1. Spectrum Surrenders
There is no joy for
(SPPI - Get Report)
CEO Raj Shrotriya. His mighty Fusilev has struck out.
After Tuesday's close, Spectrum Pharmaceuticals cautioned that sales of its colon cancer drug Fusilev will be $10 million to $15 million in the first quarter and $80 million to $90 million for all of 2013. By comparison, Fusilev sales were $44.6 million and $204 million in the fourth quarter and full year 2012, respectively.
Yeah, it was pretty gruesome. We haven't seen a swing and a miss that big since George Foster batted cleanup for the 1982 New York Mets.
And unfortunately for Spectrum, Fusilev is the biotech's biggest slugger, so its demise can't be made up elsewhere in the company's line-up. Total revenue for 2013 is now expected to be in the range of $160 million to $180 million compared to $268 million in 2012. Analysts, on average, were expecting Spectrum to bring home $297 million in revenue this year.
On the other hand, Spectrum's strikeout was a grand slam for the shorts, who have long been swarming all over this stock. Spectrum shares sank over 37% to $7.90 on Wednesday after closing the day before at $12.43.
The big score was especially sweet for Spectrum bears because Shrotriya has repeatedly thrown the market's equivalent of bean balls at them. In December, Shrotriya attempted to squeeze doubters out of the stock with a special cash dividend of 15 cents per share payable to the company's shareholders.
And on Feb. 21st of this year, Shrotriya really unloaded on the shorts, boasting on a conference call about Fusilev growth
despite flat revenue for the past three quarters
"Just how colossally awful is this new revenue guidance?" asks
biotech ax Adam Feuerstein. "Just under one month ago, Spectrum CEO Raj Shrotriya promised investors more revenue growth in 2013. Tuesday, he admits first-quarter Fusilev sales will drop more than 70% sequentially. For 2013, Fusilev sales will retrench by a jaw-dropping 60%."
On the ensuing conference call Wednesday morning, Shrotriya pitched Spectrum as even more of a bargain now that Fusilev sales are stunted.
Oh man, that's an eephus ball if we ever saw one. With ridiculously weak offerings like that, we doubt the CEO best known for headhunting shortsellers will last much longer on Spectrum's mound.
In fact, we expect he'll be soon be visiting a headhunter himself. A corporate one.
-- Written by Gregg Greenberg in New York City.