What happened
Shares of Spectrum Pharmaceuticals, Inc. (SPPI) are losing ground after the oncology-focused biotech's fourth-quarter earnings failed to impress on two fronts. The company's commercial-stage drugs missed sales expectations and a late-stage cancer hopeful's journey to the Food and Drug Administration could take longer than expected. In response, the stock is down 17.7% as of 12:37 p.m. EST on Tuesday.
So what
Spectrum Pharmaceuticals reported revenue of $28.6 million in the fourth quarter, which was $4.4 million less than analyst forecasts. Operations lost $41.1 million during the last three months of the year. That was 129% more than during the previous year, and it looks like operating expenses might need to climb further than some had hoped.
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Exciting early-stage results for poziotinib made Spectrum one of the best stocks of 2017. The drug helped shrink tumors for eight of 11 lung cancer patients with certain mutations that have run out of treatment options. An approval for this important niche could make poziotinib a blockbuster drug, but it needs to prove itself in a much larger study.
The company has begun a phase 2 trial expected to enroll up to 87 patients that many investors hope will be enough for the FDA to consider an expedited approval, a topic most discussed during a recent meeting with agency staff. When asked if there was a specific set of data the FDA wanted to see in order to consider an expedited approval, COO Tom Riga said that Spectrum understood what the agency wants, but wouldn't discuss whether the ongoing phase 2 trial will be sufficient.
Now what
It's been around five months since Spectrum highlighted data from the first 11 lung cancer patients in a trial expected to enroll up to 80. On the one hand, the trial is being sponsored by investigators at the MD Anderson Cancer Center, and single-location trials move pretty slowly. On the other hand, the tumor responses noted were of the unconfirmed variety, and the FDA hasn't granted the drug a breakthrough therapy designation yet.
Until we can get some clarity on poziotinib's path forward, investors would do well to watch this story unfold from a safe distance.
