Irvine’s Spectrum Pharmaceuticals Inc. is looking to make a name for itself.
The company has made moves to jump from generic versions of common drugs to brand-name treatments for cancer.
For now, Spectrum is leaning on its generic sales to fund a push into new drugs. The company sells its own version of GlaxoSmithKline PLC’s Imitrex for migraines and Bayer AG’s antibiotic Cipro.
“We will keep on benefiting from generic business, but going forward, we will be focusing on branded or proprietary drugs,” Chief Executive Rajesh Shrotriya said.
Spectrum counts yearly sales of about $600,000 and a recent market value of about $109 million. The company isn’t profitable.
Its lead product in the branded drug push is Satraplatin, a prostate cancer treatment that’s in late-phase trials.
Shares of Spectrum were up last week after a preclinical study of a compound that attacks breast and prostate cancers, SPI-1620, showed positive results in animals.
Last month, Spectrum said it is paying $6.5 million in stock plus milestone payments for cancer drugs from Targent Inc. of Princeton, N.J.
The deal includes levofolinic acid, which is used to treat colorectal cancer. The drug is working its way through the Food and Drug Administration’s regulatory process.
Regulators “had already reviewed it, and cleared several sections” of levofolinic’s new drug application, Shrotriya said.
Regulators could sign off on levofolinic after questions about the drug’s chemistry are answered, according to Shrotriya.
“We acquired the rights to the drug with the idea that this drug could be very quickly approved,” he said.
Spectrum plans to market levofolinic in the U.S., Canada and Mexico.
Wyeth, Sanofi-Aventis Group and others market levofolinic in other parts of the world, including Europe and Japan.
The drug does about $200 million in yearly sales abroad, according to Spectrum.
“We thought we could at least mimic the sales in Europe,” Shrotriya said.
Spectrum took another step in its transition in February.
The company struck a pact with Par Pharmaceutical Cos. of New York to sell and ship Spectrum’s generic drugs. The deal calls for $10 million in milestone payments, as well as profit sharing.
Par, a generic drug maker with yearly sales of $435 million, also plans to take a stake in Spectrum.
The pact allows Spectrum to keep getting sales from generics while freeing the company up to focus on brand drugs, Shrotriya said.
Spectrum has 11 drugs in the works. The company could bring them to market itself or work with bigger drug makers, according to Shrotriya.
Being bought also is an option, he said.
“If a big company came (to us) at the right price, we’ll take it to the board and shareholders,” Shrotriya said.
Spectrum emerged from a shareholder fight last year with Xmark Funds of Connecticut, which once owned about 11% of the drug maker.
The investor charged in an open letter last spring that Spectrum’s management team wasn’t doing a good job.
The issue “has been resolved, I would say, amicably,” Shrotriya said.
Xmark no longer is a big Spectrum investor, he said.
Still, Shrotriya said that he and other Spectrum managers are “acutely aware” of the impatience of investors.
“We hope and pray the investors in our company know the biotech market and know the product cycle,” he said. “They should know that we can’t have press releases every day. Drugs take time to develop, even a drug in phase three trials means a drug has been in development 10, 12 years.”
Wall Street is lukewarm about Spectrum. The company’s shares traded as high as $100 in 2001 but have languished around $5 since 2004.
