Spectrum Pharmaceuticals Inc. (SPPI) filed Quarterly Report for the period ended 2009-03-31.
Spectrum Pharmaceuticals Inc. is opportunistically acquiring and advancing a diversified portfolio of oncology drug candidates that meet critical health challenges for which there are few other treatment options. Spectrum's expertise lies in identifying undervalued drugs with demonstrated safety and efficacy and adding value through further clinical development and selection of the most viable and low-risk methods of commercialization. The company's pipeline includes promising early and late-stage drug candidates with unique formulations and mechanisms of action that address the needs of seriously ill patients such as at-home chemotherapy and new treatment regimens for refractory disease. Spectrum Pharmaceuticals Inc. has a market cap of $130.9 million; its shares were traded at around $4.07 with and P/S ratio of 4.6.
Highlight of Business Operations:
We believe that the approximately $64 million in cash, cash equivalents, marketable securities and funds in escrow that we had on hand as of March 31, 2009 will allow us to fund our current planned operations for at least the next twelve to eighteen months. Of the $64 million, as of March 31, 2009, we had $10 million in escrow as the remaining payment for CTI’s 50% share in RIT. We also believe the financial institutions through which we have invested our funds are strong, well capitalized and our instruments are held in accounts segregated from the assets of the institutions. However, due to the current extremely volatile financial and credit markets and liquidity crunch faced by most banking institutions, the financial viability of these institutions, and the safety and liquidity of our funds is being constantly monitored.
Our expenditures for research and development consist of direct product specific costs, including, but not limited to, upfront license fees, milestone payments, active pharmaceutical ingredients, clinical trials, and patent related costs, and non-product specific, or indirect, costs. During the three-month period ended March 31, 2009, our total research and development expenditure was approximately $5.7 million (net of $2.7 million received from Allergan), of which approximately $1.7 million was in direct costs. The principal components of direct expenses for that period related to the development of Apaziquone — approximately $0.8 million; FUSILEV — approximately $0.5 million; and Zevalin approximately $0.3 million.
During the three-month period ended March 31, 2009, net cash from operations was approximately $0.3 million compared to net cash used in operations of approximately $7.1 million in the comparative period of 2008. The improvement in operating cash flows is primarily attributable to revenues derived from sales of FUSILEV.
During the three months ended March 31, 2009, we recognized $2.1 million of licensing revenues from the amortization of the $41.5 million upfront payment we received from Allergan in 2008. Also, during the three months ended March 31, 2009, we recorded approximately $9.4 million (net of estimates for promotional, price and other adjustments) of revenue of our proprietary oncology drug FUSILEV, including adjustment of the allowance for product returns. As of December 31, 2008, we had deferred the recognition of $3.1 million revenue for product returns, until we were able to obtain more data on product sales and returns. Based on the experience gained to date, we believe that as of March 31, 2009, a product returns reserve of $1.9 million is adequate, and accordingly recognized the difference of approximately $1.2 million as a component of revenue for the three months ended March 31, 2009. Also, during the three months ended March 31, 2009, net sales of ZEVALIN were approximately $2.6 million. While the generic leucovorin shortage experienced in late 2008 and early 2009 appears to have abated, we continue to expect to generate revenue from the sales of these two products during the remainder of 2009; however, we are not able to provide any revenue or net income guidance at this time. No revenues were recorded in the period ended March 31, 2008.
Total research and development expenses, excluding amortization costs associated with ZEVALIN described below, decreased by approximately $0.7 million, from approximately $6.4 million in the three-month period ended March 31, 2008 to approximately $5.7 million in the three-month period ended March 31, 2009, primarily due to the sharing in the costs associated with the development of Apaziquone of approximately $2.7 million by our development partner, Allergan Inc. (“Allergan”), partially offset by higher R&D costs incurred for ZEVALIN of approximately $1.2 million. We expect Research & Development expenses for the remainder of 2009 to continue at a similar pace to the quarter ended March 31, 2009.
Selling, general and administrative expenses increased by approximately $3.8 million, from approximately $2.6 million in the three-month period ended March 31, 2008 to approximately $6.4 million in the three-month period ended March 31, 2009. The primary reason for the increase is due to increased sales and marketing expenses, including employee compensation costs, incurred in connection with the commercial activities associated with sales of FUSILEV of approximately $1.7 million and ZEVALIN of approximately $2.1 million. We expect selling, general and administrative expenses for the remainder of 2009 to continue at a pace similar to the quarter ended March 31, 2009.
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