Spectrum Pharmaceuticals (NASDAQ:SPPI) reported adjusted 3Q 2012 earnings per share (EPS) of $0.42, beating the Consensus estimate of $0.27. Revenues for the period came in at $69.0 million also ahead of Street expectations for $65.9 million. Notably, the number of customer accounts ordering lead revenue driver Fusilev increased by 13% vs. last quarter, fueling a rise in market share penetration of the drug to 31% (from 29% in the prior quarter). These trends demonstrate that physicians continue to order the drug despite recent generic competition from Sagent Pharmaceuticals (NASDAQ:SGNT), and that Fusilev’s sales base may be more solid than the Bears suggest (see PropThink’s discussion of Fusilev’s J-Code).
Importantly, the company raised its full-year revenue guidance from “around” $300 million to “exceed” $300 million, and this compares favorably to the Consensus expectation of $265.1 million for 2012. In addition, SPPI previously guided for cost synergies from the Allos merger (savings from combining the two companies) in a range of $40-$50 million, but now expects $50 million or more in expense savings, suggesting that the bottom-line leverage will be better than analysts are currently modeling. Consensus revenue and EPS expectations for 2013 are $314.2 million and $1.14, respectively, and the strong 3Q performance and new guidance is likely to cause estimates to rise, hence the stock to rise accordingly.
SPPI will host its earnings call Wednesday at 1:30pm EST (Webcast: www.sppirx.com). We expect the company to review growth trends for its commercial products, Fusilev, Zevelev, and Folotyn (Folotyn was acquired in the Allos merger), in addition to highlighting key candidates in its drug pipeline, which have potential to positively surprise investors given low expectations. Rationale for increasing guidance could also be a focus on the call, as analysts will want to understand how the new expectations will impact future periods.
Also, see PropThink’s September interview with Spectrum CEO Rajesh Shrotriya.
