Spectrum Pharmaceuticals, Sequenom Shares Rise on Heavy Volume

Shares of Spectrum Pharmaceuticals (NASDAQ:SPPI) jumped on twice the average volume Monday.

Shares for the biopharmaceutical company, which focuses on pioneering novel cancer therapies with a focus primarily in the areas of hematology-oncology and urology, are under a heavy accumulation which is related to Spectrum’s dealings with the FDA, seeking approval for ZEVALIN in treating non-Hodgkin´s lymphoma (NHL).

According to many, SPPI's alliance with Allergan Inc. (NYSE: AGN) has added to speculation about a possible buyout of SPPI.

In addition, if approved by the U.S. Food and Drug Administration (FDA), the market for SPPI's drug candidate ZEVALIN could reach more than $1 billion at its market saturation.

SPPI has another FDA decision due next month and they have a fully developed commercial infrastructure that is responsible for the sales and marketing of two drugs in the United States- ZEVALIN, a form of cancer therapy called radioimmunotherapy for the treatment of non-Hodgkin’s Lymphoma (NHL), and FUSILEV, which is indicated after high-dose methotrexate therapy in patients with osteosarcoma.

Its lead developmental drug is apaziquone (formerly EOquin), which is presently being studied in two large phase III clinical trials for non-muscle invasive bladder cancer under that strategic collaboration with Allergan Inc. Another drug, ozarelix is in a phase II clinical trial for benign prostatic hypertrophy (BPH).

SPPI operates in the most rapidly growing segment of treatment in the pharmaceutical market. For more on that, see the exclusive FDA Calendar at BioMedReports.

Meanwhile, shares of Sequenom Inc. (NASDAQ: SQNM) also rose- twice infact- during the trading day amid speculation that the company's prenatal Down Syndrome test may yield favorable results.

Shares for SQNM closed +$1.11 higher (+21.02%) at $6.39 after Reuters reported that "There is chatter about possible news regarding favorable results from a medical study that might benefit the company."

"Traders appear to be looking for more upside in shares and are buying September $6 and $7.50 calls," said Frederic Ruffy, options strategist at Web information site WhatsTrading.com.

In April, the company delayed the launch of the SEQureDx test, citing mishandling of research and development test data and results by employees, and had initiated an independent investigation into the matter.

In morning trade, about 25,000 call options traded in the name, more than two times its normal daily volume and nearly 11 times the number of its put options, according to option analytics firm Trade Alert.

The company’s stock reached a high of $29.14 in the fall of last year, and subsequently tumbled to a low of $2.86 this past spring. Not because of the recesssion, but because it turned that positive results of its Down test had been compromised after clinical test data was revealed may have been tampered with.

In a recent 8K filing with the SEC, the company said that in addition to its own internal investigation into the matter, and massive numbers of lawsuits, the company also faces an SEC investigation into the issue of tampering.

Sequenom is running tests/studies as part of these on-going investigations. If the stock breaks resistance during the coming session things could get interesting, since it could also be a good candidate for a short squeeze. Meaning, the number of holders shorting the stock would take 3 days to close their positions and that scenario would force a stock price higher. If the stock fails to sustain the rally, some believe it could fall back down to the $5.80 level.



Disclosure: Long SPPI

Comments

[maxpowerpi]

wrong on two points:
1) we don't know data was 'tampered' with... it was 'mishandled'. That could be tampering.. but could be something innocent... tamper infers wrong doing.

2) SEC isn't investigating 'tampering' or 'mishandling'.. SEC is investigating insider trading, related to the APR 29 announcement.

3) Internal Investigation into mishandling isn't what the SEC cares about... they only care whether exec's or other insiders traded, or gave others info to trade SQNM stock regarding the info.

2009 Sep 01 09:11 AM

[jim collins]

See above

2009 Sep 01 09:29 AM

[Penn Bioinvestor]

Honest with you, I highly doubt the following statement. There is no way Zevalin, a radioactive drug could reach peak sale of 1 billion. Don't forget this drug has been passed from one company to another for a long time. All attempt to increase sale above a few million have failed. I have seen several pumpers on SeekingAlfa pump SPPI without ground. Repeat my point: if FDA approve the extension of usage, could increase its usage, but NO WAY it could reach blockbuster status, PERIOD.

Quote:
"In addition, if approved by the U.S. Food and Drug Administration (FDA), the market for SPPI's drug candidate ZEVALIN could reach more than $1 billion at its market saturation."

2009 Sep 01 06:36 PM

[Justin M. Hall]

Penn Bioinvestor:

Here, I agree with you.

I do not foresee Zevalin achieving $1 billion in sales.

However, I do believe $180 million within 12 to 18 months post-launch for the first-line consolidation setting is attainable.

Justin M. Hall

2009 Sep 02 01:52 AM