A shift to emphasize marketing over research and development and cheap Las Vegas area housing has led Spectrum Pharmaceuticals Inc. to move its headquarters from Irvine to Henderson, Nev.
Spectrum makes drugs to treat various types of cancers, including non-Hodgkin’s lymphoma and colorectal cancer, and expects more than $100 million in sales this year.
“Once we started growing out of R&D into marketing and sales, why would we need support offices in Irvine?” said Spectrum Chief Executive Rajesh Shrotriya, who recently bought a home in an upscale section of the Las Vegas suburb.
Spectrum plans to keep about 50 research and development staffers, about a third of its work force, in Irvine.
Long Time Coming
The headquarters move has been in the works for more than three years, Shrotriya said.
The company initially opened an office in the Las Vegas area as part of a trial run. It recently started making hires there, including a head of human resources, an administrative assistant and a marketing manager.
Spectrum’s marketing and sales team was “very attracted to the fact that they could buy housing at one-third the cost” of homes in Orange County, according to Shrotriya.
Employees can find desirable homes for $100,000 to $400,000 in Henderson, he said.
Shrotriya got in on the home buying with a “very modest” house in the Anthem Country Club neighborhood in Henderson, where residents include Larry Page, the cofounder of Google Inc.
“We went there and we just couldn’t believe the beauty—manicured lawns, beautiful houses,” Shrotriya said.
His new house cost about $400,000 and would have been $1 million in OC, he said.
Shrotriya was a veteran of New York-based Bristol-Myers Squibb Co. prior to becoming Spectrum’s chief executive in 2002. He oversaw a change of the company’s name from NeoTherapeutics Inc. and a transition from neurology to cancer drugs.
“In eight years, we’ve made huge progress,” Shrotriya said. “Our employees have gone from five to about 150 and our market cap has gone from under $2 million to nearly $500 million.”
Spectrum shares are up by more than 20% so far this year to a recent market value of about $430 million.
The company now has offices in Montreal and India, and is looking to start operations in Europe.
Spectrum’s move was made public with the recent release of first-quarter results that surpassed analysts’ expectations last week.
The company swung to a $13 million profit from a $39 million loss a year earlier.
Analysts expected a $4.4 million profit in the quarter.
First-quarter revenue grew 300% to $44 million, including $35 million from Fusilev, a drug used to treat osteosarcoma, a bone cancer. Fusilev recently received Food and Drug Administration clearance for colorectal cancer.
Wall Street was looking for $30.5 million in quarterly revenue from Spectrum.
Spectrum did not provide financial guidance for the current quarter or full year in its release.
Analysts expect the drug maker to post a net loss of about $500,000 for the quarter, with marketing expenses expected to rise.
A year earlier, Spectrum lost $9.7 million.
Wall Street expects revenue of $25 million for the current quarter, more than double a year earlier.
