For the first time in its history, Spectrum Pharmaceuticals (Nasdaq: SPPI) was profitable for an entire year. That's no small feat for drugmakers that have to wrestle with long development cycles. In fact, it took having two drugs on the market for Spectrum to get there.

It'll probably take a third, or even a fourth, drug to make the company a real cash machine. Operations generated $49 million in cash last year. Nothing to sneeze at, but the company is being valued at more than 15 times that number, pushing the limits of value.

Revenue increased 160% year over year in 2011, but don't expect that trajectory to continue. Sales of its top-seller, Fusilev, skyrocketed because of limited supplies of a related generic, leucovorin. There's hope that doctors that switched will stick with the more expensive, branded product even if indirect competition by leucovorin comes back, but penetrating further into the market now will be more difficult than grabbing the low hanging fruit of last year.

Spectrum's other drug, Zevalin, has potential after the bioscan requirement was removed, making it easier for doctors to prescribe it. But the drug has been on the market for a decade; it's going to take time to get doctors to change their prescription habits.

To really get doctors excited about the lymphoma treatment, Spectrum will need to complete its head-to-head study against Biogen Idec (Nasdaq: BIIB) and Roche's Rituxan. Until the drug is shown to work better than the standard of care in a large trial, doctors aren't likely to switch in droves.

Spectrum will read out two phase 3 trials this year. Data for a trial testing of apaziquone, its bladder cancer drug partnered with Allergan (NYSE: AGN), is due out shortly. And data for belinostat, for peripheral T-cell lymphoma, should come out in the fourth quarter.

The latter is particularly appealing because it will be prescribed by hematologists and oncologists, the same doctors that prescribe Zevalin. Belinostat will have competition from Allos Therapeutics' (Nasdaq: ALTH) Folotyn and Celgene's (Nasdaq: CELG) Istodax in a fairly small market, but the marketing costs will be minimal because Spectrum can leverage its sales force.

Spectrum didn't offer any guidance for the year ahead, but research and development costs will go up dramatically from $26 million last year to $40 million next year on a non-GAAP basis. That's an investment in the future, and I expect Spectrum will remain cash-flow positive this year, but don't expect a cash cow just yet.

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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.