Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2017
SPECTRUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware
001-35006
93-0979187
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

 
11500 S. Eastern Ave., Ste. 240, Henderson, NV
89052
 
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (702) 835-6300
Not Applicable
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨






Item 2.02    Results of Operations and Financial Condition.
On August 3, 2017, Spectrum Pharmaceuticals, Inc. issued a press release, which, among other matters, sets forth our results of operations for the quarter ended June 30, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The foregoing information, including Exhibit 99.1, is being furnished under Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits.

(d)     Exhibits.

Exhibit No.
 
Description
99.1
 
Press Release dated August 3, 2017







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
SPECTRUM PHARMACEUTICALS, INC.
 
 
 
 
Date:
August 3, 2017
By:
/s/ Kurt A. Gustafson
 
 
 
Kurt A. Gustafson
Executive Vice President and Chief Financial Officer






EXHIBIT INDEX
Exhibit No.
 
Description
99.1
 
Press Release dated August 3, 2017



Exhibit

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COMPANY CONTACTS
Shiv Kapoor
Vice President, Strategic Planning & Investor Relations
702-835-6300
InvestorRelations@sppirx.com

Spectrum Pharmaceuticals Reports Second Quarter 2017 Financial Results and Pipeline Update
ROLONTIS™ (eflapegrastim):
BLA filing expected next year.
Enrollment completed in registrational ADVANCE Study under a Special Protocol Assessment (SPA) with the FDA. Topline results expected in Q1 2018.
A second smaller study RECOVER is enrolling patients in EU and U.S. Enrollment completion expected in Q1 2018.
Poziotinib:
Interim results are expected before year end from an ongoing Phase 2 study in non-small cell lung cancer patients with exon 20 insertion mutations in EGFR or HER2. This study is being conducted at The University of Texas MD Anderson Cancer Center.
Following discussions with the FDA, the Company is initiating an additional multicenter clinical trial to expedite the development of poziotinib in this patient population.
Financials:
Q2 revenues were $34.3 million, including $31.2 million in product sales.
FOLOTYN® (pralatrexate injection) was recently approved in Japan and the Company expects multiple related milestone payments totaling approximately $5 million from Mundipharma in the second half of the year.

HENDERSON, Nevada - August 3, 2017 - Spectrum Pharmaceuticals, Inc. (NasdaqGS: SPPI), a biotechnology company with fully integrated commercial and drug development operations with a primary focus in Hematology and Oncology announced today financial results for the three-month period ended June 30, 2017.

"During the second quarter we made significant progress in our highest priority clinical programs and achieved solid performance across our commercial business,” said Rajesh C. Shrotriya, MD, Chairman and Chief Executive Officer of Spectrum Pharmaceuticals. “We completed enrollment in ROLONTIS’s ADVANCE registrational Phase 3 study ahead of schedule and enrollment in a second international study RECOVER is well under way in Europe and U.S. We are also very excited about the prospects of poziotinib in cancer patients with exon 20 insertion mutations and expect interim results from the Phase 2 lung cancer study before the end of the year. We are driven to bring our novel drugs to patients with unmet medical needs and look forward to multiple near-term development catalysts that could shape the Company’s future.”

Pipeline Update:
ROLONTIS (eflapegrastim), a novel long-acting GCSF: A registrational Phase 3 study ADVANCE was initiated under an SPA with the FDA last year to evaluate ROLONTIS in the management of chemotherapy-induced neutropenia. The Company has completed enrollment in the ADVANCE study with 405 patients randomized and expects to report topline data in Q1 2018. To strengthen the regulatory package in the Europe and U.S., the Company is currently enrolling the 218-patient international RECOVER study. The Company continues to expect to file the BLA next year.

Poziotinib, a potential best-in-class, novel, pan-HER inhibitor: An investigator sponsored trial is currently enrolling at the University of Texas MD Anderson Cancer Center in non-small cell lung cancer patients with exon 20 insertion mutations in EGFR or HER2. The study is expected to yield interim results

11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI


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before year end. Following discussions with the FDA, the Company is initiating an additional multicenter study in a similar patient population. Spectrum is also conducting a Phase 2 breast cancer study in the third-line setting in the U.S., based on promising Phase 1 study efficacy data in breast cancer patients who had failed multiple HER2-directed therapies. The Company is in discussions with the FDA about a combination trial of poziotinib and standard of care therapy in HER2+ breast cancer patients in the second-line setting.

QAPZOLA™, a potent tumor-activated drug for bladder cancer is being investigated for low and intermediate risk non-muscle invasive bladder cancer: The Company has an SPA from the FDA for a new Phase 3 study incorporating learnings from the previous studies, as well as recommendations from the FDA. Compared to the previous program, this new Phase 3 study will include fewer evaluable patients (n=425 versus 1,557 patients), use a higher dosage of QAPZOLA (8 mg versus 4 mg), and will evaluate time-to-recurrence as the primary endpoint. Approximately 50 sites have been selected thus far for enrolling patients in the Phase 3 study and patients are currently being screened.

Three-Month Period Ended June 30, 2017 (All numbers are approximate)
GAAP Results
Total product sales were $31.2 million in the second quarter of 2017. Product sales in the second quarter included: FUSILEV® (levoleucovorin) net sales of $2.1 million, FOLOTYN® (pralatrexate injection) net sales of $11.2 million, ZEVALIN® (ibritumomab tiuxetan) net sales of $2.3 million, MARQIBO® (vinCRIStine sulfate LIPOSOME injection) net sales of $2.2 million, BELEODAQ® (belinostat) for injection net sales of $3.4 million, and EVOMELA® (melphalan) for injection net sales of $10.1 million.
Spectrum recorded a net loss of $20.5 million, or $0.26 per basic and diluted share in the three-month period ended June 30, 2017, compared to a net loss of $24.3 million, or $0.35 per basic and diluted share in the comparable period in 2016. Total research and development expenses were $15.1 million in the quarter, as compared to $14.3 million in the same period in 2016. Selling, general and administrative expenses were $17.1 million in the quarter, compared to $27.6 million in the same period in 2016.
Our June 30, 2017 cash and equivalents balance is $138.6 million.  In July 2017, we sold and issued 3.2 million shares of our common stock for net proceeds of $23.7 million under our ATM.  These shares and proceeds are not included in our June 30, 2017 financial statements. We have now fully utilized the ATM facility.
Non-GAAP Results
Spectrum recorded non-GAAP net loss of $8.6 million, or $0.11 per basic and diluted share in the three-month period ended June 30, 2017, compared to non-GAAP net loss of $3.7 million, or $0.05 per basic share and diluted share in the comparable period in 2016. Non-GAAP research and development expenses were $14.6 million, as compared to $12.9 million in the same period of 2016. Non-GAAP selling, general and administrative expenses were $14.5 million, as compared to $16.1 million in the same period in 2016.
Conference Call
Thursday, August 3, 2017 @ 4:30 p.m. Eastern/1:30 p.m. Pacific
Domestic:     (877) 837-3910, Conference ID# 44585743
International:    (973) 796-5077, Conference ID# 44585743

This conference call will also be webcast. Listeners may access the webcast, which will be available on the investor relations page of Spectrum Pharmaceuticals' website: www.sppirx.com on August 3, 2017 at 4:30 p.m. Eastern/1:30 p.m. Pacific.

11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI


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About Spectrum Pharmaceuticals, Inc.
Spectrum Pharmaceuticals is a leading biotechnology company focused on acquiring, developing, and commercializing drug products, with a primary focus in Hematology and Oncology. Spectrum currently markets six hematology/oncology drugs, and has an advanced stage pipeline that has the potential to transform the Company. Spectrum's strong track record for in-licensing and acquiring differentiated drugs, and expertise in clinical development have generated a robust, diversified, and growing pipeline of product candidates in advanced-stage Phase 2 and Phase 3 studies. More information on Spectrum is available at www.sppirx.com.
Forward-looking statement - This press release may contain forward-looking statements regarding future events and the future performance of Spectrum Pharmaceuticals that involve risks and uncertainties that could cause actual results to differ materially. These statements are based on management's current beliefs and expectations. These statements include, but are not limited to, statements that relate to Spectrum’s business and its future, including certain company milestones, Spectrum's ability to identify, acquire, develop and commercialize a broad and diverse pipeline of late-stage clinical and commercial products, the timing and results of FDA decisions, and any statements that relate to the intent, belief, plans or expectations of Spectrum or its management, or that are not a statement of historical fact. Risks that could cause actual results to differ include the possibility that Spectrum’s existing and new drug candidates may not prove safe or effective, the possibility that our existing and new applications to the FDA and other regulatory agencies may not receive approval in a timely manner or at all, the possibility that our existing and new drug candidates, if approved, may not be more effective, safer or more cost efficient than competing drugs, the possibility that our efforts to acquire or in-license and develop additional drug candidates may fail, our dependence on third parties for clinical trials, manufacturing, distribution and quality control and other risks that are described in further detail in the Company's reports filed with the Securities and Exchange Commission. The Company does not plan to update any such forward-looking statements and expressly disclaims any duty to update the information contained in this press release except as required by law.

SPECTRUM PHARMACEUTICALS, INC. ®, FUSILEV®, FOLOTYN®, ZEVALIN®, MARQIBO®, BELEODAQ®, and EVOMELA® are registered trademarks of Spectrum Pharmaceuticals, Inc. and its affiliates. REDEFINING CANCER CARE™, ROLONTIS™, QAPZOLA™ and the Spectrum Pharmaceuticals' logos are trademarks owned by Spectrum Pharmaceuticals, Inc. Any other trademarks are the property of their respective owners.


© 2017 Spectrum Pharmaceuticals, Inc. All Rights Reserved




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SPECTRUM PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited) 

 
Three Months Ended
June 30,

Six Months Ended
June 30,
 
2017

2016

2017

2016
Revenues:

 

 


 


Product sales, net
$
31,156

 
$
30,887

 
$
57,001

 
$
66,129

License fees and service revenue
3,145

 
3,062

 
6,401

 
11,686

Total revenues
34,301


33,949


63,402


77,815

Operating costs and expenses:

 

 

 

Cost of product sales (excludes amortization and impairment charges of intangible assets)
11,303

 
5,609

 
19,439

 
11,212

Cost of service revenue
2,118

 
2,214

 
4,221

 
3,495

Selling, general and administrative
17,107


27,620


35,715


49,583

Research and development
15,097


14,281


29,792


29,744

Amortization and impairment charges of intangible assets
6,901

 
6,306

 
13,790

 
12,145

Total operating costs and expenses
52,526

 
56,030

 
102,957

 
106,179

Loss from operations
(18,225
)
 
(22,081
)
 
(39,555
)
 
(28,364
)
Other (expense) income:

 

 

 

Interest expense, net
(2,131
)
 
(2,375
)
 
(4,182
)
 
(4,714
)
Change in fair value of contingent consideration related to acquisitions
(97
)
 
(285
)
 
(294
)
 
(1,327
)
Other income, net
240

 
340

 
650

 
618

Total other expenses
(1,988
)
 
(2,320
)
 
(3,826
)
 
(5,423
)
Loss before income taxes
(20,213
)
 
(24,401
)
 
(43,381
)
 
(33,787
)
(Provision) benefit for income taxes
(255
)
 
106

 
(54
)
 
171

Net loss
$
(20,468
)

$
(24,295
)

$
(43,435
)

$
(33,616
)
Net loss per share:


 


 


 


Basic and diluted
$
(0.26
)
 
$
(0.35
)
 
$
(0.55
)
 
$
(0.50
)
Weighted average shares outstanding:


 


 


 


Basic and diluted
78,576,260

 
68,575,021

 
78,366,610

 
67,146,188




11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI


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SPECTRUM PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
(In thousands, expect per share and par value amounts)
(Unaudited)

June 30,
2017
 
December 31,
2016
ASSETS

 

Current assets:

 

Cash and cash equivalents
$
138,313

 
$
158,222

Marketable securities
248

 
247

Accounts receivable, net of allowance for doubtful accounts of $88, respectively
41,977

 
39,782

Other receivables
3,950

 
5,754

Inventories
10,157

 
8,715

Prepaid expenses and other assets
4,369

 
3,930

Total current assets
199,014

 
216,650

Property and equipment, net of accumulated depreciation
517

 
449

Intangible assets, net of accumulated amortization and impairment charges
150,815

 
164,234

Goodwill
18,057

 
17,886

Other assets
26,684

 
29,549

Total assets
$
395,087

 
$
428,768

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

Current liabilities:

 

Accounts payable and other accrued liabilities
$
55,617

 
$
52,483

Accrued payroll and benefits
6,244

 
8,981

Deferred revenue
2,551

 
3,188

Drug development liability
153

 
861

Acquisition-related contingent obligations

 

Total current liabilities
64,565

 
65,513

Drug development liability, less current portion
12,410

 
12,269

Deferred revenue, less current portion
326

 
323

Acquisition-related contingent obligations
1,609

 
1,315

Deferred tax liabilities
6,802

 
6,675

Other long-term liabilities
10,451

 
9,604

Convertible senior notes
100,157

 
97,043

Total liabilities
196,320

 
192,742

Commitments and contingencies

 

Stockholders’ equity:

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding

 

Series B junior participating preferred stock, $0.001 par value; 1,500,000 shares authorized; no shares issued and outstanding

 

Series E convertible voting preferred stock, $0.001 par value and $10,000 stated value; 2,000 shares authorized; no shares issued and outstanding.

 

Common stock, $0.001 par value; 175,000,000 shares authorized; 81,257,192 and 80,466,735 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
80

 
80

Additional paid-in capital
646,542

 
640,166

Accumulated other comprehensive loss
(1,779
)
 
(1,579
)
Accumulated deficit
(446,076
)
 
(402,641
)
Total stockholders’ equity
198,767

 
236,026

Total liabilities and stockholders’ equity
$
395,087

 
$
428,768


11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI


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Non-GAAP Financial Measures

In this press release, Spectrum reports certain historical “non-GAAP financial measures,” as defined in Regulation G of the Securities Exchange Act of 1934. Non-GAAP financial measures differ from financial statements reported in conformity to U.S. generally accepted accounting principles (“GAAP”). In accordance with Regulation G, we reconciled each non-GAAP financial measure to its most directly comparable GAAP measure. Management uses non-GAAP financial measures to assess our company’s performance and allocate company resources, and believes that providing these non-GAAP financial measures allows investors to view the Company’s financial results in the way that management views the financial results. We believe non-GAAP disclosures also provide investors with information used generally in our industry for evaluating operating results. Investors should not place undue reliance on non-GAAP financial measures, nor should investors consider non-GAAP financial measures as more meaningful than, or as substitutes or replacements for, financial measures prepared in accordance with GAAP.

The non-GAAP financial measures presented exclude the items summarized in the below table. Management believes that adjustments for these items assist investors in making comparisons of period-to-period operating results and that these items are not indicative of the Company’s on-going core operating performance.

The non-GAAP financial measures presented herein have certain limitations in that they do not reflect all of the costs associated with the operations of the Company’s business as reported under GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the Company may be different from the non-GAAP financial measures used by other companies.



























11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI


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SPECTRUM PHARMACEUTICALS, INC.
Reconciliation of Non-GAAP Adjustments for Condensed Consolidated Statements of Operations
(In thousands, expect per share amounts)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2017
 
2016
 
2017
 
2016
(1)
GAAP product sales, net & license fees and service revenue
$
34,301

 
$
33,949

 
$
63,402

 
$
77,815

 
Non GAAP adjustments to product sales, net & license fees and service revenue:

 

 

 
(6,000
)
 
Non-GAAP product sales, net & license fees and service revenue
$
34,301

 
$
33,949

 
$
63,402

 
$
71,815

(2)
GAAP selling, general and administrative expenses
$
17,107

 
$
27,620

 
$
35,715

 
$
49,583

 
Non GAAP adjustments to SG&A:
 
 
 
 
 
 
 
 
Stock-based compensation
(2,574
)
 
(2,790
)
 
(5,316
)
 
(5,559
)
 
Litigation expenses

 
(8,518
)
 

 
(10,813
)
 
Depreciation expense
(76
)
 
(164
)
 
(166
)
 
(329
)
 
Non-GAAP selling, general and administrative
$
14,457

 
$
16,148

 
$
30,233

 
$
32,882

(3)
GAAP research and development
$
15,097

 
$
14,281

 
$
29,792

 
$
29,744

 
Non-GAAP adjustments to R&D:
 
 
 
 
 
 
 
 
Stock-based compensation
(529
)
 
(637
)
 
(928
)
 
(1,045
)
 
Depreciation expense
(2
)
 
(3
)
 
(5
)
 
(6
)
 
Other R&D milestone payments

 
(770
)
 

 
(2,826
)
 
Non-GAAP research and development
$
14,566

 
$
12,871

 
$
28,859

 
$
25,867

(4)
GAAP net loss
$
(20,468
)
 
$
(24,295
)
 
$
(43,435
)
 
$
(33,616
)
 
Non-GAAP adjustments to net loss:
 
 
 
 
 
 
 
 
Adjustments to product sales, net & license fees and service revenue, SG&A, and R&D as noted above
3,181

 
12,882

0

6,415

0

14,578

 
Amortization and impairment charges of intangible assets
6,901

 
6,306

 
13,790

 
12,145

 
Adjustments to other expense, net
1,525

 
1,495

 
3,098

 
3,694

 
Adjustments to provision (benefit) for income taxes
255

 
(106
)
 
54

 
(171
)
 
Non-GAAP net loss
$
(8,606
)
 
$
(3,718
)
 
$
(20,078
)
 
$
(3,370
)
(5)

GAAP loss per share (Basic and Diluted)
$
(0.26
)
 
$
(0.35
)
 
$
(0.55
)
 
$
(0.50
)
 
Non-GAAP loss per share (Basic and Diluted)


 


 


 


 
Basic and diluted
$
(0.11
)
 
$
(0.05
)
 
$
(0.26
)
 
$
(0.05
)
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
Basic and diluted
78,576,260

 
68,575,021

 
78,366,610

 
67,146,188


(1) Non-GAAP product sales, net & license fees and service revenue: These amounts reflect adjustments to reverse revenue recognition for upfront revenue from out-licenses and revenue from milestone achievement(s) that do not consistently recur. The resulting non-GAAP revenue solely consists of our (i) product sales, (ii) percentage-based royalties from our licensees’ sales, and (iii) on-going service revenue. We believe this measure of non-GAAP revenue is more indicative of the period-over-period success of our core ongoing product sales and service revenue.

(2) Non-GAAP selling, general and administrative: These amounts reflect adjustments to reverse allocated operating expenses for certain non-cash items (including stock-based compensation and depreciation), as well as the reversal of irregular operating expense items such as non-recurring legal fees and settlements. We believe the resulting non-GAAP SG&A value is more indicative of the period-over-period success of our administrative expense control, and more reflective of our normalized SG&A expense trends.

(3) Non-GAAP research and development: These amounts reflect adjustments to reverse allocated operating expenses for certain non-cash items (including stock-based compensation and depreciation), as well as non-recurring R&D milestone achievements that we record to expense for our in-licenses. We believe the resulting non-GAAP R&D value is more reflective of our true R&D expense

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trends.

(4) Non-GAAP net loss: These amounts reflect all non-GAAP adjustments described in (1) through (3) above, plus other non-cash and/or non-recurring items, including: (i) adjustments to reverse operating expenses for non-cash amortization and impairment of intangible assets (the reversal of these non-cash expenses allows for a clearer representation of the period-over-period success of our overall financial results and future working capital requirements); (ii) adjustments to reverse the impact of income taxes; and (iii) adjustments to reverse the impact of mark-to-market contingent consideration (although our contingent consideration results from prior acquisitions and is a part of our business strategy, these adjustments through earnings typically result from variables other than our current commercial activity or other operating performance measures that are a focus of our management), (iv) reversal of foreign exchange gains and losses (noncash), and (v) debt discount accretion expense (non-cash) for our convertible notes.

(5) Non-GAAP loss per share: These amounts reflect all non-GAAP adjustments in (1) through (4) above to present our overall non-GAAP financial results for each period on a per-share basis.


11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI