Spectrum Pharmaceuticals Reports Second Quarter 2018 Financial Results and Pipeline Update

  • An oral presentation of updated Phase 2 poziotinib data including EGFR
    and HER2 patients with exon 20 mutations will occur on September 24 at
    the World Conference on Lung Cancer in Toronto
  • Spectrum’s current poziotinib Phase 2 study is viewed as the pivotal
    registrational trial following recent conversations with the FDA
  • Both Phase 3 ROLONTIS® (eflapegrastim) studies, RECOVER and
    ADVANCE, have met the primary efficacy endpoint; Spectrum is preparing
    for a pre-BLA meeting with the FDA in the third quarter
  • Q2 revenues were $24.2 million, including $23.8 million in product
    sales

HENDERSON, Nev.–(BUSINESS WIRE)–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, 2018.

“The second quarter marked significant progress and data milestones for
our two lead programs poziotinib and ROLONTIS, moving us closer to our
ultimate goal of delivering targeted and novel therapies to cancer
patients,” said Joe Turgeon, President and Chief Executive Officer of
Spectrum Pharmaceuticals. “We have strong momentum going into the second
half of the year as we aggressively broaden our poziotinib clinical
program and continue to gain additional regulatory clarity.”

Clinical Program Overview:

Poziotinib, an irreversible tyrosine kinase inhibitor targeting EGFR
and HER2 mutations:

  • Updated data from the MD Anderson Phase 2 trial in non-small cell lung
    cancer with exon 20 mutations will be presented at the World
    Conference on Lung Cancer in Toronto on September 24. Updated data
    will include EGFR and HER2 patients with exon 20 mutations. The
    abstract will be released online on September 5.
  • Spectrum recently had a meeting with the FDA regarding poziotinib to
    gain clarity on the regulatory pathway. Based on that conversation,
    Spectrum views the current poziotinib phase 2 study as the pivotal
    registrational trial needed for the Agency’s review.
  • Data published in Nature Medicine from the first 11 NSCLC patients
    with EGFR exon 20 mutations receiving poziotinib in MD Anderson’s
    Phase 2 clinical trial demonstrated a confirmed objective response
    rate of 64 percent. The median progression-free survival had not been
    reached, with a median follow up of 6.6 months. The safety profile was
    consistent with what has been previously described for poziotinib and
    other TKIs with the two most common adverse events being known EGFR
    inhibitor-related toxicities: skin rash and diarrhea.
  • Data presented at AACR demonstrated that HER2 exon 20 mutations were
    prevalent across multiple solid tumors.

ROLONTIS (eflapegrastim), a novel long-acting GCSF:

  • Spectrum plans to conduct a pre-BLA meeting in the third quarter to
    ensure alignment with the FDA in preparation for a planned BLA filing
    in the fourth quarter of 2018.
  • Top line data from RECOVER, the second Phase 3 ROLONTIS study,
    demonstrated that the study met the primary efficacy endpoint of
    non-inferiority in the duration of severe neutropenia (DSN) between
    ROLONTIS and pegfilgrastim. Both Phase 3 ROLONTIS clinical trials,
    ADVANCE and RECOVER which studied more than 600 patients combined,
    have met the primary efficacy endpoint. Additional RECOVER data will
    be released at a future medical meeting.
  • ADVANCE data released as part of ASCO 2018 demonstrated that ROLONTIS
    was non-inferior to pegfilgrastim in the reduction of duration of
    severe neutropenia (DSN) in all four cycles of the study. Mean DSN±SD
    was 0.19±0.478 days for ROLONTIS and 0.34±0.668 days for
    pegfilgrastim, demonstrating non-inferiority with 95 percent
    confidence interval (CI) of DSN: [-0.260, -0.035]; p<0.0001) in Cycle 1. There were no statistically significant differences in all secondary endpoints in Cycle 1. The adverse event profiles were similar across groups. The most common treatment emergent adverse events in both treatment arms were fatigue, nausea, neutropenia, and lymphopenia.
  • In an oral presentation at MASCC 2018, data from the ADVANCE Phase 3
    study demonstrated an absolute risk reduction of severe neutropenia of
    8.5 percent (95% CI: 0.2%, 16.2%) versus pegfilgrastim in Cycle 1.
    Absolute risk reduction was defined as the difference in percentage of
    patients experiencing no severe neutropenia (ROLONTIS 84.2 percent;
    pegfilgrastim 75.7 percent).

Financial Guidance

Spectrum’s 2018 revenue guidance remains between $95 to $115 million.
Additionally, Spectrum anticipates current cash and marketable
securities will be sufficient to fund operations into 2020.

Three-Month Period Ended June 30, 2018 (All
numbers are approximate)

GAAP Results

Total product sales were $23.8 million in the second quarter of 2018.
Product sales in the second quarter included: FOLOTYN® (pralatrexate
injection) net sales of $11.7 million, EVOMELA® (melphalan)
for injection net sales of $5.8 million, BELEODAQ®
(belinostat) for injection net sales of $2.7 million, ZEVALIN®
(ibritumomab tiuxetan) net sales of $1.6 million, MARQIBO®
(vinCRIStine sulfate LIPOSOME injection) net sales of $1.1 million, and
FUSILEV® (levoleucovorin) net sales of $0.8 million.

Spectrum recorded net income of $13.7 million, or $0.13 income per basic
share and $0.13 per diluted share in the three-month period ended
June 30, 2018, compared to net loss of $(20.9) million, or $(0.27) loss
per basic and diluted share in the comparable period in 2017. Total
research and development expenses were $21.5 million in the quarter, as
compared to $15.2 million in the same period in 2017. Selling, general
and administrative expenses were $23.5 million in the quarter, compared
to $17.4 million in the same period in 2017.

Non-GAAP Results

Spectrum recorded non-GAAP net loss of $(21.6) million, or $(0.21) loss
per basic and diluted share in the three-month period ended June 30,
2018, compared to non-GAAP net loss of $(8.6) million, or $(0.11) loss
per basic and diluted share in the comparable period in 2017. Non-GAAP
research and development expenses were $20.1 million, as compared to
$14.6 million in the same period of 2017. Non-GAAP selling, general and
administrative expenses were $19.6 million, as compared to $14.5 million
in the same period in 2017.

Conference Call

Thursday, August 9, 2018 @ 4:30 p.m.
Eastern/1:30 p.m. Pacific

        Domestic:    

(877) 837-3910

        Conference ID# 9084737
 
International:

(973) 796-5077

Conference ID# 9084737

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
9, 2018 at 4:30 p.m. Eastern/1:30 p.m. Pacific.

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
®, EVOMELA®, and ROLONTIS®
are registered trademarks of Spectrum Pharmaceuticals, Inc.
and its affiliates.
REDEFINING CANCER CARE™ and the Spectrum
Pharmaceuticals’ logos are trademarks owned by Spectrum Pharmaceuticals,
Inc.
Any other trademarks are the property of their respective
owners.

© 2018 Spectrum Pharmaceuticals, Inc. All Rights Reserved

SPECTRUM PHARMACEUTICALS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
  2018       2017     2018       2017  
Revenues:
Product sales, net $ 23,753 $ 31,156 $ 51,863 $ 57,001
License fees and service revenue   415     3,145     2,799     6,401  
Total revenues $ 24,168   $ 34,301   $ 54,662   $ 63,402  
Operating costs and expenses:
Cost of sales (excludes amortization of intangible assets) 6,606 11,303 13,420 19,439
Cost of service revenue 2,118 4,221
Selling, general and administrative 23,451 17,421 47,556 36,525
Research and development 21,488 15,167 39,382 29,945
Amortization of intangible assets   6,934     6,901     13,880     13,790  
Total operating costs and expenses   58,479     52,910     114,238     103,920  
Loss from operations   (34,311 )   (18,609 )   (59,576 )   (40,518 )
Other income (expense):
Interest expense, net (242 ) (2,131 ) (472 ) (4,182 )
Change in fair value of contingent consideration related to
acquisitions
(192 ) (97 ) (483 ) (294 )
Other income, net   48,492     240     58,463     650  
Total other income (expense)   48,058     (1,988 )   57,508     (3,826 )
Income (loss) before income taxes 13,747 (20,597 ) (2,068 ) (44,344 )
Provision for income taxes   (3 )   (255 )   (6 )   (54 )
Net income (loss) $ 13,744   $ (20,852 ) $ (2,074 ) $ (44,398 )
Net income (loss) per share:
Basic $ 0.13   $ (0.27 ) $ (0.02 ) $ (0.57 )
Diluted $ 0.13   $ (0.27 ) $ (0.02 ) $ (0.57 )
Weighted average shares outstanding:
Basic   102,597,059     78,576,260     101,747,416     78,366,610  
Diluted   112,617,150     78,576,260     101,747,416     78,366,610  
 
SPECTRUM PHARMACEUTICALS, INC.
Condensed Consolidated Balance Sheets
(In thousands, expect per share and par value amounts)
(Unaudited)
 
  June 30,   December 31,
  2018     2017  
ASSETS
Current assets:
Cash and cash equivalents $ 174,371 $ 227,323
Marketable securities 95,287 248
Accounts receivable, net of allowance for doubtful accounts of $70
and $71, respectively
27,658 32,260
Other receivables 2,915 2,133
Inventories 4,520 5,715
Prepaid expenses and other assets   4,769     10,067  
Total current assets 309,520 277,746
Property and equipment, net of accumulated depreciation 523 589
Intangible assets, net of accumulated amortization 123,214 137,159
Goodwill 18,106 18,162
Other assets   13,159     53,783  
Total assets $ 464,522   $ 487,439  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $ 49,886 $ 58,117
Accrued payroll and benefits 4,946 9,261
Deferred revenue 3,872
FOLOTYN development liability 211 275
Convertible senior notes   39,427     38,224  
Total current liabilities 94,470 109,749
FOLOTYN development liability, less current portion 11,980 12,111
Deferred revenue, less current portion 315
Acquisition-related contingent obligations 6,755 6,272
Deferred tax liabilities 1,447 1,438
Other long-term liabilities   5,751     6,215  
Total liabilities 120,403 136,100
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no
shares issued and outstanding
Common stock, $0.001 par value; 300,000,000 shares authorized;
105,130,603 and 100,742,735 shares issued and outstanding at June
30, 2018 and December 31, 2017, respectively
103 100
Additional paid-in capital 829,052 837,347
Accumulated other comprehensive (loss) income (3,088 ) 15,999
Accumulated deficit   (481,948 )   (502,107 )
Total stockholders’ equity   344,119     351,339  
Total liabilities and stockholders’ equity $ 464,522   $ 487,439  

Non-GAAP Financial Measures

In this press release, Spectrum reports certain historical and expected
non-GAAP results. Non-GAAP financial measures are reconciled to the most
directly comparable GAAP financial measure in the tables of this press
release and the accompanying footnotes. The non-GAAP financial measures
contained herein are a supplement to the corresponding financial
measures prepared in accordance with generally accepted accounting
principles (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.

Management uses non-GAAP net income (loss) in its evaluation of the
company’s core after-tax results of operations and trends between fiscal
periods and believes that these measures are important components of its
internal performance measurement process. Management 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.

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 determined in accordance
with 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.

SPECTRUM PHARMACEUTICALS, INC.
Reconciliation of Non-GAAP Adjustments for Condensed Consolidated
Statements of Operations

(In thousands, expect per share amounts)

 
    Three Months Ended   Six Months Ended
June 30, June 30,
  2018       2017     2018       2017  
(1) GAAP product sales, net & license fees and service revenue $ 24,168 $ 34,301 $ 54,662 $ 63,402
Non-GAAP adjustments to product sales, net & license fees and
service revenue:
          (2,001 )    
Non-GAAP product sales, net & license fees and service revenue $ 24,168   $ 34,301   $ 52,661   $ 63,402  
(2) GAAP selling, general and administrative expenses $ 23,451 $ 17,421 $ 47,556 $ 36,525
Non-GAAP adjustments to SG&A:
Stock-based compensation (3,832 ) (2,888 ) (7,522 ) (6,126 )
Depreciation expense   (61 )   (76 )   (108 )   (166 )
Non-GAAP selling, general and administrative $ 19,558   $ 14,457   $ 39,926   $ 30,233  
(3) GAAP research and development $ 21,488 $ 15,167 $ 39,382 $ 29,945
Non-GAAP adjustments to R&D:
Stock-based compensation (902 ) (599 ) (1,689 ) (1,081 )
Depreciation expense (2 ) (2 ) (5 ) (5 )
Other R&D milestone payments   (500 )       (500 )    
Non-GAAP research and development $ 20,084   $ 14,566   $ 37,188   $ 28,859  
(4) GAAP net income (loss) $ 13,744 $ (20,852 ) $ (2,074 ) $ (44,398 )
Non-GAAP adjustments to net income (loss):
Adjustments to product sales, net & license fees and service
revenue, SG&A, and R&D as noted above
5,297 3,565 7,823 7,378
Amortization of intangible assets 6,934 6,901 13,880 13,790
Adjustments to other (expense) income (47,596 ) 1,525 (56,847 ) 3,098
Adjustments to provision for income taxes   3     255     6     54  
Non-GAAP net loss $ (21,618 ) $ (8,606 ) $ (37,212 ) $ (20,078 )
(5) GAAP income (loss) per share (Basic) $ 0.13   $ (0.27 ) $ (0.02 ) $ (0.57 )
GAAP income (loss) per share (Diluted) $ 0.13   $ (0.27 ) $ (0.02 ) $ (0.57 )
Non-GAAP loss per share (Basic and Diluted) $ (0.21 ) $ (0.11 ) $ (0.37 ) $ (0.26 )
Weighted average shares outstanding:
Basic   102,597,059     78,576,260     101,747,416     78,366,610  
Diluted   112,617,150     78,576,260     101,747,416     78,366,610  

(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). 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 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 sales milestone achievements; (ii) 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); (iii)
adjustments to reverse the impact of income taxes; (iv) 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), (v) reversal of foreign exchange gains and losses
(non-cash), (vi) reversal of debt discount accretion expense (non-cash)
for our convertible notes, and (vii) reversal of the mark-to-market
adjustment on our equity securities.

(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.

Contacts

Spectrum Pharmaceuticals, Inc.
Shiv Kapoor
Vice President,
Strategic Planning & Investor Relations
702-835-6300
InvestorRelations@sppirx.com