Spectrum Pharmaceuticals: Undervalued and (Now) Oversold

ROUND ONE

During the last pullback, Spectrum Pharmaceuticals (SPPI) began to sell-off on June 30 after shares of the company had reached the first new multi-year high since July 2007. On June 30, SPPI topped at $8.15 and closed at $7.65.

From the high on June 30 to the low on July 14, SPPI dropped about -42%. SPPI hit its intra-day low of $4.76 on July 14 – the day, I indicated shares of SPPI were oversold and undervalued.

During this round, the naysayers ran rampant, exhibiting chicken-with-no-head syndrome.

ROUND TWO
SPPI began its recent pullback on September 4 after shares hit another new multi-year high of $10. On that day, Zevalin was approved and the stock sold-off. By September 8, SPPI had fallen -30.7% to its lowest point in this current trading range, $6.93.

Just like the previous sell-off, the naysayers have worked overtime to free up the "weak hands," or less informed and inexperienced investors again this round. And this time, just like the last, many shorter-term traders gave up and sold or were stopped-out.

LOW TO LOW: SPPI +47.5%
From July 14 of $4.76 to September 8 low of $6.93, SPPI is up +47.5%.

ROUND THREE: COMING SOON
From the low on July 14 to the high on September 4, shares of SPPI advanced about 112%. If the same holds true during the next advance, then SPPI could touch $14.83.

Will shares of SPPI do the unexpected and unthinkable and strive towards a fair market value? I remain optimistic.

CONCLUSION
Near its 50-day MA, SPPI now appears to be oversold as of Tuesday’s close at $7.08. Since SPPI is also undervalued, shares should be accumulated at these levels.

Disclosure: Long SPPI

Comments

[MattK:]

Justin,

I appreciate the article and as always your insight. I don't understand why you even want to respond to the obvious idiots that comment on your articles. They argue with attacks and without facts to support any aurgument or point. You know as well as I do the truth is always the truth no matter how hard these idiots try to twist and distort it. time will prove you right and the previous comments to be from uninformed moronic idiots. Enjoy the weekend.

Sep 25 10:03 PM

[Justin M. Hall:]

Thanks MattK!

Regarding those you describe in your comment, you should note that I don't respond to them all!

Have a good weekend, my friend!

Justin


On Sep 25 10:03 PM MattK wrote:

Justin,

I appreciate the article and as always your insight. I don't understand why you even want to respond to the obvious idiots that comment on your articles. They argue with attacks and without facts to support any argument or point. You know as well as I do the truth is always the truth no matter how hard these idiots try to twist and distort it. Time will prove you right and the previous comments to be from uninformed moronic idiots. Enjoy the weekend.

Sep 26 02:03 AM

[Hustle617:]

hey Justin don't waste you time bro btw thanx again 44% in 6 weeks is good in my book anyday....

Sep 26 08:52 AM

[money4me:]

Woooooow!! This is horrible. Who deletes those comments?? The authors or SA???? I read this article earlier and there were a lot of negative comments about SPPI.....now gone!!! I though SA was a good source to get information and opinions, guess i was wrong.....everything biased.

Sep 26 03:42 PM

[money4me:]

Hope your comment doesn't get deleted again rrtzmd

Sep 26 03:43 PM

[Justin M. Hall:]

Dissent is always welcome without the personal attacks.

If you all would exercise some self-control, I would respond to serious inquiries and comments.

I will never respond to personal attacks.

It is very obvious that you all would never say this stuff to my face. Just because you can hide behind an alias doesn't empower or entitle you to act the way you do.

You can think what you want and I will continue to fight you the entire way.

You really have two choices: act like men or go away and stop wasting your time with me. I will NOT allow you or your multiple aliases to run around like children, act like jerks and personally attack me or others who comment under my articles. So, deal with it.

Reasonable dissent is always welcome. Your form of dissent is NOT and therefore will be deleted.

I am raising the bar. The negativity will not be allowed. I will do everything I possibly can to make sure that the attacks cease. I will neither give up nor be defeated. This stuff must stop.

I have spoken to the Managing Editor at SA and SA has no interest in having its contributors constantly and personally attacked by obsessed, hateful readers. It is not good for business or serious readers.

If you do NOT like it, then go somewhere else. Such negativity is NOT welcome here.


Justin M. Hall

Sep 27 08:36 AM

[Justin M. Hall:]

I HAVE A BETTER IDEA:

SIGN-UP FOR YOUR OWN FREE BLOG HERE AT SA AND SUBMIT YOUR OWN ARTICLES.

YOU HAVE THE FREEDOM TO WHAT YOU WANT, SO OFFER YOUR WELL-RESEARCHED DISSENT AND LET THE FREE MARKET DECIDE. YOUR CLAIMS ARE NOT WORTH A RESPONSE.

YOU ARE ALSO NOT ENTITLED TO RECEIVE A RESPONSE FROM ME. I OWE YOU NOTHING MORE THAT WHAT I HAVE PROVIDED.

WHEN YOU ACT LIKE A JERK, NO ONE WANTS TO HAVE A DIALOGUE WITH YOU.

KNOW THIS: COMMENTING IS A PRIVILEGE NOT A RIGHT. YOU ARE NOT ENTITLED TO ACT LIKE A JERK.

AND IF YOU ENJOY READING SUCH COMMENTARY, GO SOMEWHERE ELSE. THERE ARE OTHER AVENUES FOR YOU TO NEGATIVELY ATTACK PEOPLE.

THIS IS NOT THE AVENUE. I WILL TRY TO PREVENT IT EVERY TIME.

WHY NOT COMPETE IN THE FREE MARKET?

SIGN-UP AND SET UP YOUR OWN BLOG HERE AT SA.

SUBMIT ARTICLES TO THE SA EDITORS AND ALLOW THEM TO DECIDE WHETHER THEY WILL PUBLISH IT OR NOT.

IF YOU CONTINUE TO POST COMMENTS OBSESSIVELY AND PACKED WITH PERSONAL ATTACKS, YOU SHOULD NOT BE SHOCKED WHEN YOU SEE THAT YOUR COMMENTS ARE REMOVED.

ATTENTION RRTZMD:
I WANT YOU TO KNOW THAT I WILL NEVER PROVIDE YOU WITH A RESPONSE.

SO, THERE IS NO NEED FOR YOU TO ASK OR EVEN COMMENT UNDER MY ARTICLES. DO NOT WASTE TIME WONDERING AND ASKING WHY I WON'T RESPOND TO YOU. I AM TELLING YOU NOW. IT WILL NEVER HAPPEN.

I HONESTLY HOPE YOU ELECT TO MOVE ON TO GREENER PASTURES.

JUSTIN

Sep 27 09:10 AM

[Jugy:]

Justin

Just ignore this guy. He is a nerd that always gets picked on and is a big man (or woman) on the internet. They come in after the stock has already gone done and tries to do an "I told you so". They try to get under peoples skin and if you acknowledge him he will keep doing it.

Let's stick to the main topic SPPI.

9 days until Fusilev FL approval (hopefully). Look for a slight rebound this week. Keep up the good work.

Jugy

Sep 27 04:47 PM

[Jugy:]

meant to write "gone down"

Sep 27 04:50 PM

[DocBates7:]

Justin -

Thanks for the commentary on SPPI. Been following for a bit and I have to say that I agree w/your analysis. A takeover would be a dream but I agree that SPPI has potential as a stand-alone company.

Here's hoping the medicaid reimbursement goes favorably!

Thanks!

Sep 28 11:46 AM

[rrtzmd:]

...I feel compelled to remind readers to evaluate on SPPI on the MERITS of its products as opposede to the hype surrounding them..."fusilev" is NOTHING but levleucovrin...it is in NO way superior to just plain leucovrin...so there is NO argument for convincing third party reimbursers that they should pay more...so after pharamcies complete stocking up the drug, don't expect sales to go anywhere but DOWN afterwards...zevalin?.... that's only been approved now for SEVEN YEARS...how big are US sales currently?...that's kind of important for TWO reasons...first, Bayer owns ALL rights outside of the US...second, even though the company gained approval for an expanded label, it's current sales PROBABLY reflect off-label use as well....so DON'T expect such approval to have any significant effect on sales...eoquin?...that's NOTHING but a prodrug for an antique drug called mitomycin C...it is NOT superior to plain mitomycin...so, like levleucovorin, how are they going to convince reimbursers to pay for it?...and now everyone can understand the REAL motivation for the recent secondary -- strike while the suckers are biting...because once reality rears its ugly head, they won't be able to give the stock away...

Sep 28 02:47 PM

[rrtzmd:]

...addendum -- I did not intend to make three posts in a row as shown above...SA's "publish" button screwed up, not me...

Sep 28 02:52 PM

[Drug Recruiter:]

Justin-

I know you follow Spectrum (SPPI), but I follow them a little more in-depth. I am recruiting sales managers and sales reps for the EXPANSION of Spectrum's nationwide sales force due to Zevalin's 1st line approval, and Fusilev's Oct. 8th approval. If any Spectrum manager reads this, I am probably in deep crap, but this undervalued stock price is absolutely ridiculous!

They have ZERO debt and will make a fortune by year-end 2009, and 1st quarter 2010. This stock will hit the 20's within 6 months.

Plus, they were never in talks with Bayer. The only drug company that may buy them is Allergan.

Hope you believe me. I have 8 sales openings for Spectrum I am working with managers on as I type. GET THIS OUT TO EVERYONE IF YOU CAN. I KNOW YOU HAVE THE PULL.
JUST PLEASE KEEP MY NAME OUT OF IT!

Just want us all to make some money!

Sep 29 03:14 PM

[GARP:]

You are very immature. Your comments are not useful.


On Sep 25 01:20 AM cbryant1990 wrote:

> Justin,
>
> You know that you and I do not agree about each other's analyses
> of SPPI. I have to say, this is the most incoherent blog you have
> posted to date. Were you sitting on the floor with a bottle of cheap
> Scotch after the big drop? Your readers expect more from you. Pick
> yourself up man!

Oct 04 08:01 PM

[GARP:]

Hi, I don't know about the comments you are speaking about. I didn't see them but I did see one negative comment which I reported as abuse because it unecessarily insulting toward the author and provided nothing relevant to the article. People come here to read about and discuss SPPI. If one comes here to do anything else, their comment should be removed.

Kevin


On Sep 26 03:42 PM money4me wrote:

> Woooooow!! This is horrible. Who deletes those comments?? The authors
> or SA???? I read this article earlier and there were a lot of negative
> comments about SPPI.....now gone!!! I though SA was a good source
> to get information and opinions, guess i was wrong.....everything
> biased.

Oct 04 08:23 PM

[GARP:]

I like to hear both positive and negative points of view of the equity SPPI but your commentary is less credible because of the tone. The tone is very angry.


On Sep 28 02:47 PM rrtzmd wrote:

> ...I feel compelled to remind readers to evaluate on SPPI on the
> MERITS of its products as opposede to the hype surrounding them..."fusilev"
> is NOTHING but levleucovrin...it is in NO way superior to just plain
> leucovrin...so there is NO argument for convincing third party reimbursers
> that they should pay more...so after pharamcies complete stocking
> up the drug, don't expect sales to go anywhere but DOWN afterwards...zevalin?....
> that's only been approved now for SEVEN YEARS...how big are US sales
> currently?...that's kind of important for TWO reasons...first, Bayer
> owns ALL rights outside of the US...second, even though the company
> gained approval for an expanded label, it's current sales PROBABLY
> reflect off-label use as well....so DON'T expect such approval to
> have any significant effect on sales...eoquin?...that's NOTHING but
> a prodrug for an antique drug called mitomycin C...it is NOT superior
> to plain mitomycin...so, like levleucovorin, how are they going to
> convince reimbursers to pay for it?...and now everyone can understand
> the REAL motivation for the recent secondary -- strike while the
> suckers are biting...because once reality rears its ugly head, they
> won't be able to give the stock away...

Oct 04 08:34 PM

[fxchat:]

Hi Justin,

with the disapproval of FUSILEV, what is the current ideal valuation of SPPI?

Zevalin sales can only be worked out in 3 months, so what is left for now till then? Any expected upside?

Oct 12 09:41 PM

[Did U Think...:]

Did any of you who negatively rec'd my post on the 25th learn anything from the 20% drop SPPI has taken since then? I say again, learn to read a stock chart because this junk stock is headed well under $2 again, probably under $1. Don't fall in love with a stock!


On Sep 25 06:43 PM Did U Think The Ponzi Scheme Would Last? wrote:
"Learn to read a stock chart. It peaked and is now in freefall.
Perhaps you forgot that it was 60 cents per share back in Oct 2008?"

Oct 13 09:31 AM

[looking_fro...:]

wow, remind me to do the opposite to what this author writes. If I listened to him and bought in Sept I would be off by 40%. I am glad I bought it today 10/14 at $4.35... Now it's a real bargain.

Oct 14 05:47 PM

[looking_fro...:]

You had the right idea. You were just off well off when to execute the trade. No need to get nasty with people if you were wrong. Instead you should write here that you were wrong!!!!!


On Sep 27 09:10 AM Justin M. Hall wrote:

> I HAVE A BETTER IDEA:
>
> SIGN-UP FOR YOUR OWN FREE BLOG HERE AT SA AND SUBMIT YOUR OWN ARTICLES.
>
>
> YOU HAVE THE FREEDOM TO WHAT YOU WANT, SO OFFER YOUR WELL-RESEARCHED
> DISSENT AND LET THE FREE MARKET DECIDE. YOUR CLAIMS ARE NOT WORTH
> A RESPONSE.
>
> YOU ARE ALSO NOT ENTITLED TO RECEIVE A RESPONSE FROM ME. I OWE YOU
> NOTHING MORE THAT WHAT I HAVE PROVIDED.
>
> WHEN YOU ACT LIKE A JERK, NO ONE WANTS TO HAVE A DIALOGUE WITH YOU.
>
>
> KNOW THIS: COMMENTING IS A PRIVILEGE NOT A RIGHT. YOU ARE NOT ENTITLED
> TO ACT LIKE A JERK.
>
> AND IF YOU ENJOY READING SUCH COMMENTARY, GO SOMEWHERE ELSE. THERE
> ARE OTHER AVENUES FOR YOU TO NEGATIVELY ATTACK PEOPLE.
>
> THIS IS NOT THE AVENUE. I WILL TRY TO PREVENT IT EVERY TIME.
>
> WHY NOT COMPETE IN THE FREE MARKET?
>
> SIGN-UP AND SET UP YOUR OWN BLOG HERE AT SA.
>
> SUBMIT ARTICLES TO THE SA EDITORS AND ALLOW THEM TO DECIDE WHETHER
> THEY WILL PUBLISH IT OR NOT.
>
> IF YOU CONTINUE TO POST COMMENTS OBSESSIVELY AND PACKED WITH PERSONAL
> ATTACKS, YOU SHOULD NOT BE SHOCKED WHEN YOU SEE THAT YOUR COMMENTS
> ARE REMOVED.
>
> ATTENTION RRTZMD:
> I WANT YOU TO KNOW THAT I WILL NEVER PROVIDE YOU WITH A RESPONSE.
>
>
> SO, THERE IS NO NEED FOR YOU TO ASK OR EVEN COMMENT UNDER MY ARTICLES.
> DO NOT WASTE TIME WONDERING AND ASKING WHY I WON'T RESPOND TO YOU.
> I AM TELLING YOU NOW. IT WILL NEVER HAPPEN.
>
> I HONESTLY HOPE YOU ELECT TO MOVE ON TO GREENER PASTURES.
>
> JUSTIN

Oct 14 05:49 PM