Spectrum's (Nasdaq: SPPI) Zevalin Has Traveled a Long Road

Friday, 26 June 2009 03:00

In six days, Spectrum Pharmaceuticals (Nasdaq: SPPI) will receive word from the FDA whether the company's non-Hodgkin's lymphoma (NHL) drug will finally be approved for use as a first-line consolidation therapy.

Some, less optimistic about Zevalin's prospects, have implied that because four companies have tried to market Zevalin with little success that SPPI is facing an uphill battle. I respectfully disagree.

I first learned about Zevalin in July of 2007 after reading this article from the New York Times. Zevalin is a very safe and effective treatment when used in the first-line consolidation setting to treat NHL. The drug works!

LACKING INCENTIVE

Biogen Idec (Nasdaq: BIIB) did not properly market Zevalin. Why? BIIB also markets Rituxan, which is the current standard of care for NHL in addition to chemotherapy. When BIIB sold Zevalin's rights to Cell Therapeutics (Nasdaq: CTIC) in December of 2007, Rituxan sales totaled $2.515 billion. What incentive did BIIB have to market Zevalin?

Today, BIIB may be concerned with the number of trials that Bayer Schering and other sponsors are conducting on Zevalin. Some have suggested that Zevalin could be shown to be both safer and more effective than either chemotherapy or Rituxan. Before jumping to any conclusions, I will wait to see if the data can support that claim.

ZEVALIN IS SAFE

As you should have picked from the New York Times article, hematologists / oncologists, were not treating patients with Zevalin. Why? Some have argued the treatment is inconvenient while others have argued safety concerns.

The data clearly show that Zevalin is safe for NHL patients.

As I indicated in my June 12 article here and here, if safety concerns were an issue, then the FDA's Oncology Drug Advisory Committee (ODAC) would have been asked to review the Zevalin application. By not involving the ODAC panel, it is evident that regulators do NOT have any concerns with Zevalin's safety profile.

Worth noting, Zevalin was approved in Europe for NHL, first-line consolidation therapy on April 28, 2008.

A SOUND PLAN

Unlike some, I am optimistic about Zevalin's prospects. SPPI has a sound plan to get over the hurdles that have kept Zevalin from patients. An SPPI spokesperson indicated to me that the company was receiving a great deal of interest from treating physicians across the country. Following two recent offerings in late May and June 18 for a total of $30 million, SPPI should be able to launch Zevalin without too much delay. For these reasons, I share the belief that Zevalin is in good hands with SPPI.

DELAY UNLIKELY

Because other companies have experienced some setbacks in the approval process, some have questioned whether Zevalin's review will be delayed by regulators. Historically, the third quarter is the best time of the year for drug reviews with a 68% first-cycle approval rate. However, Zevalin is already approved for refractory NHL. Zevalin was originally approved by the FDA on September 11, 2001. No kidding.

In 2009, SPPI filed a supplemental biologics application (sBLA) and is now seeking approval for Zevalin for use as a first-line consolidation therapy under the same indication which it was originally approved, NHL. Supplemental applications (sNDAs & sBLAs) have a much higher approval rate than new applications (NDAs and BLAs), exceeding 85%. Data source: FDA.

FARRAH'S IMPACT ON ZEVALIN

In a Newsweek article on the late Farrah Fawcett yesterday, her treating physician, a hematologist, is also hopeful that regulators will approve Zevalin on July 2. Hey FDA, are you listening?

PRICE TARGETS

I am reaffirming the price targets I highlighted in my articles on both June 12 and June 19 here and here.

(1) Retest $7.88 prior to July 2 - SPPI should retest at or near the July 2007 high of $7.88.

(2) $31 within 12-18 months - SPPI could hit as high as $31 with both approvals on July 2 and October 8, 2009. At $31, SPPI would retain a market cap of $1.12 billion.

CONCLUSION

Zevalin works! The data clearly show that Zevalin is both safe and a very effective treatment for patients with NHL in both a first-line consolidation and the existing refractory setting.

On July 2, I expect Zevalin will finally be approved by the FDA for use as a first-line consolidation therapy.

Contributed by Justin M. Hall.

Disclosure: Long SPPI.

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