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Executives

Shiv Kapoor - Vice President of Strategic Planning & Investor Relations

Rajesh C. Shrotriya - Chairman, Chief Executive Officer, President, Chairman of Placement Committee and Chairman of Product Acquisition Committee

Brett L. Scott - Acting Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Joseph Kenneth Keller - Chief Operating Officer and Executive Vice President

Steven M. Fruchtman - Chief Medical Officer and Senior Vice President

Rick Gonzalez - Deputy Chief Commercial Officer and Senior Vice President

Analysts

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Reni J. Benjamin - Burrill & Company, Research Division

Difei Yang - WallachBeth Capital, LLC, Research Division

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

Spectrum Pharmaceuticals (SPPI) Q3 2012 Earnings Call November 7, 2012 1:30 PM ET

Operator

Good day, ladies and gentlemen, and welcome to the Spectrum Pharmaceuticals Third Quarter 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the call over to your host, Shiv Kapoor, Vice President, Strategic Planning and Investor Relations. Please go ahead.

Shiv Kapoor

Thank you. Good morning, and thank you all for joining us today for Spectrum's Third Quarter 2012 Financial Results Conference Call. I'm Shiv Kapoor, Vice President of Strategic Planning and Investor Relations for Spectrum Pharmaceuticals. With me today are Dr. Raj Shrotriya, Chairman, CEO and President; Ken Keller, Chief Operating Officer; Brett Scott, Acting Chief Financial Officer; Dr. Steve Fruchtman, Chief Medical Officer; Jim Shields, former Chief Commercial Officer; and other senior members of the Spectrum management team. Here's an outline of today's call. First, Dr. Raj Shrotriya will provide you with the highlights of the third quarter and discuss overall direction and strategy. Brett will then provide a summary of our third quarter financial performance. Following this, Ken will review commercial and pipeline progress of the company in the quarter, and then we will open the call to questions. Before I pass the call over to Dr. Shrotriya, I would like to remind everyone that during this call, we will be making forward-looking statements regarding future events of Spectrum Pharmaceuticals, including statements about the product sales, profits and losses, the safety, efficacy, development timelines and clinical results of our drug products and drug candidates that involve risks and uncertainties that could cause actual results to differ materially. These risks are described in further detail in our reports filed with the Securities and Exchange Commission. These forward-looking statements represent the company's judgment as of the date of this conference call, November 7, 2012, and the company disclaims any intent or obligation to update these forward-looking statements. However, we may choose to update them. And if we do so, we will disseminate the updates to the investing public. For copies of today's press release, historical press releases, 10-Ks, 10-Qs, 8-Ks, other SEC filings and other important information, please visit our website at www.sppirx.com. I would now like to hand the call over to Dr. Shrotriya.

Rajesh C. Shrotriya

Thank you, Shiv, and good morning, everyone. As we begin our call today, let me say that our thoughts are with all those who are impacted by Hurricane Sandy. We know that several of our employees, patients and shareholders were affected and we wish them the very best in the days ahead.

We are very pleased to be reporting our eighth consecutive profitable quarter. We are very excited about the company's direction and our growth prospects. We continue to achieve robust revenue growth and profitability while maintaining a strong fiscal discipline. Four years ago, we were primarily a FUSILEV company with a limited cash. Today, Spectrum has FUSILEV, we have ZEVALIN worldwide rights, we have recently acquired FOLOTYN through the Allos acquisition, we have a robust, maturing pipeline and a strong balance sheet. Spectrum has developed and continues to grow into a much more diversified company. The breadth of our products and the potential of our pipeline are good for patients and further add value for shareholders as they reduce risk, both clinical and financial. We now have 3 products in the market, including FOLOTYN, and we have 2 additional late-stage products in addition to a diversified portfolio of several drugs in clinical trials. The fundamentals of our current business remain strong, and we expect to end this year with pro forma revenues of greater than $300 million. This quarter is the first time we are reporting sales of the combined entity, and I'm very pleased at the seamless execution of the integration. While there's much more work to do, I'm thrilled with how quickly and efficiently we are being able to integrate the best assets of our combined companies. Prior to the closing of the Allos acquisition in September, we expected that debt would be up to $40 million to $50 million in synergies. I'm pleased to report that we are now confident that in 2013, we expect to achieve $50 million or more in efficiency gains. Our fiscal discipline remains focal to our strategy. We have continued to create an environment where excellence is rewarded. We have been able to attract leaders who can bring us to the next level of growth. For example, Ken Keller, our Executive Vice President and Chief Operating Officer, who will speak shortly, recently came to us from Amgen bringing a proven track record of more than 40 years, including leading commercial launches of multiple billion-dollar drugs. Ken will discuss ways in which we have further bolstered our senior management team for continued success. Now I will hand the call to Brett, who will review our financials. Following Brett, Ken will give an overview of our commercial and research operations. Brett Scott, please.

Brett L. Scott

Thank you, Dr. Raj, and good morning to everyone on the call today. I am delighted to report this is Spectrum's eighth consecutive profitable quarter. We closed the quarter with cash, cash equivalents, investments and accounts receivable of more than $237.5 million after paying $133.3 million for the Allos acquisition net of Allos cash. Let's review the results for the quarter ended September 30, 2012. All numbers are approximate. Consolidated revenues include FOLOTYN sales for the period of September 5 through September 30, 2012. For the 3-month period ended September 30, 2012, we had total revenues of $69 million compared to $51 million in the third quarter of 2011, an increase of 35%. Product revenues were $66 million as compared to $48 million in the third quarter of 2011, an increase of 37%. FUSILEV sales were approximately $52 million, and ZEVALIN sales were approximately $8 million with FOLOTYN sales being $6 million for the period in September, which included net product sales of approximately $3 million for use in a clinical trial being conducted by an unrelated party. Net income was $21 million or $0.36 per basic and $0.33 per diluted share as compared to net income of $20 million or $0.38 per basic and $0.34 per diluted share in the third quarter of 2011. On a non-GAAP basis, net income was $27 million or $0.47 per basic and $0.42 per diluted share as compared to $23 million or $0.42 per basic and $0.38 per diluted share for the same period in 2011.Total research and development expenses for the third quarter were $10 million as compared to $7 million in the same period of 2011. On a non-GAAP basis, research and development expenses for the third quarter were $9 million as compared to $7 million for the same period in 2011.

Selling, general and administrative expenses for the third quarter of 2012 were $23 million as compared to $16 million in the same period of 2011. $5 million of this increase was due to costs incurred in the Allos transaction and transitional services related to the sales of ZEVALIN outside the United States. On a non-GAAP basis, selling, general and administrative expenses for the third quarter of 2012 were $17 million as compared to $15 million in the same period of 2011. Now to the 9-month period ended September 30, 2012. Total revenues for the 9 months were $198 million, a 41.2% increase over the same period of 2011. Product revenues were $188 million, a 44% increase over the same period in 2011. FUSILEV sales were approximately $160 million with ZEVALIN sales being approximately $23 million and FOLOTYN sales of $6 million. Net income was $86 million or $1.47 per basic and $1.32 per diluted share compared to net income of $40 million or $0.77 per basic and $0.70 per share diluted in the 9-month period of 2011.

On a non-GAAP basis, net income was $74 million or $1.27 per basic and $1.15 per diluted share as compared to net income of $62 million or $1.18 per basic and $1.08 per diluted share for the same period in 2011.

Total research and development expenses for the 9-month period ended September 30, 2012, were $29 million as compared to $21 million in the same period of 2011. Selling, general and administrative expenses were $65 million compared to $47 million in the same period in 2011. This increase is, in part, attributable to onetime costs associated with the Allos transaction and the acquisition with the x U.S. ZEVALIN rights. Further, in response to the investor inquiries from past quarters, we have included additional disclosures in our quarterly report on Form 10-Q regarding the components of gross to net revenue.

And just a quick update on our stock buyback program. We purchased 705,000 shares for a total of $8.6 million in the third quarter ending September 30, 2012. In summary, our revenues were up a strong 35% over the same quarter last year. We ended the quarter with a strong financial position of $237.5 million in cash, cash equivalents, investments and accounts receivable. I now will hand the call over to Ken Keller.

Joseph Kenneth Keller

Thank you, Brett, and good morning, everyone. I'm pleased to be part of the Spectrum team. I joined the company because I was very excited by its growth prospects. Everything I've learned since I started has reconfirmed and added to my excitement about what lies ahead. I've been impressed by the people, the energy, the commitment I see across the organization and the potential we have here to build an exceptional success story. I look forward to contributing and helping patients benefit from our current and future medicines. I'll focus my comments today on the 3 areas that we think are most important to share with you. First, I'll report on the substantial progress we made integrating Allos into Spectrum, and I'll review how we have refit our commercial organization to drive the future growth of ZEVALIN, FUSILEV and our newly acquired cancer therapeutic, FOLOTYN. I'll close with a brief update on the progress we made, advancing our pipeline. As our CEO, Dr. Raj, has stated earlier, we are confident we will achieve at least $50 million in efficiency gains and possibly more through several changes. Some of the most significant and immediate synergies are being realized through the elimination of duplicative administrative and management roles. Headcount for both companies in 2011 was approximately 390 people. Today, as one company, our headcount stands at approximately 200 people. The integration progress is not yet complete. There is still work to be done, and we expect to see further benefits and cost savings in 2013. This acquisition has also provided us the opportunity to look throughout both companies and upgrade our skill sets and talents across the organization. By taking the best from both, we are now becoming a far more effective and efficient company. The second area I want to cover today is the progress we made in building and refitting our commercial organization to accelerate the growth of our 3 marketed oncology drugs. We are starting this process from a solid foundation. Because of changes in buying patterns, there can be some fluctuation in FUSILEV sales as we saw this quarter. Importantly, FUSILEV demand remains strong despite readily available supplies of generic leucovorin. Market research shows that 75% of physicians say that generic leucovorin is available without difficulty. It is clear that physicians are continuing to choose FUSILEV even when other options are available. This quarter, there was a 13% increase in the number of accounts ordering FUSILEV. When I look at market penetration over the past 12 months, FUSILEV penetration is up from 29% in the last quarter to 31% in this quarter, and we believe there is room for improvement. A recent market survey suggested that 60% of physicians treating colorectal cancer patients have not yet been contacted by a Spectrum sales representative. We can, and we will change that.

The beauty of our marketing portfolio is that all 3 drugs, FUSILEV, ZEVALIN and FOLOTYN, will be effectively promoted by a single sales representative. We have cross-trained all of our sales representatives, and we are bringing them all together as a single team next week. This synergy allows us to rightsize the footprint of our sales team and promotional investments to optimize the reach and the frequency of our selling messages. This is something that just wasn't cost effective for the team that was promoting a single product. We've redesigned our commercial team based on 2 core principles. First, we've made a critical decision to have our commercial team be customer-facing heavy and headquarters light. This is consistent with our focus on managing our expenses prudently. And second, we have built the selling model that decentralizes key decision-making to better meet the needs of our customers regionally. We have established 6 regions in the U.S., each led by a regional sales manager, who will have all key resources at their disposal. Each of these individuals is or will be a seasoned professional in the oncology space. The new commercial team will have more than 90% of its total headcount in direct contact with our customers. Total sales headcount will exceed 60 people, which essentially doubles the number of sales professionals promoting all 3 of our drugs. These changes, coupled with our expanded product portfolio, have enabled us to attract additional top talent. We have recently recruited Joe Turgeon as our new Senior Vice President of Commercial Operations, and Joe is with us today. Joe has over 25 years of experience as a commercial leader, over 20 years in the oncology space. He was most recently the Vice President of Sales for Amgen. Joe has led teams that have been accountable for generating revenue exceeding $6 billion. This is a quality of the people that Spectrum is now able to attract. Now I'd like to share just a few highlights from the progress we've made in our clinical development program. We have a robust and maturing pipeline with 10 drugs in development for unmet medical needs. At the upcoming American Society of Hematology meeting, there will be 15 presentations on FOLOTYN and ZEVALIN, including 2 oral presentations on ZEVALIN. The new ZEVALIN data will focus on its use across the disease paradigm from first-line use to relapse and refractory disease to more aggressive diffuse large B-cell lymphoma to the transplant setting. This illustrates that lymphoma experts' interest in ZEVALIN remains high, and thought leaders are actively exploring ways to take advantage of ZEVALIN's unique efficacy, onetime treatment and well-recognized safety profile.

Second, we have opened our first sites for Phase II programs for both SPI-2012, our conjugated granulocyte colony-stimulating factor. This is a head-to-head study versus Neulasta, and SPI-1620, our novel endothelium antagonist -- agonist for lung cancer and biliary tract carcinoma. We expect to initiate these trials in the next few months. And third, in the past quarter, we completed a Phase I clinical study of RenaZorb, which is a novel oral phosphate-binding agent designed using nanoparticle technology for patients with renal insufficiency. We expect data from this trial in the next 3 months. That brings me to the end of my prepared statements, and now I will hand the call back to our CEO, Dr. Shrotriya.

Rajesh C. Shrotriya

Thank you, Ken, for providing such a comprehensive and compelling overview of the key commercial opportunities at Spectrum and select pipeline programs advancing at our company. Our strategy can be summed up succinctly. We succeed best in our combined mission to help patients and to increase shareholder value where, as a company, we can continue to lower our financial and clinical risks and focusing on critical unmet medical needs. Spectrum has proven its ability to manage an increasingly diverse portfolio of products and promising drug candidates. We continue to acquire and develop drugs in a physically prudent manner. I would underscore that we are a cash-generating business, and we do not anticipate needing to raise capital to run operations. Before I want to open the call to questions, I want to say that we expect to remain to keep growing our revenue and profits in 2013. We'll now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from Adnan Butt with RBC Capital.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

I'll begin with FUSILEV, of course. Can you expand a bit more on the down sequential quarter? How do we reconcile that with share being up and market penetration being up? And then secondly, if my back of the envelope math is correct, would you expect, based upon the pro forma guidance given, for FUSILEV to be up sequentially in the fourth quarter?

Rajesh C. Shrotriya

Adnan, as we said in the past, net sales will fluctuate based on timing of orders from wholesalers. What we want to monitor very closely is underlying end-user demand. Underlying demand is stable. In fact, the number of accounts order in Q3 was the highest ever as stated by Ken. We have more accounts ordering today than ever before. Our research shows that the large majority of physicians report that generic leucovorin is not difficult to obtain, but this demand is not solely driven by lack of other options. And we see that there are opportunities to further penetrate this market. Ken further stated that more than 60% of doctors have not yet been called upon by our doctors. So we expect our sales of FUSILEV to remain strong and keep growing quarter-after-quarter and year-after-year.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Okay, I appreciate it, and I think I kind of came to the same conclusion when we did the survey. In terms of being able to penetrate -- in terms of being able to reach more and more of the targeted physicians, is 60 kind of the right size number or is that something that you will continue to look at?

Rajesh C. Shrotriya

I will ask Ken to comment on this.

Joseph Kenneth Keller

Thank you, Dr. Raj. With the increased sales force size, we'll have 60 people that will be selling all 3 of our products plus, just to remind you, we still have a contract sales organization that is also out there. So when you look at the footprint in our share of voice, we should expect a significant increase in the number of physicians that we reach, and that can only help as we go forward.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Okay. And I mean, so you think this 60 probably is the right size number now in terms of the accounts that you're targeting?

Joseph Kenneth Keller

Yes, I think 60 selling the 3 products plus the CSO is the right size, and we'll look at it as we go on and we'll learn from it, and we'll adjust as we have to.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Then, if I can ask a question on FOLOTYN and get back in queue, are you able to break out the pro forma number that falls and would have posted had it been the full quarter? And secondly, any change in demand trends for FOLOTYN at this time? And where would you expect FOLOTYN to go?

Rajesh C. Shrotriya

So Brett, are you ready to answer this question about the pro forma numbers?

Brett L. Scott

Yes, I think FOLOTYN numbers, at least for the -- through September 30 on a pro forma basis will be approximately $37 million.

Rajesh C. Shrotriya

Adnan, is that your question, for 9 months?

Brett L. Scott

For 9 months, correct, yes.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Okay. That's fine. I can figure out the math. And then finally, if I can ask a pipeline question and then get back in queue, when do you expect to have the final belinostat data?

Rajesh C. Shrotriya

So Adnan, we are expecting the -- that by the -- before the end of this year, we should have belinostat data available. As I said, 6 patients are still on this study and the data log is expected to occur by the end of this month or early in first week of December.

Operator

Our next question comes from Joe Pantginis with Roth Capital Partners.

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

While you continue to grow the FUSILEV franchise, I just wanted to see if you can add some additional color regarding -- especially when you're doing all of these different surveys, what competitive pressures you are seeing and specifically might anticipate, especially from the newly approved drug from SAGENT.

Rajesh C. Shrotriya

So the only competition that I'm aware of that all generic companies are trying to increase their production, they have increased their production. Teva has imported drug and has been calling our customers -- calling their clients and customers that they have got -- they're loaded with generic leucovorin that they have imported. And now SAGENT has been approved. And last year, we know that APB was approved. In addition to that, there are other companies, several companies. And typically, generic companies compete with themselves. In fact, I'm looking for a day when market is over-flooded with all generic leucovorin supplies and they fight with each other and kill each other and Spectrum's FUSILEV will keep performing on its growth trajectory that it has been doing in the past. And all the industry players, all the people who believe that somehow FUSILEV sales are going to go fall off the cliff, we have proven them wrong for 8 quarters, and I must -- you must take my word for it, we'll prove them forever. FUSILEV was approved by the FDA in April 2011. It's a pure isomer that benefits. Doctors will see no need to use a cheaper product. Of course, there are hospitals and there are patients who would use a cheaper brand, and generics are here to stay. But FUSILEV is also here to stay as a branded pure product that has been in use in Japan and Europe, several sales in overseas. They probably have been in market for 15 years, the levoleucovorin, and its sales are $150 million to $200 million x U.S. And they don't have what we have called a J-Code. In other words, anybody who says that Spectrum is discounting drugs, they're wrong because, in fact, our ASP has been growing quarter-after-quarter. ASP has been growing up that shows that Spectrum, in fact, has not discounted, and any anomaly that they're seeing in the sales from WK data or here and there is primarily because, as we sell FUSILEV to government hospitals, the government mandated price at which we have to sell. FUSILEV price happens to be $87, and the wholesale price is $200 or $183 off ASP. So I think people have to understand that this is a complex way -- the way the units are reported and the way net sales -- we report net sales. In fact, this year, we have reported both gross and net sales.

Brett L. Scott

In this quarter, correct.

Rajesh C. Shrotriya

In this quarter, and we plan to do that in the future.

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Okay, that's great. And then that actually is very helpful. And then maybe just a financial question. As you look at your -- as you're rightsizing your sales force and then you sort of link that to your R&D and G&A run rates, what do you think we might be looking at here because you're also increasing the amount of some of your clinical trials?

Rajesh C. Shrotriya

So I think, at this time, I can only say that Ken has just joined the operations as Chief Operating Officer. He's busy looking at budgets. He and Steve Fruchtman and Brett and many other people are diving right at this time into the budgets. I think we'll have more clarity in the next 3 to 4 months.

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Okay. And then just lastly, real quickly. I'm just curious if there's any updates with regard to the data analysis that were ongoing behind the scenes for apaziquone or any potential plans between you and Allergan.

Rajesh C. Shrotriya

Yes. So I think as we have said before, Joe, that we have -- we are planning to have a meeting with the FDA sometime in the future and see what strategy we can develop. As you know, that when the 2 studies are combined, then the data is highly significant in favor of apaziquone. However, standalone 2 studies do not make the feedback view of less than 05. So at this time, this is work in progress, and we'll keep you posted.

Operator

Our next question comes from Jason Kenner [ph] with Credit Suisse.

Unknown Analyst

A lot of my questions have been asked already, but could you break out for us the U.S. versus x U.S. ZEVALIN? And you think you have that out there for a while. Could you give us some sense of what if anything is going on or changing in the marketplace there?

Rajesh C. Shrotriya

Yes, again, remember, this is the first time we are reporting sales of this. We don't have it at this time. The dollar number is so small, $8 million. When you start talking the sales x U.S., we're talking of Japan, we're talking of Europe, and we're still breaking down as to how much comes from where. We don't have -- the number is so small, $8 million, and at this time, really not focusing on how much we're getting from any given country. That said, we don't look at how much comes from Florida and how much comes from Tennessee to make up our sales in the U.S. We are looking at it as a brand that Spectrum owns worldwide to be able to report worldwide sales.

Unknown Analyst

Right. But aren't your margins very different and the stuff that you're selling outside the U.S. is worse than what you're selling in the U.S.? Is that fair?

Rajesh C. Shrotriya

Again, remember, our revenues are in excess of $200 million a year and the sales that are coming from there are bigger with time. We're starting to build our infrastructure in Europe and Japan.

Unknown Analyst

Okay. And maybe you can speak to -- you just completed a merger. It took a lot longer than I think you probably thought it would. But what is your appetite for doing more deals? What kind of deals are you looking for? Are you looking to specifically build out in other regions like in Europe or are you focused pretty much on just getting new commercial rights? Could you give us some sense of strategically where you want to go?

Rajesh C. Shrotriya

So -- and our plate is full at this time. We have 4 drugs in the market. We have 2 drugs latest in development. We have already 10 drugs in clinical trials. So our plate is pretty full at this time. As you rightly said, the FTC delay in Allos acquisition took us 4 months more than we thought it will, and basically it was trying to educate FTC. FTC was concerned that Spectrum will have monopoly in PTCL market, and we just had to educate them about this. Once they were satisfied, they blessed the deal. We are always looking for opportunistic deals. Our focus remains that we want to do deals that are accretive to our operations, and our sales force, instead of carrying one drug in their bag now, they're carrying 3 drugs. If we can have 4 or 5 drugs, we'll certainly welcome that. But we should be able to afford it because we always want to keep focus on our burn at the same time, while we are bringing -- adding value to the company.

Operator

Our next question comes from Ren Benjamin with Burrill & Company.

Reni J. Benjamin - Burrill & Company, Research Division

Can you talk to us a little bit more about the activities that's going on regarding ZEVALIN and the worldwide rights? What sort of sales infrastructure might be going into that on a worldwide basis? Can you just to help us understand what's happening x U.S.?

Rajesh C. Shrotriya

Well, I'll ask -- I'm sure Ken has been on board a little over 2 months. He has been focusing on all of our commercial and development pipelines, and Ken has a lot of ideas that I would have Ken answer this question.

Joseph Kenneth Keller

Thank you very much. We made some very good progress, both in Japan and in Europe. And in Japan, we're working with Fuji RI to extend our promotional footprint there. In the past, Fuji is focused on the nuclear medicine audience, and now they're actually going to be promoting ZEVALIN to the hematology audience. They have a very large sales team. They're an embedded sales team, and that's getting up and going as we're speaking. In fact, I was out in Japan just a few weeks ago to kind of touch it with my own hands. Over in Europe, we're setting up our own organization in Europe, and that organization will be a small team but a team that will be focused on the 4 biggest countries, the ones that have the most potential. And that is a work in progress. Those people will be live for us right around the first of the year.

Rajesh C. Shrotriya

And Ren, please remember that this drug has not been promoted in the last 4 years ever since it got approval by Bayer. It's not been promoted. They decided to get out of hematology-oncology business. This drug has really been orphaned. The only -- and still, you'll see at the American Society of Hematology meeting in the last 2 years, 2 meetings, there were 19 papers presented from Europe. So these [indiscernible] in Europe have kept doing research, funding by sales with ZEVALIN, and this exciting new data is coming. So we are quite excited to be a global owner of this drug and therefore, any clinical research we do in U.S. or in Europe can be put to better use to educate doctors and patients with this drug. So we are quite excited about it.

Reni J. Benjamin - Burrill & Company, Research Division

Yes, no, and the data we keep seeing keeps -- pretty much backs up all the excitement that you have, as well as the physicians we're working with it. I guess related to that, when we think about the sales force and the efforts of the sales force, should we think about the effort as roughly sort of 1/3, 1/3, 1/3 split among the 3 marketed products? Or is there, let's say, more of a focus on ZEVALIN or more of a focus on FOLOTYN going forward?

Rajesh C. Shrotriya

Again, I'll have Ken answer this question.

Joseph Kenneth Keller

Sure. The new Senior Vice President of the Commercial Organization, Joe Turgeon, will look into that. But early on, as I look at it, you've got great synergies with these 3 products. Every single account that we walk into has the ability pretty much to use all 3 of these products. The doctors will be different. So when you look at FOLOTYN and you look at ZEVALIN, those are really the same doctors for the most part, and that's just beautiful synergy. FUSILEV is used ubiquitously kind of across the board. When we look at designing the IC plan, which is really what you're talking about here, we'll do it in a way that is tailored and structured to what works in that regional area. That's the beauty of having this regional focus. For example, in some territories that are very academic focused, we will put most of our efforts on ZEVALIN and FOLOTYN. In other areas that don't have that academic focus, we may tip it a little bit more for FUSILEV. But really, the strength of this is our ability to tailor it to the region that -- in the specific doctors and areas.

Reni J. Benjamin - Burrill & Company, Research Division

Okay, okay. And just switching gears to the pipeline. Raj, I know you've talked about the extensive pipeline, the fact that you have a couple of agents that are in late-stage testing. But at one point, there was also quite a bit of focus on streamlining the pipeline and maybe jettisoning some compounds, keeping others. You mentioned that there are 10 products in the pipeline in development. Can you just give us maybe the top compounds that are in focus right now that you think will drive value in the next 12 months or so?

Rajesh C. Shrotriya

So Ren, you are right. I mean, we have a lot of real estate, wonderful properties, and we are now trying to sort out as to which one needs more attention. Clearly, the drugs that are in Phase IIb -- we have drugs in Phase IIb and late Phase II trials, for example, the drug for prostate cancer , drug for brain tumor or GBM is this white blood cell called the Neulasta-like drug. These are all the drugs that are in late stage of development and they all show very promising activity. There are drugs like RenaZorb. I mean, you have heard of RenaZorb for a long time. We completed preclinical testing and now Phase I clinical trial has been completed. We'll have data within next 2 months. So we are constantly visiting our pipeline, and now that Ken and Joe and others can focus on further strategizing and seeing which drugs need to move faster, that will happen. In fact, we have a quarterly strategic planning process that is in place, and you will hear more about these things in future quarters.

Reni J. Benjamin - Burrill & Company, Research Division

Okay. And I know that we have ASH coming up so we have, what, 15 or so presentations at ASH. Three months from now, we'll have data from RenaZorb. Can you give us just a little bit more of a longer-term horizon between the next -- in the next 6 to 12 months, what sort of data from which programs will we be expecting?

Rajesh C. Shrotriya

Yes. So I think the -- Steve, you want to talk about the data that's coming within the next 6 months?

Steven M. Fruchtman

Sure. Thank you, Dr. Raj, for that opportunity. As Ken mentioned in his prologue, we are very excited about some of our novel products, specifically 1620, anticipate opening a randomized trial in 2 indications in lung cancer and biliary tract cancer. We anticipate results of that trial to mature sometime in late 2013. In addition, our head-to-head, better perhaps, colony-stimulating-factor for recovery of the white count, 2012, as also mentioned previously, we'll have a head-to-head trial against Neulasta. Our sites are beings identified to participate in that trial. As well as some time in 2013, late 2013, we should have some results in that trial as well. Our more mature products, ozarelix, in the prostate cancer patients are being recruited. And again, sometime in the late 2013, we anticipate results from that, as well as lucanthone in GBM as well. In addition, for ZEVALIN, we continue our development program as was mentioned by the questionnaire. There's a lot of excitement at ASH. We are looking for broadening our indications with ZEVALIN, looking at diffuse large B-cell lymphoma. A patient has already been randomized on that trial as you've heard. So we have an exciting developmental pathway for ZEVALIN as well, and again, the Phase I trial just completed. And we anticipate going head-to-head against standard of care shortly at some point in 2013.

Rajesh C. Shrotriya

Thank you, Steve. I'll just add that our protocols of FOLOTYN and FUSILEV, trying to reduce the mucositis with using FUSILEV has now been completed, and we're waiting for our first patient to be entered. In fact, the protocol is ready. The investigators are ready to go. So we are planning to have a number of pilot studies. These are small pilot studies where patients will be given FOLOTYN and FUSILEV, and we arrive at their optimum dose or optimum strategy of how to reduce mucositis. We think we will be able to achieve our goal because we already have some pilot data. In fact, one of the investigators published a small study in 18 patients, that he was able to keep these patients on FOLOTYN by giving FOLOTYN and FUSILEV. So we are quite excited about the possibility of getting more value out of FOLOTYN if we can reduce the mucositis, and we think we can do it with the help of FUSILEV. And we can do that. In fact, our plans are to expand indications, not only for ZEVALIN, but also FOLOTYN because then FOLOTYN can be utilized for lung cancer and breast cancer because, remember, FOLOTYN is a super methotrexate. Methotrexate has activity in a wide variety of cancers, and we plan to exploit fully the potential of FOLOTYN.

Reni J. Benjamin - Burrill & Company, Research Division

Perfect. And just one last question, and I apologize if it's silly but just to help me understand. When we're talking about pro forma numbers of being greater than $300 million, what is the pro forma component? I mean, is it full year's worth of FOLOTYN sales that's being added on to full year FUSILEV, ZEVALIN sales?

Rajesh C. Shrotriya

Yes, and for pharma, that remains that now we own the asset global ZEVALIN and Allos -- and FOLOTYN, we will be able to report pro forma revenue combining all the drugs' whole year sales at our next -- at our K.

Brett L. Scott

Yes. So to answer your question, you're absolutely right. The pro forma revenue that we're speaking about assumes that we were -- we had sales from each of these products for a full year of 2012.

Operator

Our next question comes Difei Yang with WallachBeth.

Difei Yang - WallachBeth Capital, LLC, Research Division

Just a couple. First one is on SG&A expenses for Q4. Now that integration with Allos has been completed, how should we think about modeling in terms of SG&A moving forward?

Shiv Kapoor

This is Shiv. We are still looking at this process. We've closed, as you know, Allos. It's only been a month since we closed the transaction, and it's too early for us to give you a very good estimate for Q4. But hang in tight, we will be talking about this more, and we'll give you a good estimate of the combined company guidance, especially for expenses in sometime January.

Difei Yang - WallachBeth Capital, LLC, Research Division

So now let me circle back on FUSILEV. So FUSILEV with SAGENT launching their generics and possibly Teva comes back to market, it sounded like, if I hear you correctly, it sounded like you're not expecting losing major market shares back to the generics. And could you help us to understand why, this time around, it may be different from previous times where, when the generics comes back to market, essentially FUSILEV revenue tanked?

Rajesh C. Shrotriya

So Difei, actually, your observation is not quite correct. Actually, it's wrong. The only time the sales of FUSILEV went down was before Spectrum got approval for colorectal cancer. That's before April 2011. If you go back and look, FDA had given us a special permission to promote drug, sell drug for CRC before we got approval in 2010. Sales went down because we couldn't promote it. We couldn't even sell it to the doctors, even if they ordered it, because they were not approved. FDA turned the tap on and off. So actually, FDA called us one day. FDA called me at 10:30 at night, "Dr. Raj, we have shortage of generic leucovorin. Can you sell FUSILEV?" And I said no, we are not approved for colorectal cancer. They said, "No, we are going to give special permission to do that." So special permission was given from FDA to sell for a finite amount of time. In 2008 December, we sold for about 2 weeks. In 2009, we sold for about 2 months. In 2010, we sold for about 6 months. In 2011, we sold in the first quarter when we actually had to import FUSILEV from Europe, and we went to Pfizer to get -- FDA actually allowed us to import FUSILEV from Europe because our manufacturer couldn't keep up with the demand. So what you are talking about, the sales going down when the generic came up, that was because we could not sell the drug at that time. Since April 2011, it is a different story. Our sales have never ever gone down. They're going only one way, going up.

Difei Yang - WallachBeth Capital, LLC, Research Division

Yes, very much appreciate the color. So you're saying those 2 times potentially there was off label usage permitted by the FDA to deal with the shortage situation. And so the revenue run up for FUSILEV back then was really due to generics, and this time, it's more likely to due -- to be because of the promotional effort?

Rajesh C. Shrotriya

Yes. So I think, Difei, there are 2 things to keep in mind one is it that the generic leucovorin supplies go on and off all the time? Because the people who make these are difficult generic drugs. They don't make money. So they make them when they can, they bundle them and sell them. Our drug was approved in 2011. It has got a J-Code. We have sales force. We are the only people who have a sales force dedicated to promote FUSILEV. Our drug is more expensive. ASP plus 6% is $183 for Q3. And also, we learned from what happened in 2010. That was a good experience because at that time, we had only one contract manufacturer who is making FUSILEV for us. Now we have multiple manufacturers approved by the FDA because we say never ever we will run out of drug better than demand for cancer patients. And therefore, now we have multiple suppliers of this drug, and I have assured people that there will never ever be a day where there'll be a shortage of FUSILEV.

Difei Yang - WallachBeth Capital, LLC, Research Division

Yes. And just a quick follow-up question with regards to the J-Code for this product. So you're saying FUSILEV has its own J-Code. What about generics? Do they share one J-Code or do they each have their own?

Rajesh C. Shrotriya

No, Rick, do you want to answer this question?

Rick Gonzalez

Yes, Difei, it's Rick Gonzalez here. The J-Code for generics is a bundled J-Code. All the generics are under one. And the J-Code does 2 things. It recognizes the uniqueness of FUSILEV as a different product, different molecule, number one. And number two, it allows for proper and adequate reimbursement when used on -- in its indications. So we can expect for the treatment of colorectal cancer that FUSILEV, under its unique J-Code, will be reimbursed with no foreseeable issues in the near future.

Rajesh C. Shrotriya

And Ken, do you want to add on it?

Joseph Kenneth Keller

No, no, no, that is perfect.

Operator

Our next question comes from Joe Pantginis with Roth Capital Partners.

Joseph Pantginis - Roth Capital Partners, LLC, Research Division

Raj, when you talk about the increasing demand and the number of accounts increasing for FUSILEV, I was just wondering if you can merge that with your announcement of several months ago about your plans to increase the manufacturing capacity for FUSILEV. I was just wondering where that stood. Is that -- are those initiatives complete? Are they still ongoing? And like you said, you have the ability to meet demand now.

Rajesh C. Shrotriya

So we indeed have multiple manufacturers that have been approved by the FDA. We have one more manufacturer that is being approved as we speak. They are still not online. The material they produce is still not for commercial sale, but I'm hoping that within the next several months that will be approved by the FDA. So all of the other manufacturers are supplying our drug at this time. And at any given time, we have millions of vials in our inventories to be able to supply should there be a sudden increase in demand for any reason.

Operator

Our next question is a follow-up from Ed Arce from MLV & Co.

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

I just was struck by the comment earlier about having 60% or so of the colorectal cancer physicians in the U.S. have not yet been detailed in the 1.5 years that you've been approved. And just wondering if the sales force of the 60 reps plus the CSO is the right size. And also, if you could tell us what you think the size of the number of accounts are that you're targeting.

Rajesh C. Shrotriya

So before I ask Ken to answer this question, let me give you some historical perspective. So the first time we ever hired a sales force, they're not employees of Spectrum but they come to us from Ventiv Sales. That was in September of last year. That's exactly a year ago. It means that we've got approval in April, and there's nobody selling the drug from April to September. And at September, we hired a dedicated sales force and then [indiscernible] only they have promoted this drug. In fact, our ZEVALIN sales force never ever promoted this drug. It is -- now I will ask Ken to talk about it as to what his, going forward, what his plan is.

Joseph Kenneth Keller

Sure. Thank you, Dr. Raj. What we know is that the size of the team in the past was too small. It's clear by the market research that we have. Physicians just aren't learning about FUSILEV enough, and so what we have now is a sales force that is more than twofold larger than it was, and we will evaluate as we go forward. The way that I'm looking at this is, when I compare it to other oncology product sales forces, 60 gets a lot closer to the right size number. I will have to look exactly where we end up in 2 or 3 months from now, but I'm very optimistic that this will -- I know for sure this will increase our footprint in our share of voice and we'll reach more customers. And then, depending on our progress, we'll make adjustments as we go forward.

Operator

I'd like to turn it back over to Dr. Raj for closing comments. I'm showing no further questions in the queue.

Rajesh C. Shrotriya

In closing, I would like to thank you again for joining us on this call at a very exciting time in Spectrum's evolution. We have transformed ourselves and will continue to transform the company, increasing our presence in the marketplace, growing our commercial pipeline and advancing our drug candidates in development. We're looking forward to a great future for Spectrum and continued fulfillment of our mission to meet the needs of cancer patients. Please stay tuned. The best is yet to come. Thank you.

Operator

Thank you, ladies and gentlemen. Thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.

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