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In this update I will talk about the information from the two investor conferences Monday and Wednesday, and from the Q4 report and the CC. In this I will make my own analyses, I will refer to what Raj and Spectrum has been saying. So make sure before reading, some of the following states are my own and not necessary Spectrums opinion on think.
At first I will say I was a little bit disappointed on the 4Q. Not about the earning, but on the revenue. As I have predicted several times before, the Q4 will be hit by some extraordinary expenses, and I was right about that. So the earning didn’t really disappoint me, because I knew the expenses were coming. I like Spectrum because of its earning, but earning isn’t really that important at this time. Spectrum Is set for growth the next several years, and invest in growth, this is the important. Strong growths were earning follow up.
So what have I heard in this week? Raj told that Spectrum is now set for growth over the next five years. He said: Spectrum has never been stronger. I will come with some Raj posts from the CC (I do not refer the exactly words all the time):
– 2012 is a new transformation year for Spectrum.
– Q4 is affected by extraordinary posts which are not coming back
– Will start several phase II trials for Spectrums yearly state pipeline.
– Will file 2 NDA for Apaziquone and Belinostat in 2012.
– Do an meaningful expansion in Zevalin in 2012
So now I will take look on the number in the Q4 report. I will not talk about the whole year income; I will wait and make a post about it when the annual report is released. So now we talk about the most important, the last quarter.
Revenues in this quarter are 50 mio. $ compared to 31 same period last year. 44 from Fusilev and only 6 million from Zevalin. If we take a look on the earning the earning was NON-GAAB 0,27 per share and GAB 0,15 per share. I look on the GAAB earning because this is included the stock based compensation. This is now and expense, because it don’t affect the cash flow, but it will over time make the EPS weaker, so I think it’s fair to include them. There are 6,5 mio. $ In stock based compensation just in Q4. This I huge. The stock based compensation for the whole 2011 is over 20 million $. This is a lot for a company at this size, and a lot with a small board of directors. But that was it, now we are looking forward to a 2012 with clean balance sheets and hopefully strong revenue growth and strong earning.
What I think is great is under the stock purchase program spectrum have only acquired 5 mio.$ out of totally 25 mio. So they need to spend 20 mio. $ In stock purchase in 2012.
The last thing I will comment is the receivables. Receivables were 52 mio. At 31/12 2011. In Q3 it was 48 mio. What does that tells me? It tells me that the sale have been stronger in the last part of December than the last part of September. This is an indicator of future growth. And then take the holidays in mind.
Cost of sales were in 8,8 mio. and spectrum had a gross margin of 82 %. In Q4 this was 10,3 mio. $ And a margin of 79,4 %. In the CC Brett Scott said this was temporary and margins will be higher again. So we can count on minimum 1-2 millions on this post next Q.
Than let me talk about the products and what Raj did say about them.
Many new cases every day. Spectrum does at this time have a total market share of 21 %. They expect Fusilev will continue to grow, and grow over the long term. Fusilev is the only branded drug against colorectal cancer. It has its own unique J-code and reimbursement. Fusilev is reliable, payers can count on the delivery from Fusilev. They have significant opportunities to growth.
They expect long term growth, but stated that growth will not explode, it will start slow. They start new clinical programs. Zevalin will growth in 2012 and thereafter. It is a lot easier to use without the bioscan. As Raj said, this drug has been on the market for 10 years, it takes time to convince doctors that now it’s the time to use it. It can now be delivered directly to the doctors which is important. They will start clinical trials in a head to head study against Rituxan and in Large B-cell Lymphoma. They acquired worldwide rights, because they believe in this drug, and they will come out with a global strategy later in this year.
NDA Filing in 2012. There is a significant need for this drug. Doctors will start using in directly after FDA approval. The primary endpoint is statistic significant for Apaziquone vs. Placebo after 2 years. Drug has the potential to chance the global standards.
NDA Filing 2012. In PTCL we will get topline data in Q4 2012. In the study there are still 13 people alive, and 2 people have been in the study for more than 2 years. About CUP, Raj can’t talk about it. The data is coming any time now.
Strategy to find, develop and market drugs. They will make a lot of new phase II trials in 2012 for their other pipeline. SPI2012 is on a 5 bio. $ market. They start phase II very soon.
The last thing I will do is to refer to the questions on the CC and the answers I find most important.
Clinics that use Fusilev are growing. When first a patient starts Fusilev they can’t shift to Leucovorin because it’s different doses. The finance for the doctors is good on Fusilev, and the reliability is important.
They will do a Global strategy for Zevalin. They see big opportunities in Japan, and will later in marts talk about this global strategy.
They will make a turnaround for Z in US. Many people were wandering, why would Bayer sell Zevalin rights if this drug is good? Raj answered that question now. Bayer was closing down their Haematologist division, and therefore they don’t promoted Zevalin. They don’t want the drug. Spectrum has already got a lot of calls from European doctors, they could not understand why Bayer didn’t promote the drug. Spectrum will do this now. With a global strategy.
Will still let Biogen manufacture Zevalin. Make the drug easy to use in Europe, just like they have done in US. As Raj says, nobody knows this drug better than us on the whole globe. They will make partnerships in Japan.
They expect Research and development costs in 2012 about 40 mio. $.
Apaziquone data is not delayed. It Is a large and complicated study. Data is expected in April or May. Allergen and Spectrum do not have the data. A third party are cleaning and collecting the data.
In Q4 there have been a lot of onetime costs as the ASH, the Zevalin relaunch, some seasonal expenses. Their margins will be over 80 % again.
They make no guidance’s.
80 % of colorectal cancer sales are from doctors and 20 % from hospitals. Raj expects doctors to prefer Fusilev. And when they get Fusilev, they stay on it.
PTCL is a small market. But PTCL is important, because it is the entry, it is the gateway for Belinostat. He will not talk about CUP study, but data should come anytime now. They expect to start new clinical trials. He expects Belinostat to be good combined with chemotherapy.
This was all for me today. Good luck to all of you.
[EDIT by Admin: for more on Spectrum Phamaceuticals by Investor1989, follow this link. http://medicoinvestor.com/category/spectrumpharma ]
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