On Wall Street, as in life, innocent bystanders sometimes get hurt.

Last week, another company's screw-up cost Spectrum Pharmaceuticals ( SPPI) dearly.

Spectrum shares are off 45% since July 20, when a negative Food and Drug Administration review of the prostate cancer drug satraplatin was made public. Four days later, an FDA advisory panel voted to recommend that regulators wait for more clinical data before approving satraplatin.

Spectrum shares closed Wednesday at $3.65, down 12 cents, or 3.2%.

The satraplatin debacle is a frustrating setback for Spectrum, because while the company has an economic interest in the drug, it doesn't control its development.

Spectrum licensed the drug to German drugmaker GPC Biotech ( GPCB) years ago, and GPC was responsible for clinical testing and submitting the approval package with the FDA.

As many investors learned painfully last week, GPC's efforts in this regard were woefully inadequate and, dare I say, misleading to many of us who have followed satraplatin.

Unfortunately, Spectrum is caught in the crosshairs. Its deal with GPC calls for the company to receive royalties on worldwide satraplatin sales. But now, U.S. approval of the drug looks dicey, and European approval isn't a sure thing either.

So what to do with Spectrum? The stock was -- and continues to be -- in my biotech model portfolio. The sharp drop in market cap is painful, but I continue to like the company's prospects, especially its experimental drug ozarelix.

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