Personal Finance

Here's Why Spectrum Pharmaceuticals, Inc. Is Getting Beaten Down Today

Man in a suit holding a downward-sloping arrow

What happened

Shares of Spectrum Pharmaceuticals (NASDAQ: SPPI) , a biopharmaceutical company focused on oncology treatments, are sliding after the Food and Drug Administration refused to designate the company's lung cancer candidate a Breakthrough Therapy. Disappointed investors have hammered the stock 38% lower as of 3:23 p.m. EST on Thursday.

So what

Spectrum Pharmaceuticals had already told investors that it submitted a Breakthrough Therapy designation request for poziotinib, so the company couldn't keep the FDA's unusual decision to decline that request a secret. The company's been exciting investors with the hope of accelerated approval for poziotinib as a treatment for relapsed non-small cell lung cancer (NSCLC) patients with a specific mutation, but if it can't earn a simple breakthrough designation, that probably won't happen.

Man in a suit holding a downward-sloping arrow

Image source: Getty Images.

The news is especially upsetting because management told investors it expected to submit an application before the end of the year, following a positive pre-BLA (BLA is "biologics license application") meeting with the FDA. Since these meetings are considered confidential, the regulators could have told Spectrum there's no chance they'd look at an application without survival data that beats standard care -- and we'd never know.

Now what

Although Spectrum intends to keep trying with its single-arm study, investors aren't buying it. Earning a breakthrough designation usually isn't hard: You simply need to show signs that your drug can outperform available options. Spectrum reported an impressive 40% response rate among 30 lung cancer patients who had relapsed multiple times, which should be enough for the designation. With this in mind, it almost looks like the FDA is punishing Spectrum for misinterpreting the discussion during their pre-BLA meeting.

We'll find out more about poziotinib when the Zenith20 study reads out in the second half of 2019. The single-arm study is evaluating 300 patients with NSCLC, and Spectrum intends to submit an application supported by just 87 patients in a group with EGFR exon 20 mutations. Whether the FDA will accept it for review is still anybody's guess.

10 stocks we like better than Spectrum Pharmaceuticals

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Spectrum Pharmaceuticals wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SPPI

Other Topics

Stocks

Latest Personal Finance Videos

    #TradeTalks: The Changing E-Commerce Landscape

    e-Commerce Consultant James Thomson joins Jill Malandrino on Nasdaq #TradeTalks to discuss the changing e-commerce landscape, what consumers should prepare for as we head into shopping season and why you shouldn’t do last minute shipping.

    2 days ago

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More