A Reacquired Drug Lottery Ticket

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Spectrum Pharmaceuticals (NASDAQ: SPPI  ) has worked some magic with acquisitions, driving sales of forgotten cancer drugs higher. Let's see if it can do the same for its newest (re)acquisition.

First, the biotech has to get the drug approved.

The company announced today that it had reacquired the full rights to bladder cancer treatment apaziquone from its partner Allergan (UNKNOWN: AGN.DL  ) . I couldn't find any mention of money changing hands in the deal, but Allergan will get a royalty on future sales for giving up its rights to the drug.

My best guess is that the two former partners had different views of what to do with apaziquone after the drug failed to meet its primary endpoint in two phase 3 trials last April. Allergan likely thought there wasn't any reason to throw more money chasing a potential approval and was happy to give up control.

Spectrum is clinging onto the fact that the combined data from the two trials showed that apaziquone reduced the rate of tumor recurrence after two years and delayed the time it took for the tumor to reoccur.

The biotech says the Food and Drug Administration has agreed to accept an application based on the combined data, but that's not saying a whole lot. Just because the agency is happy to collect Spectrum's PSUFA fees and send it off to an advisory committee doesn't mean it's likely to approve the drug based on combined data. InterMune (Nasdaq: ITMN) had one positive trial in addition to combined data that showed its drug was working, but the FDA rejected it. Investors shouldn't expect anything different for apaziquone.

It just seems like a waste of time and money to submit to the FDA at this point, but maybe the potential payoff of launching years earlier makes it worth the effort. As long as the company is running a new phase 3 trial in parallel with its long-shot strategy, I guess it's a reasonable strategy.

Like playing the lotto is a reasonable strategy with pocket change.

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