What happened

As of 12:54 p.m. EDT, shares of Spectrum Pharmaceuticals (NASDAQ:SPPI) were down by 11.3% following a disappointing first-quarter earnings report that hit the wires after the bell yesterday. The key issue that seems to be concerning investors is the 26.7% drop in year-over-year net product sales -- partially reflecting the stagnating commercial launch of Spectrum's sixth anti-cancer drug, Evomela. 

Man looking at a laptop in shock

Image source: Getty Images.

So what

Despite having a basket of approved drugs on the market, Spectrum is still having significant trouble growing either its bottom or top line. Evomela's launch last year as a treatment for two multiple myeloma indications was supposed to change this scenario. But with the drug's sales seemingly stuck around $6 million per quarter and failing to show much momentum, the company may have trouble meeting the Street's fairly modest growth expectations (5.7% top-line growth is being forecast for 2018) going forward.  

Now what

On the bright side, Spectrum does have two late-stage drug candidates in the pipeline that might provide a welcome boost in the not-so-distant future. Rolontis, an experimental drug for the management of chemotherapy-induced neutropenia, could be on the market in the U.S. by late next year. Qapzola is working its way toward a regulatory filing as a treatment for low- and intermediate-risk non-muscle-invasive bladder cancer by perhaps 2020. 

At the end of the day, though, Spectrum clearly lacks a bona fide franchise-level drug in its product portfolio, as well as a game-changer in its late-stage pipeline. And that's a significant issue when it comes to attracting a stable investor base. Spectrum, after all, is currently trading at a rock-bottom price-to-sales ratio of 3.62 -- a rather unusual valuation for a company with multiple cancer drugs on the market. So until Spectrum finds a true flagship drug to build around, it might be best to look elsewhere in the biotech space for more compelling growth opportunities.

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.