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Shares of Spectrum Pharmaceuticals (Nasdaq: SPPI ) are trading nearly 5% higher in pre-market activity after reporting better-than-anticipated third-quarter results along with increased future expectations. The company posted a 35% increase in revenues to $69 million, topping analyst estimates of $65.5 million. Spectrum also beat at the bottom line, with adjusted earnings per share of $0.42 sailing past comparable estimates of $0.35 per share.
In addition to strong quarterly results, the company offered up a double whammy of higher 2012 revenue guidance, as well as stronger cost savings projections for its recent acquisition of Allos Therapeutics. Specifically, the company now expects pro forma revenue to exceed $300 million for the full year, versus prior expectations of "around $300 million." Expected cost savings related to the Allos deal are now projected to exceed $50 million versus the $40 to $50 million the company had previously offered investors.
While today's news is encouraging for Spectrum shareholders, any potential investor has to be aware of one major issue facing the company. As my colleague Brian Orelli recently noted, Spectrum's top-seller Fusilev could see some major generic competition in the future if generic manufacturers can get their act together. A lot of uncertainty still exists, and the impact might not be as significant as feared, but it's certainly a risk any Spectrum investor has to be keep in mind.
While you can certainly make huge gains in biotech stocks like Spectrum, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.