Feuerstein's Biotech Mailbag

Satraplatin was outlicensed to GPC Biotech by Spectrum, so as Tim points out, Spectrum will collect a net royalty of about 10% of worldwide Satraplatin sales.

I believe Spectrum's current $115 million enterprise value basically factors in the company's Satraplatin opportunity. That leaves investors with a free call option on the rest of Spectrum's pipeline, which is definitely something worth taking a look at.

In particular, I'm most interested in ozarelix, a new drug to treat benign prostatic hyperplasia, or BPH, a noncancerous enlargement of the prostate that can result in increased frequency or difficulty with urination. BPH is a common disease for men over the age of 50 and is currently treated with once-a-day pills such as Boehringer Ingelheim's Flomax or GlaxoSmithKline's (GSK Quote) Avodart.

Ozarelix, however, is an injection that can be given twice a year, which means no more remembering to take your BPH pill every day. And the data generated by ozarelix so far in a single ex-U.S. phase II study (placebo-controlled) have been impressive. Men taking ozarelix are reporting urinary and quality-of-life improvements not seen with drugs such as Flomax and Avodart, and ozarelix has an excellent safety profile.

Spectrum recently began a second phase II study to confirm these results with patients enrolled in the U.S. Data are expected later this year. The company is already working to design a phase III trial program, but if the phase II data are positive, you might see a Big Pharma partner step in to license North American rights to ozarelix from Spectrum.

There is a big market opportunity here: Upward of $4 billion a year worldwide is spent on BPH treatments. This is not a drug that Spectrum can market on its own, so management is well aware that if it can drive more value with new clinical data, ozarelix could be a hot commodity.

I should also mention that the other way to play ozarelix is via Canadian drug company Aeterna Zentaris (AEZS Quote), which owns the European rights to the drug. Aeterna has its own long-acting BPH drug in development, too, called cetrorelix.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider ArQule, Spectrum Pharmaceuticals and Aeterna Zentaris to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.