This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Biotech Stock Mailbag: Spectrum Pharma

BOSTON ( TheStreet) -- Patrick A. gets the ball rolling on this week's Biotech Stock Mailbag:

"Why not talk recently of Spectrum Pharmaceuticals (SPPI - Get Report) and its sales of Zevalin? Spectrum is posting encouraging sales numbers with first quarter revenue coming in at $6.5 million, a 27% quarter-over-quarter increase from the fourth quarter. Considering that Zevalin sold a total of $12 million in all of 2008, these numbers have to be exciting for Spectrum shareholders since the company's sales force was completely implemented in the first quarter. What are your thoughts on the future of Zevalin sales? How high can they go?"

Analyst coverage of Spectrum is hit or miss, so I don't have a sense for the consensus sales expectation for second quarter, if one even exists. Is it reasonable to expect the first quarter sequential sales growth (27%) to continue? If so, Spectrum should post second-quarter Zevalin sales of $8.2 million.

Zevalin sales in 2009 totaled $15.7 million. Spectrum needs to at least double Zevalin sales this year, if not more. Based on first quarter growth trends, Zevalin sales of $35 million to $40 million in 2010 should be an achievable target, especially since Spectrum's sales force and the company's full-time marketing efforts are underway.

If Spectrum can grow Zevalin sales to these targets -- if -- the stock in the low-$4 range is undervalued.

Investors are still in show-me mode, witnessed by the flattish performance of the stock this year. I have questions about Spectrum's commercial capabilities, as well. On April 12, two high-level executives, Chief Medical Officer Andrew Sandler and Chief Commercial Officer Amar Singh, resigned from the company unexpectedly.

Spectrum CEO Raj Shrotriya couldn't tell me exactly why both Sandler and Singh left the company, although Shrotriya intimated that personal reasons, including an out-of-state commute, played a role. Neither Sandler nor Singh had new jobs lined up, according to Shrotriya, and I haven't been able to track either of them down for comment.

The unexpected exit of two top executives at any drug company is reason for concern. The situation at Spectrum might be more worrisome because Shrotriya, in the past, has made the point of talking about recent hires like Sandler and Singh as evidence of the company's ability to turn around the fortunes of a drug like Zevalin.
1 of 7

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GNBT $0.01 5.26%
APPY $2.82 -4.40%
ARNA $1.59 -1.90%
DNDN $0.06 -6.02%
DSCO $2.30 -0.87%


Chart of I:DJI
DOW 17,650.20 -100.71 -0.57%
S&P 500 2,050.15 -13.22 -0.64%
NASDAQ 4,724.0390 -39.1850 -0.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs