Spectrum Pharma's Top Line Isn't Growing

HENDERSON, Nev. ( TheStreet) -- Spectrum Pharmaceuticals ( SPPI) is not growing the top-line much at all, despite the acquisition of a third cancer drug in September and assurances to the contrary by CEO Raj Shrotriya.

Total revenue in the third quarter was $69 million, flat sequentially. This includes total product sales of $66 million, also flat quarter over quarter.

Spectrum chose not to break down product sales by drug in its earnings announcement this morning, unlike every other commercial biopharmaceutical company. This afternoon, we learned why: Spectrum's drug sales fell sequentially.

Fusilev sales totaled $52 million in the September quarter, down 8%. Zevalin sales were $8 million, off 11% sequentially. Spectrum's only bright spot was Folytyn, the company's newest product acquisition stemming from the close of the Allos acquisition in early September. For September, Folotyn sales totaled $6 million, although that included a $3 million, one-time purchase from an outside company to conduct a clinical trial.

Folotyn sales for the first nine months of the year totaled $37 million, Spectrum said. Backing out sales when Allos was independent implies third-quarter sales of $16 million, up 45% quarter over quarter. If the $3 million bulk purchase is excluded, Folotyn sales grew 18% sequentially.

Looking ahead, Spectrum isn't going to grow much in the fourth quarter either, with implied revenue guidance of approximately $71 million or 3% sequential growth. And that's $71 million from three drugs, not just two.

The current consensus estimate for Spectrum revenue in the December quarter is $73.5 million.

Spectrum doesn't make it easy to calculate real sales guidance. Instead, the company will only say that "pro forma" revenue is expected to exceed $300 million in 2012. But real sales guidance for the fourth quarter can be calculated roughly using Spectrum's reported nine-month sales plus Folotyn sales reported by Allos in the first six months of the year.

At $11 per share, Spectrum trades for a bit more than two times sales. That's not expensive -- some would call it cheap -- except for the lackluster top-line growth. With questions about the sustainability of Spectrum's Fusilev sales a constant concern not going away, the smallish multiple makes sense.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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