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business newsBetting on Spectrum's Cancer Drug
By
Brett Chase
Apr 13, 2011 12:40 am
Spectrum Pharmaceuticals' Fusilev should get FDA nod for colon cancer, analyst says.
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In the next couple of weeks, Spectrum Pharmaceuticals (SPPI) expects to get word from the Food and Drug Administration on whether the company’s cancer drug Fusilev will be approved for a new use.
Spectrum applied to sell Fusilev to treat the side effects of chemotherapy in patients with advanced colon cancer. (It’s already approved for side effects of chemo in bone cancer patients.) But Spectrum tried in 2009 to get Fusilev OK’d for colon cancer patients, and the FDA rejected the application, saying the drug didn’t appear to be effective. The FDA set April 29 as a deadline for reconsidering the application.
As investors know, betting on FDA approval can be a dicey proposition, but one analyst says Fusilev approval is a bet worth making.
RBC Capital Markets analyst Jason Kantor predicts that Fusilev will be approved. He recommends buying the shares and has a $12 price target on the stock. Spectrum shares were little changed at $8.77 midday Wednesday. The stock jumped almost 90% over the past year.
The reason for Kantor’s confidence: The FDA asked Spectrum last year to produce Fusilev to treat patients with colon and other types of cancer as an emergency substitute for a generic chemo antidote, leucovorin. Since there’s been a critical shortage of leucovorin, the FDA continues to turn to Spectrum for help.
This shortage helps Spectrum with near-term sales of Fusilev and should bolster its chances of getting the FDA nod for colon cancer patients. Kantor predicts the likelihood of approval is greater than 70%.
“Our confidence in FDA approval is largely based on FDA’s continued recommendation to physicians that they use Fusilev as a replacement for leucovorin during the ongoing shortage,” Kantor says.
Fusilev demand helped Spectrum’s sales surge 95% to $74 million last year. The company lost about $49 million, or 99 cents a share as it ramped up R&D and marketing costs. The company also sells Zevalin, a cancer drug used with Biogen Idec’s (BIIB) Rituxan.
Fusilev is a derivative of folic acid and is aimed at protecting healthy cells that can be damaged by chemotherapy.
Cancer doctors have been using the drug given the short supply of leucovorin, which may help the commercial success of the product if it gets a positive decision from the FDA, according to Kantor.
“An approval in colorectal cancer would permit Spectrum to actively market the drug, which has gained significant brand awareness and physician experience throughout the recent leucovorin shortage,” Kantor says.
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
Spectrum applied to sell Fusilev to treat the side effects of chemotherapy in patients with advanced colon cancer. (It’s already approved for side effects of chemo in bone cancer patients.) But Spectrum tried in 2009 to get Fusilev OK’d for colon cancer patients, and the FDA rejected the application, saying the drug didn’t appear to be effective. The FDA set April 29 as a deadline for reconsidering the application.
As investors know, betting on FDA approval can be a dicey proposition, but one analyst says Fusilev approval is a bet worth making.
RBC Capital Markets analyst Jason Kantor predicts that Fusilev will be approved. He recommends buying the shares and has a $12 price target on the stock. Spectrum shares were little changed at $8.77 midday Wednesday. The stock jumped almost 90% over the past year.
The reason for Kantor’s confidence: The FDA asked Spectrum last year to produce Fusilev to treat patients with colon and other types of cancer as an emergency substitute for a generic chemo antidote, leucovorin. Since there’s been a critical shortage of leucovorin, the FDA continues to turn to Spectrum for help.
This shortage helps Spectrum with near-term sales of Fusilev and should bolster its chances of getting the FDA nod for colon cancer patients. Kantor predicts the likelihood of approval is greater than 70%.
“Our confidence in FDA approval is largely based on FDA’s continued recommendation to physicians that they use Fusilev as a replacement for leucovorin during the ongoing shortage,” Kantor says.
Fusilev demand helped Spectrum’s sales surge 95% to $74 million last year. The company lost about $49 million, or 99 cents a share as it ramped up R&D and marketing costs. The company also sells Zevalin, a cancer drug used with Biogen Idec’s (BIIB) Rituxan.
Fusilev is a derivative of folic acid and is aimed at protecting healthy cells that can be damaged by chemotherapy.
Cancer doctors have been using the drug given the short supply of leucovorin, which may help the commercial success of the product if it gets a positive decision from the FDA, according to Kantor.
“An approval in colorectal cancer would permit Spectrum to actively market the drug, which has gained significant brand awareness and physician experience throughout the recent leucovorin shortage,” Kantor says.
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.
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