Spectrum Pharmaceuticals Inc. (Nasdaq: SPPI) Chief Executive Joe Turgeon plans to continue and perhaps expand the company’s research operations in Orange County despite job cuts elsewhere.
OC will become “the biggest and most important part of the company,” Turgeon told the Business Journal in a phone interview.
In January, the drugmaker announced it will sell all seven of its commercial drugs to Acrotech Biopharma LLC, a New Jersey-based subsidiary of generic drugmaker Aurobindo Pharma USA Inc., for $300 million. The deal includes a $160 million upfront payment and an additional $140 million for related regulatory and sales-based milestones.
In conjunction with the divesture, Spectrum reduced its workforce by approximately 40%, with most moving over to Acrotech.
Turgeon said the reduction is in the company’s sales and marketing departments and won’t affect its OC employees.
Spectrum leases a 56,000-square-foot administrative office and research and development facility in Irvine. Its headquarters in Henderson, Nev., includes 12,000 square feet of office space for the company’s executive team, according to Securities and Exchange filings.
It reported 129 employees at the Irvine office as of last October. The company currently employs about 145 companywide, down from about 240 prior to the deal.
Bigger Market
Spectrum sells drugs that have small patient populations, with about 1,200 to 3,000 patients each, Turgeon said.
The company is ditching its existing revenue as these seven drugs generated $76.4 million in the first nine months of 2018, all of the company’s net product sales. Their sales in the first nine months declined 13% from the same period in 2017.
Spectrum can now move from a “niche special pharmaceutical company to a biopharmaceutical company” that develops novel cancer drugs for a larger market, Turgeon said.
Going forward, the company plans two multibillion-dollar opportunities—Rolontis and poziotinib, or Pozi. The former is designed to treat chemotherapy-induced neutropenia, or an abnormally low count of white blood cells, and the latter for nonsmall-cell lung cancer.
It filed for Food and Drug Administration approval for Rolontis in December and expects a nod later this year.
Rolontis is a $4 billion market in the U.S., estimated David Buck, a research analyst at B. Riley FBR Inc.
“There should be a nice opportunity for Spectrum to gain share with Rolontis as a novel biologic,” Buck wrote in a report to investors.
Pozi is in an ongoing Phase 2 study.
The company’s shares reached a five-year high around $24.50 last August before dropping 70% in December to $7.24. Since the sale announcement made on Jan. 17, shares have climbed 12% to $11.62 and a $1.2 billion market cap.
Laser Focused
Proceeds from the sale “will significantly strengthen the financial position of the company, providing the capital to develop and commercialize our two late-stage pipeline assets,” according to Turgeon.
It would also allow the company to grow through acquisition.
“It’s a good example [that with] the right drugs you can transform your company,” he said. “With the two late-stage drugs … we can now buy other assets [including] companies.”
The drug development means OC growth, he said.
Spectrum plans to grow research and development “in the not-too-distant future, 2020, [after we] launched Rolontis,” Turgeon said.
Turgeon has more than 30 years of experience in the biotech industry, including 22 years at Thousand Oaks-based Amgen Inc.
He joined Spectrum as senior vice president and chief commercial officer in 2012, and was later promoted to president and chief operating officer in 2014. He was named chief executive in December 2017 after its board of directors terminated without cause Rajesh Shrotriya, who was chairman and chief executive for 15 years.
