Auriga Starts Spectrum Pharmaceuticals (SPPI) at Buy; Fast-Growing Cancer Therapy Company

Auriga initiates coverage on Spectrum Pharmaceuticals (NASDAQ: SPPI) with a Buy. PT $11.50.

Auriga analyst says, "The company has two-fast growing cancer drugs on market, Fusilev and Zevalin. Fusilev has been the revenue driver due to the shortage of generic leucovorin. Fusilev revenue grew from $12 million in 2009 to $113 million (estimated) in 2011. We believe the supply issues at generic manufacturers, in particular TEVA (Nasdaq: TEVA), are likely to continue for some time especially the loss of revenue is not meaningful to TEVA. $200 per dose price is relatively inexpensive for a cancer drug and we believe even after TEVA resumes full manufacturing capacity, Fusilev is likely to retain significant market share it has gained so far." (For modeling purpose, we conservatively assumed TEVA resumes full capacity Q1/2012 and Fusilev would lose 40% market share as a result. The other drug, Zevalin, has strong clinical data, pending FDA approval for bioscan removal, and we believe it has more room for higher pricing, which could add to future revenue growth)

"In addition, there are two compounds in phase III developments and several in phase I/II development. The company has a strong balance sheet with $104 million in cash and no debt."

For more ratings news on Spectrum Pharmaceuticals click here and for the rating history of Spectrum Pharmaceuticals click here.

Shares of Spectrum Pharmaceuticals closed at $7.59 yesterday.

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