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Biotech Stock Mailbag: Spectrum Pharma

Stocks in this article: SPPI VVUS GNBT DNDN DSCO APPY ARNA

When I asked Shrotriya about this, he told me that the Zevalin commercial launch is on track and that a replacement for Singh has already been hired. He added that Singh, despite the title of chief commercial officer, was more involved with new business development deals than he was in overseeing the Zevalin sales team. As CMO, Sandler was an important link between the company and physicians when it came to discussing Zevalin clinical data. He has not yet been replaced.

Spectrum chose not to disclose the departures of Sandler and Singh to investors because neither was considered a "key executive" per SEC rules, which would have required disclosure, says Shrotriya.

That might be a perfectly defensible argument from a legal perspective, but if I were an investor in Spectrum, I'd want to know that two top guys decided to find work elsewhere.

If Spectrum puts up solid Zevalin sales numbers in the second quarter and beyond, investors won't worry about the exit of Sandler and Singh. Until then, it's an overhang.

More on Biotech
13 Drugs Facing FDA Approval Decisions

Joel K. emails, "Thanks for your insight. I use to be a doubter of your columns but after getting burned multiple times by going contrarian, I have started listening and stopped losing. I would like to hear your thoughts on Vivus (VVUS) and whether it is a good speculative play. I was impressed with the phase 3 erectile dysfunction drug data that was just released and I think the obesity drug has a good shot of approval."

I'm on record ranking the three obesity drug stocks in this order: 1) Vivus, 2) Arena Pharmaceuticals (ARNA) and 3) Orexigen Therapeutics (OREX). My view seems to be in line with the market. Vivus is outperforming its weight-loss peers so far this year, even with the stock at $!0.60 down from its 52-week high of $13.68 reached last month.

I do worry that Vivus' run is done, or slowing down, now that we're less than a month away from the FDA advisory panel on July 15 which will review the company's weight-loss drug Qnexa. A positive recommendation from the FDA panel is no sure thing. Qnexa does a good job in helping obese patients lose weight, but the safety and tolerability of the two-drug regimen is a question mark.

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