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Justin M. Hall
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  • Spectrum Pharmaceuticals Update 11 comments
    Apr 5, 2010 2:56 PM | about stocks: SPPI

    Despite poor Q4 results, I am still willing to give my investment in SPPI more time.  I am prepared for a near-term sell-off as buyers are not likely step in. 

    • *** Owning put options is always smart when investing in small cap drug makers. ***

    I do NOT at all agree with the company's decision to not provide some sort of guidance for Q1.  That's not a good sign.  That said, I still like the company's long-term prospects. 

    Q1 2010 is just around the bend.  Based on Today's conference call, it is apparent that the Zevalin turnaround is going to take some time and a little patience from long-term investors. 

    While I was not impressed with the Q4 results, I still view Zevalin as a winner in the long-run.  I also like the company's pipeline, which features two late stage cancer drugs.  In addition, SPPI has another cancer drug, Fusilev, which is pending approval, March 31, 2011.

    • $125 million in cash and currently trading at 1.8 X cash
    • $30-$35 million in 2010 expenses
    • $30 million in revenue with ZERO growth
    • Two Phase 3 cancer drugs (2012)
    • One cancer drug pending approval (3/31/11)
    • Trading with a market value of $220 M. Go check out ALTH, EXEL, CTIC and other small cap cancer drugs makers.  SPPI is relatively very cheap. 

    SPPI still represents a good long-term opportunity.  While Q4 2009 was a disappointment, I still like SPPI long-term and am willing to give the company to 1/1/11.

    Disclosure: Long SPPI.

    Stocks: SPPI
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Comments (11)
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  • antisense
    , contributor
    Comments (42) | Send Message
    Spectrum conference call was a hash of the same old again. Not a lot of calls from Analysts and they pretty much asked the same question. I am guessing everyone is looking for a catalyst to determine when they can trade on the stock, but Raj isn't giving away any information.


    Based on Belinostat Clinical trials there seems to be some news coming in April related to a PII trial results, but obviously I cannot confirm it. I am looking for any tradeable events in Spectrum in the near future to see if there is any news coming which can move the stock up. In terms of Zev. sales it looks like Raj isn't going to give any projections for 2 or more qtrs but he can surprise me.


    About taking my business elsewhere? I can certainly do that, but to me Spectrum is a known evil at the moment and safer from a cash preservation point of view with definite prospects in the longer term, while I do believe in longer term prospects of the Co., I do need to generate cash on a continuing basis and earn cost of investment in Spectrum while I am waiting. I do not leverage by way of margin so I do not buy Puts as I think they are silly at these levels, buying the stock at these levels is like buying non-expiring options assuming that either EOQuin or Belinostat will make it to market in the next 2-3 years. In terms of volatility, I love it but Spectrum has been trading in a very tight range so the volatility has been low resulting in lack of trading opportunities.


    So at the moment the only thing that concerns me is lack of known catalysts in the immediate so I can sell the volatility while I wait for the broth to cook. I have over 15 years trading and investing in Bio-techs so it is nothing new, but Spectrum insiders seem to be holding the cards too close to their chest and shutting out anyone from profiting in the interim.
    6 Apr 2010, 04:23 PM Reply Like
  • Justin M. Hall
    , contributor
    Comments (748) | Send Message
    Author’s reply » Agreed. After the conference call, I changed my mind. SPPI is no longer a buy.


    They won't help themselves.
    6 Apr 2010, 04:41 PM Reply Like
  • Justin M. Hall
    , contributor
    Comments (748) | Send Message
    Author’s reply » A joke. I gave it an hour.


    As I have said repeatedly since June '09, I like the company long-term.


    6 Apr 2010, 05:47 PM Reply Like
  • horse625
    , contributor
    Comments (16) | Send Message
    if there is something leaked from conference call, the last option will be surely excercised, right?
    7 Apr 2010, 06:18 PM Reply Like
  • Justin M. Hall
    , contributor
    Comments (748) | Send Message
    Author’s reply » Horse:


    I do not understand what you are asking. Please clarify. Thanks.


    7 Apr 2010, 09:53 PM Reply Like
  • horse625
    , contributor
    Comments (16) | Send Message
    oops, I should say warrants.
    7 Apr 2010, 11:57 PM Reply Like
  • Justin M. Hall
    , contributor
    Comments (748) | Send Message
    Author’s reply » In other words, the company could not report the warrants as income next quarter if the warrants were excercised.


    You caught this as well.


    On that, the censors prohibit me from saying what I want to say.


    8 Apr 2010, 12:29 AM Reply Like
  • horse625
    , contributor
    Comments (16) | Send Message
    the censors prohibit me from saying what I want to say.
    who are the censors?
    8 Apr 2010, 11:46 AM Reply Like
  • Justin M. Hall
    , contributor
    Comments (748) | Send Message
    Author’s reply » T'was a joke.


    The above issue pisses me off.


    That's all.
    8 Apr 2010, 02:20 PM Reply Like
  • reitinvestor
    , contributor
    Comments (20) | Send Message
    """"As I have said repeatedly since June '09, I like the company long-term""".........P... how long is "long term"? Justin, do you know if the price of Zevalin was the same in Q4 2009 as it was in Q4 2008?....Put another way, was the 8% increase in Zev revenues due to an increase in unit sales or a price increase? Or, both?
    12 Apr 2010, 09:30 AM Reply Like
  • Justin M. Hall
    , contributor
    Comments (748) | Send Message
    Author’s reply » Review my articles again. Start with the article dated June 19, 2009 or the second article I published here. There, I indicated 12 to 18 months.


    Did you bother to read what I wrote in the post above? I stated very clearly that I plan to stick it out until 1/1/11 and reevaluate my position in the company at that time.


    That's just my take. You have no obligation to follow my plan. If you have a short-term time horizon, then this strategy would not likely be a good fit for you.


    The price increase went into effect 1/1/10. Therefore, it would not impact sales reported in Q4 2009.
    12 Apr 2010, 10:18 AM Reply Like
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