a bioreductive prodrug to chemical and older analog of the chemotherapeutic agent mitomycin C. SPPI has enrolled about 1,600 patients over three years for the two Phase III studies as a surgical adjuvant for intravesical bladder noninvasive Cancer which will bring first data in December 2011. In a two-year follow-up of a phase II marker lesion study of intravesical apaziquone for patients with non-muscle invasive bladder cancer,in 2009, Eoquin demonstrated a CR in 67% of patients, followed by a recurrence-free rate of 56.5% at 1-year FU, and 49.5% at 2-year FU. These long-term results are good in comparison with the results of other ablative studies. Some analysts estimated sales of Eoquin Could Have peak at or near $ 1 Billion annually once approved.

The pipeline, the financial position, the potential of drugs already on the market, make SPPI a valuable investment for the coming months and certainly undervalued compared to other companies pipelines. Time passes and the next few months will be really interesting for SPPI, with a series of events that could change significantly the value of the stock: the completion of enrollment in the trial Belinostat CUP, the NDA for Belinostat in PTCL in 2011, the outcome of the sNDA for Fusilev in colorectal cancer in late April 2011, the end data of phase III trials of Eoquin thge firts months of 2012, but also the request for Bioscan elimination for Zevalin and the initiation of new important trials for Zevalin and Belinostat (NSCLC).

BiomedReports is not paid or compensated to report news and developments about publicly traded companies. Full disclosure can be read in the About Us Section

---

Add this page to your favorite Social Bookmarking websites