H.C. Wainwright Reiterates Buy On Spectrum On The Heels Of Phase 3 Plans For SPI-2012

In a research report issued today, H.C. Wainwright analyst Reni Benjamin reiterated a Buy rating on Spectrum Pharmaceuticals (NASDAQ:SPPI) with a $15 price target, following Tuesday news that Spectrum decided to advance SPI-2012, its novel long-acting granulocyte colony-stimulating factor (GCSF) into Phase 3 clinical trials after achieving positive results from a randomized, controlled, Phase 2 trial.

Benjamin noted, “We view this decision as great news for the company and investors alike as management targets to chip away at Amgen’s (NASDAQ:AMGN) lucrative $3.5 billion (US Sales in 2013) franchise. With a solid portfolio of diverse revenue generating assets, the potential for a new FDA approval every year from one of the late stage assets in the pipeline, and a cash position of approximately $110 MM (pro forma), we believe Spectrum represents an undervalued player with significant upside for the long-term investor.” 

The analyst added, “With successful Phase 2 results achieved, Spectrum hopes to begin Phase 3 registrational trials in 2015 after meeting with the FDA to discuss study designs before year-end. We speculate the registration strategy will likely involve two non-inferiority Phase 3 trials (approximately 300-patients each). If successfully initiated, we believe the studies could take 18 months to complete enrollment and report topline results. Given what we expect should be a standard review, SPI-2012 could be on the market in 2H17. The worldwide commercial opportunity for neutropenia is over $6 billion and patents on Neulasta in the US and EU are due to expire in 2015. Although multiple “biosimiliars” are poised to enter the market, a lack of a clear registration pathway in the US and lackluster sales of generic filgrastim in the EU may provide a window of opportunity which Spectrum is well-positioned to exploit in the near-future.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Reni Benjamin has a total average return of -0.3% and a 35.7% success rate. Benjamin has a 5.8% average return when recommending SPPI, and is ranked #2616 out of 3279 analysts.

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