In a major disappointment for Spectrum Pharmaceuticals (SPPI), the US Food and Drug Administration (FDA) last week refused to approve the company’s supplemental New Drug Application (sNDA) for Fusilev (levoleucovorin) in its current form. The company was seeking approval for the treatment of patients with advanced metastatic colorectal cancer. Following the news, the shares plummeted 18% on Friday.

Spectrum received a Complete Response Letter (CRL) from the FDA, in which the agency stated that the Fusilev data did not confirm the drug’s non-inferiority to leucovorin. Spectrum Pharmaceuticals plans to request a meeting with the agency to discuss the future course of action. The drug is currently approved by the FDA as a treatment option after high dose of methotrexate therapy in patients with osteosarcoma, a type of bone cancer.

Earlier in September, the company raised $50 million in a registered direct offering of shares and warrants priced at $7.55. We believe the funds were raised to support the increasing marketing activities associated with further penetration of Zevalin following the expanded approval of the drug.

As a reminder, Zevalin had received FDA approval for an expanded label for the treatment of patients with previously untreated follicular non-Hodgkin’s lymphoma (NHL), who achieve a partial or complete response to first-line chemotherapy. This new and expanded application supplements the 2002 FDA approval of the drug as treatment for patients with relapsed or refractory, low-grade or follicular B-cell non-Hodgkin’s lymphoma.

While the additional indication for Zevalin is a positive development for the company, we remain concerned about the future of Fusilev. The drug’s approval would have provided a strong impetus to its sales as colorectal cancer is the fourth most common cancer in men and the third most common cancer in women worldwide. With more than 630,000 deaths worldwide per year, it is the second leading cause of cancer-related death in the Western world.

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