Spectrum's Fusilev Problems Not Letting Up

HENDERSON, Nev. ( TheStreet) -- Spectrum Pharmaceuticals ( SPPI) hasn't seen the end of Fusilev sales declines, meaning the company's already-lowered guidance for 2013 might still be too high, says Credit Suisse analyst Jason Kantor.

Kantor cut his Spectrum rating to underperform from neutral and slashed his 2013 Fusilev sales projection to $65 million from $77 million on Monday due to prescription sales data showing slack demand for the colon cancer drug.

Spectrum shares are already down 31 percent this year because the company cut its 2013 Fusilev sales guidance to $80-90 million, blaming over-stuffed wholesaler inventory and falling demand from hospitals. Fusilev sales totaled $204 million in 2012.

The official line from Spectrum is that inventory levels and end-user demand for Fusilev should start to recover in the second half of the year. But Credit Suisse's Kantor says currently available prescription data doesn't give any reason for optimism.

Fusilev sales continue to fall:

The blue line in the chart tracks average daily sales of Fusilev over time, according to Wolters Kluwer (now known as Symphony Health.) Based on these data, monthly sales numbers also reported by Symphony Health and projections for June, Kantor believes Fusilev sales for the second quarter may fall 16% compared to reported first quarter sales of $11.8 million.

If that occurs, Spectrum will be hard-pressed to meet its already-lowered 2013 sales forecast, warns Kantor.

Spectrum has been trying to convince investors that pipeline drugs such as belinostat are a new source of growth for the company. That's true to some extent, but Fusilev still makes up the bulk of the company's revenue and dwindling profits.

Last week, I reported Spectrum has the second-highest short interest of any bio-pharma company. The continued problems with Fusilev explain why.

Spectrum shares are down 7.5% to $7.41 in early Monday trading.

-- 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.