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Spectrum Pharmaceuticals - More on the buyout rumors

There have been many questions concerning the buyout rumors about Spectrum Pharmaceuticals lately. The rumor originated from Justin Hall as a speculative comment on June 30, 2009.
Mr. Hall's comments were recycled at many websites such as biomedreports.com and a myriad of other sites that regurgitate what others have written. On July 31, Jonathan Moreland reported in a piece at TheStreet.com about the “breeding speculation” about big pharma buying out of smaller firms to beef up their pipelines. He mentions Rodman & Renshaw biotech analyst, Reni J. Benjamin who suggests that Spectrum Pharmaceuticals could benefit from such a speculative buyout. Mr. Benjamin does not say that a buyout is in the works, he simply says that SPPI could benefit.   It should be pointed out that Rodman and Renshaw (R&R) are the placement agents for the institutional investors that agreed to pay $7.15 for 2.9M shares of SPPI announced on June 30th.  One has to question the timing of Mr. Hall's post, the Spectrum Press release, and the R&R comments. On August 10, Justin Hall again repeats that SPPI could be a buyout candidate. He does not offer any evidence of talks, only speculation, this time concerning Allergan and Renazorb. These references to a buyout of SPPI constitute the full extent of the basis for these rumors. In each case, they are mere speculation and no one appears to have spoken to anyone at any company that suggests than any kind of buyout negotiations are in the works with any company. 
Let’s face it. Any CEO that knows the checkered past of Zevalin would most likely be loathe to take on a problem child such Zevalin. I like Spectrum. I like the approach that Dr. Shrotriya, Spectrums CEO, has taken with the company to develop safe drugs with a history of effectiveness. It’s a slow methodical approach to overcome marketing, financial, and image problems with drugs that have tremendous potential. Unfortunately bloggers want to rush things. 
I believe that Zevalin has tremendous potential. It has the potential to replace Rituxan and strip away the $1Billion market it represents. But, don’t be fooled, Genentech is not going to give up this Billion dollar market easily, and there is nothing simple in the bio-political world which includes big pharma and the FDA.  If Dr. Shrotriya is successful at guiding Zevelan to its rightful place, it will take several years and several more trials to accomplish it. Consequently, the $30 price tag on SPPI That Justin Hall has speculated about is several years away. 

Strangely, I have confidence in Spectrum's tortoise-like strategy. And, I do believe that Mr. Hall will eventually be correct in his predictions about the $30 price for SPPI. After all, it's the same path Rituxan took.  However, today is a different story, and I believe that it would have to be a hostile takover from any firm to make Dr. Shrotriya give up his diamond in the rough.
 
Position: Long SPPI