I was very excited about Spectrum Pharmaceuticals hiding of high capacity guy Ken Keller as their new COO. I wondered why an experienced guy with 20 years in Amgen wanted to join a little company like Spectrum with this big reputation the guy have. I did an interview with Ken Keller and I must say. This guy will be a huge improvement for shareholders in the future. Read it for yourself:

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Investor1989: “Can you shortly tell about your considerations before becoming the new COO at Spectrum? What do you think is so exciting about this company?”

 

Ken Keller: “I was excited to join the company for a number of very compelling reasons:

  • With three products on the market – FUSILEV, FOLOTYN and ZEVALIN – Spectrum has built and is building a strong reputation among hematologists and oncologists.  Joining the company, I also recognized at least two key areas of synergy among these products:  1) Our sales team calls on many of the same clinicians for FOLOTYN and ZEVALIN, and 2) We’re beginning to explore potential treatment synergies between FOLOTYN and FUSILEV.
  • Spectrum has an exciting, rapidly advancing pipeline of ten drugs in development with several near-term catalysts including clinical data and potential regulatory filings.
    • For example, we expect an NDA filing by mid-2013 for Spectrum’s HDAC inhibitor, belinostat, which is being developed for the treatment of patients with relapsed/refractory peripheral T-cell lymphoma (PTCL) and for which we recently reported that the registrational Phase 2 BELIEF trial surpassed the primary endpoint of an objective response rate (ORR) of at least 20% in patients.
    • We also recently announced positive Phase 1 data for RenaZorb®, an orally available, lanthanum-based nanotechnology compound with potent phosphate-binding properties that is being developed for the potential treatment of hyperphosphatemia (high phosphate levels in the blood) in patients with stage 5 chronic kidney disease (CKD).
  • Overall, Spectrum has outstanding financial strength and has seen great progress over the past 5 years, building a solid foundation from which we can significantly accelerate growth.”

 

Investor1989: “Can you briefly highlight the most important things in the new sales structure and how this can help the revenue of all 3 drugs to growth in the coming years?”

 

Ken Keller:

  • “In November, 2012, Spectrum undertook a strategic strengthening of its sales force in the U.S., implementing a structure of six geographic regions and expanding the sales team to 60 professionals in order to effectively and efficiently add more oncology products in the future.
    • Each regional manager is empowered to align sales resources and tailor promotional and other physician and patient support initiatives to meet our customers’ needs, allowing Spectrum to become even more of a customer-facing commercial organization.
  • In the past few months, Spectrum also has expanded its senior commercial team, including with the appointment of Joe Turgeon from Amgen, who recently was promoted to senior vice president and chief commercial officer.
  • The realignment of existing resources and expanded senior team are expected to result in a significantly greater hematology and oncology footprint, increased promotional reach, and more efficient physician engagement.”

Investor 1989: “So Ken, you have now 60 sales people that sale all 3 drugs and 40 people only selling Fusilev? Right?”

Ken Keller: “Our sales organization consists of over 60 individuals; we believe that the recent expansion of the team, announced in November of last year, is sufficient to meet our goals of increasing our market presence in 2013.  Each geography is different in terms of sales potential, so with the size of the team we have today, we can effectively target and tailor our efforts .The important point is that we have synergies in the products we sell and the physicians we reach. We have changed the structure of our sales organization to be more customer-facing, and we are absolutely committed to expanding our commercial footprint, both in the US and abroad.”

 

Investor1989: “Do you think that it is enough with all this potential? With 6 regions it is only about 10 people in each region and there has to be managers, commercials, reimbursement experts etc. is there enough sales people on the ground contacting the doctors in each region? “

 

Ken Keller: “We believe the sales organization is the right size at this time. The structure, which is one of the most highly customer-facing sales groups I’ve seen, will allow us to better penetrate the existing opportunities. As we grow, we will continually evaluate where we are and how we can improve. As we launch new products, we will build upon this foundation.

The right sized sales team to reach our customers is table stakes, what we believe will separate us from others is the quality of our people. With this restructuring and the products we now have, we’ve been able to attract seasoned, successful and passionate sales professionals from across the industry. That is something that should not be underestimated, in terms of its impact.”

 

Investor1989: “What is it with the direct to patient sales methods? Are you thinking like, Zevalin is the best approved drug against NHL and doctors wont prescribe it because its radioactive, so we will inform patients that they have a choice and can get a better drug? Will that work and are there examples of other companies that have got some success with this way? I am just thinking you know, when a doctor say, do Rituxan, I think most patients will just say like “ok, my doctor knows what’s best for me”. “

 

Ken Keller: ”The situation is never as black and white as this, but is in fact much richer and well worth understanding. Today patients play an active and important role in the treatment decision, especially in cancer. When a person is being treated for cancer, the whole family or support network is called into action, husband, sons, daughters, parent’s even friends. Being informed on treatment options is a healthy, important part of taking charge of your situation. Our goal is to ensure that Zevalin is always a part of the discussion. It should be, it’s an effective therapy, it is a different option than chemotherapy and rituxan which requires months and months of therapy and it’s often forgotten. Thru patient communication vehicles we want patients to ask their physicians one question, “Can you help me understand if Zevalin is right for me?”  That is a fair question that physicians are happy to answer and once that dialog begins the unique benefits of Zevalin become apparent to patients and allows them to express their wants. Doctors don’t have a “problem” with Zevalin , it is more so that Zevalin is not in the routine “toolkit”. With Zevalin , a patient  patient request will be granted more times than not. #

 

Investor 1989: “Many companies and persons have tried to sell Zevalin and grow the drug to a Commercial success, but at this point nobody has succeeded. Will you be the guy that take Zevalin and turn it into a growth story and how will you do this?”

Ken Keller:

  • “I’m confident we will increase penetration of ZEVALIN in three ways – 1) strengthening of the commercial team and structure to achieve a larger market footprint and 2) advancement of an exciting developmental pathway for additional indications. 3) we have tailored our promotional messages to focus on those patients with the greatest unmeet need:  patients who have achieved only a partial response to initial therapy and those who have relapsed. These groups are large and growing and Zevalin has demonstrated outstanding clinical efficacy.
  • For the commercial footprint, Spectrum has more than doubled its sales force dedicated to supporting ZEVALIN awareness among clinicians, we have a further strengthened commercial leadership team for continued execution, and we are going directly to the patients as well.  We now have 8 years of positive clinical data to support and reinforce ZEVALIN messaging among key audiences, demonstrating continued impressive efficacy and safety findings, including head-to-head against Rituxan.  Consistently, there is increasing demonstration of benefits in peer-reviewed publications and conference presentations, with further shrinking barriers to adoption (no Bioscan required, reimbursement consistent).
  • On the development side, the company is seeking to broaden the indications with ZEVALIN:
    • In September, the company initiated its Phase 3 ZEST (Zevalin Evaluation as Sequential Therapy) study, comparing ZEVALIN to observation in patients with newly diagnosed stage II, III, or IV Diffuse Large B-Cell Lymphoma (DLBCL) who are 60 years of age and older and who are in complete remission after first-line R-CHOP or R-CHOP like chemotherapy for their disease.
      • Results of multiple Phase 2 trials have supported advancement into the Phase 3 ZEST study, including an investigator-sponsored trial presented at the 2012 European Hematology Association (EHA) annual meeting, showing an 84% 5-year overall survival (OS) rate and 75% 5-year progression-free survival (PFS) in older patients with stage II-IV DLBCL who received ZEVALIN following R-CHOP (rituximab, cyclophosphamide, doxorubicin, vincristine, and prednisone).
    • Spectrum also has a strong commitment to the ongoing randomized, international SPINOZA trial in patients with relapsed DLBCL who receive autologous stem cell transplantation (ASCT).
      • This trial builds upon investigator-sponsored clinical trial results, such as Phase 2 data presented at the most recent EHA meeting, which demonstrated 2-year overall survival rate of 91% for ZEVALIN plus high dose chemotherapy (Z-BEAM), vs. 61% for chemotherapy, i.e. BEAM (carmustine, etoposide, cytarabine, and melphalan), in patients with aggressive relapsed/refractory lymphoma.
    • Further, Spectrum continues enrollment into its head-to-head “RoZetta” study, evaluating of ZEVALIN consolidation treatment vs. rituximab maintenance on progression-free survival (PFS) following response induction with chemotherapy plus rituximab in previously untreated patients with follicular lymphoma.”

 

 

Investor1989: “Thank you Ken, for putting words on the possible bright future of Zevalin. And what about selling Zevalin in Europe? Fuji is helping you in Japan. Will it just be a slow process where you are hiring sales people one after one slowly and using Bayers reimbursement experts?”

Ken Keller: “Yes, in Japan Fuji is our partner and they are in full operation mode. In Europe we have a small team of sales professionals that are hired and now in the field. By the end of Q2, Spectrum will have complete responsibility for Zevalin in EU. Zevalin has not been adequately resources in the EU for quite some time, with our renewed efforts I expect to see a resurgence of both interest and use later this year.”

 

Investor1989: “SPI-012 is an improvement of Amgen’s drug NeuLasta. As I remember it, you were the man in charge of the sales of NeuLasta. Is that a drug you have expectations to, and can you use your knowledge about NeuLasta to make SPI-012 a commercial success if approved?”

 

Ken Keller:

  • “As with Neulasta® (pegfilgrastim), SPI 2012 is a medicine that can increase the profileration of neutrophils and is being tested to prevent febrile neutropenia.-.  In a U.S.-based Phase 1 study in healthy volunteers, SPI-2012 demonstrated activity similar to Neulasta, but at one-third the dose.  SPI-2012 is being developed for chemotherapy induced neutropenia, a multibillion dollar worldwide market, and Spectrum has worldwide rights except for Korea, China, and Japan.
  • Based on the preclinical and clinical data to date, we believe SPI-2012 could have potential advantages for more rapid and profound granulocyte recovery.  We are not providing additional information at this time.”

Investor1989: “Just to understand, SPI-2012 does not have to show efficiency improvements head to head to NeuLasta because in can be treated in one-third dose and this way have less side effects. ?”

Ken Keller: “SPI 2012 is in Phase 2 studies right now, it’s too early to say what its efficacy or safety profile is. To date, we’ve been very encouraged by earlier results and I’m optimistic about this product.”

 

Investor1989: “I was impressed by RenaZorb. From starting the phase I study to topline results took only about 6 months. Is it possible that phase II and III trials also can be done this fast? As I remember it (I think it was from your Q1 or Q2 earnings conference call) Dr. Raj told that there were already massive interest in partnering RenaZorb, but Spectrum would add more value to the drug before partner it. Are SPPI in discussions with potential partners at this point of time?”

Ken Keller: “Certainly, we’re happy with the progress of the program, although at this point, we’re not providing any timeline elements except to say that we’re planning for Phase 2 testing and also are seeking a licensing partner outside of the U.S., in particular, in Japan and other countries in Asia.

  • You are correct there has been interest in partnering, though it is our policy not to comment on potential deal specifics or possible timing.  I should iterate what differentiates RenaZorb:
    • RenaZorb is a lanthanum-based nanotechnology compound available in a convenient, easy-to-swallow pill formulation, which we believe can address substantially the poor compliance associated with current therapies.
    • The higher phosphate-binding capacity of RenaZorb compared to current products, as we’ve seen in preclinical testing, allows us to offer lower dosing and a smaller, patient-friendly tablet size.
    • The recently announced Phase I study demonstrated good tolerability, an impressive dose response curve and phosphate binding capacity.”

 

 

Investor1989: “My personal thoughts are that the stock price is highly undervalued. You can either agree or disagree in that. Any thoughts?”

 

  • Ken Keller: “I’m not commenting on the stock valuation, other than to say that we think there are a number of important value drivers and program milestones in 2013, as I’ve indicated.”

 

 

Investor1989: “I think SPPI is so undervalued because of the lack of confident in the future of the company and in the sustainability of Fusilev sales (which I personally think is wrong). What are your plans to make more confident from analysis in the future of the company?”

Ken Keller:

  • “From the commercial perspective, I think you can understand that, based on the recent realignment and strengthening of our commercial team and program, we expect to see additional traction in the marketplace in 2013.  I am confident that this will be a year of execution, and we expect this will have an impact on how the company is evaluated by multiple audiences.
  • As with any firm that has a broad development pipeline, not all programs will progress at the same rate, and there can be attrition of programs as well.  Spectrum is a lean organization, which means that we can react quickly and judiciously to make the best decisions for our stakeholders, including shareholders, the clinical community and patients.
  • We will continue to communicate our progress in an open and transparent manner, as we have in the past.  We are excited about the opportunities before us and our momentum, and we will continue to share this excitement in public forums, at medical and industry conferences, through press announcements and in other interactions with key audiences, including members of the investor community.”

 

 

Investor1989: “I think one of the key issues is the lack of no “guidiance” from the company. The most other companies I follow are every giving Revenue and EPS guidiance, even companies that have losses. Is this something we can expect for 2013? A real guidiance?”

 

  • Ken Keller: “I need to defer this question to Dr. Raj Shrotriya.  He’s the one who can best respond in terms of the financial issues.”
  • Dr. Raj: “We have not given guidance in the past, and if we do in the future we will let investors know.”

 

Investor1989: “I think it is unusual that you raised the buyback program from 25 to 100 mio. $ Without using it. The 25 mio. $ Buyback was established in June 2011 and as of august 2012 under 5 mio. Was used. But still you raised the program to 100 mio. $ But of December 11 2012 there were still remaining 88 mio. $ Of the program. Why raise the program from 25 to 100 mio. $ If the program is not used. Was it only a PR stunt? I think this is some of the issues why the share has been under pressure. Lack of confidence?”

 

  • Ken Keller: “As with the previous question, I refer you to Dr. Shrotriya.”
  • Dr. Raj: We are committed to returning value to our shareholders and will determine opportunistically when the right time to implement the buyback plan will be.”

 

Investor1989: “Dr. Raj said in an interview with Propthink that the goal was to become a 5 bio. $ Company in 3 years (at the end of 2015). What are the key drivers for Spectrum to reach that goal? With a Price to earnings at 20 Spectrum will need to make 250 mio. $ In profit after taxes to reach the goal. Do you think that’s possible in 2015 or what is the key drivers?”

 

Ken Keller: “With the three products on the market today and possible a forth with the NDA filing of Belinostat, I see potential to substantially grow organically in the next few years.  That is our focus and this will put us on the way. We will add to what we have by advancing our pipeline, I see big potential in a few of our assets and of course, if the right business development opportunity is identified we will be opportunistic and aggressive. “

 

Investor1989: “After the ALTH acquisition in September 2012 Dr. Raj stated that the “plate was full” regarding new business acquisitions, but at the J. P. Morgan conference in January this year he said: “we are looking for opportunities and will be active”. Are you planning to be active or what? Looking for something and what kind of size and company would fit to SPPI?”

Ken Keller: “We have a very active and opportunistic business development team and as you know made 3 acquisitions in 2012. We have a balanced approach of growing our pipeline organically and by bringing in products through acquisition.  We also have an excellent cash position, which gives us a great deal of flexibility.”

 

Investor1989: “You met with FDA regarding Apaziquone in the fourth quarter of 2012, how did that meeting go, when will we hear more? And are we just waiting for the multiple installation trial data in the end of 2014?”

Ken Keller: “You may have seen our recent news announcement, which reported we had a scheduled meeting with the U.S. Food & Drug Administration last month to discuss the results from the Company’s Phase 3 clinical trials of apaziquone.  Based on these discussions, we understand that the FDA can accept the NDA filing with the current Phase III data and will likely convene an Advisory Committee meeting.  Also based on discussions with the FDA, we have agreed to conduct one additional Phase III study following consultation with the FDA on its design.

We are not providing additional information at this time.”

 

Investor1989: You had owned the rights to Belinostat in about 3 years now. In that time there has been 0 new randomised phase II and phase III studies on solid tumours. Will Spectrum only focus on Belinostat in hematologic diseases or what?

Ken Keller: “It is just a matter of focus and sequence. Belinostat has shown great promise, both in terms of efficacy and safety, in patients with Relapsed/Refractory Peripheral T-Cell Lymphoma (R/R PTCL).  In fact, we just announced safety data at the annual T-Cell Lymphoma Forum.  We already reach these clinicians with two products (ZEVALIN and FOLOTYN), and we believe that belinostat, pending FDA review and approval, would be a great addition to our hematology offerings and add further synergies.

We pursued blood cancers for belinostat in the late-stage studies because we felt the early trials showed promising results and because we feel we can make a real difference for patients.  We always will consider additional uses of our compounds and will make decisions based on the data and our resources.”

 

Investor1989: “Fusilev/Folotyn combined trial to treat mucositis. Will they end in 2013? And will we see any PTCL patients treated with the combined products in 2013 or will it be 2014 at first? And what are your opinions about Folotyn sales in 2013 then?”

Ken Keller: “We are not providing a timeline for the combination study at this time.  We do think the two products have the potential for significant synergy, and we’re excited by the program.

We’re also not giving any guidance on FOLOTYN for 2013.”

 

Investor1989: “Are you considering starting a regular quarterly dividend? The onetime special dividend was a good thing for shareholders, but if this company should be rated as a “yielding” company by analysts there has to be some regular quarterly dividend like 0,05  or 0,1 $ per share. As I see the cash flow every quarter there is plenty of cash to do this and still money to buy back and other business acquisition?”

Ken Keller: “Spectrum strives to bring value to our shareholders, as we issued a year-end special cash dividend at the end of 2012 and future special cash dividends will be at the discretion of the board of directors in the future. “

 

Investor1989: “Dr. Raj said at the J. P. Morgan conference that you expected sales of Fusilev, sales of Zevalin and sales of Folotyn to grow in 2013 compared to 2012 and that you expected operating profit to be higher in 2013 than in 2012. Is that an official company statement?”

 

Ken Keller: “We have aggressive goals for 2013, as we did for 2012.  “

 

About Investor1989

Investor in stocks in about 5 years with some very good profits. Focusing on Biotech and Value stocks. Active investor...

 

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