Spectrum licenses Ligand multiple myeloma drug

NEW YORK -- Spectrum Pharmaceuticals Inc. said Thursday it licensed a potential treatment for multiple myeloma from Ligand Pharmaceuticals Inc.

Ligand's drug candidate is a form of melphalan, which is already used to treat multiple myeloma. The new form of the drug is designed to be given before the patient receives a round of autologous stem cell treatment, and the companies say it could allow for longer, safer, and stronger treatment because it could have fewer side effects.

The experimental formulation of melphalan eliminates ingredients that are reported to cause kidney and heart side effects. Those side effects force physicians to use smaller doses of the drug.

Multiple myeloma is a cancer of the blood that mainly affects older adults. Spectrum, based in Henderson, Nev., said about 20,000 cases are diagnosed each year.

The Food and Drug Administration has designated the treatment an orphan drug, which means similar products will be barred from the market for up to 7 years if it is approved. Spectrum is now responsible for clinical testing of the drug and expects to file for marketing approval in the first half of 2014.

Ligand said it will get an upfront license payment of $3 million and could receive more than $50 million in milestone payments. The San Diego company will also get royalties on sales of the drug if it is approved.

Ligand raised its financial guidance, saying it now expects to report net income of 47 to 51 cents per share in 2013 on $43 million to $46 million in revenue. It had forecast income of 35 to 39 cents per share on $41 million to $44 million in revenue.

Analysts expect net income of 41 cents per share and $43.1 million in revenue, according to FactSet.

For the first quarter, the San Diego company said its net income will be between 10 and 13 cents per share in the first quarter, and revenue will be between $10 million and $11 million. Analysts are forecasting a profit of 2 cents per share with $8.5 million in revenue on average.

Shares of Ligand rose 55 cents, or 2.5 percent, to $22.41 in afternoon trading, and Spectrum shares picked up 7 cents to $7.86.

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Ahead of the Bell: Spectrum shares continue slide

Shares of Spectrum Pharmaceuticals Inc. plunged in premarket trading Wednesday after the pharmaceutical company said sales of its drug Fusilev could fall significantly this year.

The Henderson, Nev., company's stock started to slide Tuesday after it said it expects Fusilev revenue to total between $10 million and $15 million in the first quarter and about $80 million to $90 million for the year.

The estimate for the year would represent a drop of at least 56 percent from Fusilev's 2012 total of $204.3 million, and it is much less than analysts expected.

Fusilev is an injectable treatment for the side effects of a chemotherapy drug called methotrexate.

Roth Capital Partners analyst Joseph Pantginis said Spectrum's announcement shocked Wall Street, and he believes investor confidence in the company will be shaky until its new sales push show results. He had expected Fusilev revenue of $47.2 million in the first quarter and $210 million for 2013.

"We are certainly disappointed by this news and unfortunately we believe that this sends a poor signal to the Street, which has been hanging on everything Fusilev," Pantginis wrote in a Wednesday morning research note.

Pantginis said that while the Fusilev announcement will hurt Spectrum's stock, he still sees value when looking at the company's total revenue stream.

Company shares had climbed 4 percent to close at $12.43 on Tuesday. That put the stock up 11 percent so far in 2013 before shares began sliding after hours.

By Wednesday morning before markets opened, the stock was down about 40 percent, or $4.93, to $7.50. If that price carries over into regular market trading, it would be its lowest price since 2011.

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