Moving on, Charles D. writes, "As a former Cell Therapeutics ( CTIC) long holder and now interested observer, would you please look into the rumor of Novartis ( NVS) buying Cell Therapeutics at $2 per share? I find the very notion to be preposterous and laughable, but someone has generated enough momentum that it appears plenty of suckers are buying in. Unless hell freezes over and swine grow wings, I do not see this happening, and thousands are being duped (again, like I was) out of their hard-earned money. I enjoy your writing, especially when you twist the dagger. More journalists should have the same edge." Novartis is not going to buy Cell Therapeutics for the reasons I outlined quite clearly Wednesday when I detailed the company's fiscal crisis and pixantrone's dwindling commercial potential.
ARoy emails, "What do you feel about the prospects of Spectrum Pharmaceuticals ( SPPI)? It's been a while since you've have written about the company. Do you consider Spectrum shares are currently undervalued or at least fairly valued?" Spectrum has traded relatively sideways since late last year because investors still aren't sure if the company is going to turn the lymphoma drug Zevalin into a profitable drug. Monday, Spectrum said it was delaying the release of financial results for the fourth quarter and full year 2009 because it needs more time to complete its accounting work. Spectrum said it will post a higher net loss in 2009 than the previous year, but that's not a surprise at all. More important for Spectrum and its stock price are sequential quarterly sales gains for Zevalin. Third quarter sales totaled $4.7 million, up 42% from the second quarter. Spectrum doesn't have enough analyst coverage to compile a good consensus, but Morgan Joseph's analyst is looking for fourth quarter Zevalin sales of $5.6 million. Don't expect Spectrum's stock to surge even if Zevalin posts healthy sequential growth in the fourth quarter. That would be nice, but I think Spectrum is under the gun to produce consistent Zevalin sales growth over a longer time period before all the doubts about the drug and its commercial potential are lifted. Investors also want evidence that doctors are using Zevalin in more patients and that sales growth is not just coming from price increases. The FDA label for first-line use in non-Hodgkin's lymphoma granted last September was a big help in that effort, but it's still up to Spectrum to generate meaningful sales.
Correction: In last week's Mailbag column, the name of Generex' Oral-lyn was misspelled. It has been corrected. Also, it should be noted that Oral-lyn has been discussed in medical journals and presented at medical association meetings over the last ten years. TheStreet.com regrets the error.