From the Spectrum Pharmaceuticals, Inc. 2010 Annual Report
May 1, 2011
It is a rare opportunity to be a part of something truly transformational. Over the past three years, Spectrum Pharmaceuticals has grown from a drug development company to an energized, highly-focused biopharmaceutical company with fully integrated commercial and drug development operations.
I am proud to report that in 2010 we grew product revenue to more than $60 million. This is the third consecutive year of strong product revenue growth, more than doubling each year, beginning in 2008. In fact, both of our marketed anti-cancer drugs, FUSILEV® and ZEVALIN®, achieved record sales in 2010. FUSILEV sales were a record $32 million, a nearly three-fold increase over 2009; and ZEVALIN sales were a record $29 million, a nearly two-fold increase over 2009.
Spectrum’s balanced portfolio is a powerful asset. Our commercial success has fueled our ability to manage multiple late-stage clinical trials for belinostat and apaziquone, two drugs with blockbuster potential that are nearing NDA fi ling in less than 2 years, along with other promising candidates in our pipeline of anti-cancer drugs.
We continued to make such advances while maintaining strict scal prudence, ending the year on a solid foundation with more than $100 million in cash. Excluding strategic activities and acquisitions in 2010, we were able to increase our cash position without a dilutive equity fina ncing.
OUR MARKETED DRUGS
FUSILEV® - Poised For Tremendous Growth
With the approval of FUSILEV in March of 2008, for an orphan indication, Spectrum transformed into a drug commercialization company. Since its U.S. launch in August of 2008, sales have grown more than four-fold, from nearly $8 million in 2008 to $32 million in 2010. In the fi rst quarter of 2011, sales were in excess of $34 million. I am proud to report that on April 21, 2011 and April 29, 2011, we received two approvals from the FDA. The rst approval was for a Ready-to-Use formulation of FUSILEV and the second was for the use of FUSILEV in the palliative treatment of patients with advance metastatic colorectal cancer. Outside the United States, FUSILEV is sold (under various trade names) by, among others, P zer and Sano -Aventis in Europe, and Takeda Pharmaceuticals in Japan, and generates approximately $180 million in sales annually. We believe these are major infl ection points in the history of Spectrum that are expected to expedite and fuel further growth of the Company.
ZEVALIN® – Long-Term Survival Benefitts After a Single Course of Treatment
Since obtaining full U.S. commercial rights to ZEVALIN in 2009, we have made great strides in broadening the utilization of ZEVALIN, including obtaining FDA approval for rst-line consolidation therapy, establishing government reimbursement, and securing inclusion in the National Comprehensive Cancer Network treatment guidelines. These accomplishments further strengthened the ZEVALIN brand and its growth potential.
Long-Term Survival Benefi t
The FIT study was the basis for ZEVALIN’s expanded approval in the fi rst-line consolidation setting in 2009. New clinical data was recently presented that further demonstrates the long-term bene ts of ZEVALIN’s use in the treatment of non-Hodgkin’s lymphoma. At the 2010 Annual Meeting of the American Society of Hematology, there were 12 scienti c papers demonstrating ZEVALIN’s effectiveness in treating a range of lymphomas. Six of these papers were selected by the ASH Program Committee for oral sessions.
One paper in particular selected for oral discussion was the fi ve-year follow up from the FIT study. The paper highlighted that patients with previously untreated follicular non-Hodgkin’s lymphoma and treated with a standard, single-dose infusion of ZEVALIN (after partial or complete response to fi rst-line chemotherapy) had a nearly three-year advantage in median progression-free survival compared to patients not treated with ZEVALIN in the study.
Another important data point in the oral presentation was that the median time to next treatment had not yet been reached after more than 8-years. Imagine, more than 8-years of survival benefit t after a single course of treatment with ZEVALIN.
OUR DRUG DEVELOPMENT PIPELINE
The number of cancer patients continues to grow year over year. Because we are patient focused, our main objective is to bring life-saving drugs to the cancer patient as quickly as possible. Therefore it is our goal to a nd the quickest and most ef cient development and regulatory pathway for FDA approval.
“The World Is Our Laboratory”
I have gone on record as saying that the “world is our laboratory.” Every single compound we have in our pipeline was discovered by academic research institutions and/or research-focused companies. We acquire and license drugs with three goals in mind: mitigating risk, reducing developmental timelines and remaining diversi ed while maintaining focus in oncology.
What do I mean by mitigating risk? Our drug portfolio can be divided into three distinct categories: marketed drugs; late-stage clinical drugs; and early-stage clinical development drugs. This diversi cation strategy mitigates the risk of a long-lasting negative impact of any single drug failure.
We have no drug discovery operations at Spectrum Pharmaceuticals. We do not spend investors’ money working on Petri dish science experiments. Academic institutions and other drug discovery companies do the work for us. Instead, we focus our efforts and investors’ capital on seeking out, researching, and evaluating the many oncology drugs that have already demonstrated efi cacy in human clinical trials. Once we identify a promising drug, we acquire/license the drug, determine the most efi cient regulatory and commercialization pathway, and get to work.
LATE STAGE DRUGS
Belinostat – Potential Backbone of Cancer Therapy
We believe belinostat has the potential to become an integral part of cancer treatment in multiple indications. For many cancers, patients are treated with paclitaxel and carboplatin. We believe that belinostat can be added in full therapeutic doses in combination with these two drugs. It's active in multiple resistant cancer cells, has a favorable toxicity pro le compared to other drugs that are currently on the market or under development, and has not shown any evidence of unacceptable toxicities to date.
We are conducting a registrational study, under a Special Protocol Assessment with the FDA, for peripheral T-cell lymphoma (PTCL). We are currently enrolling patients and expect to le a New Drug Application in 2012. The PTCL trial has been granted “fast-track” designation, which allows us to start fi ling the application before we have full clinical data.
Apaziquone – Potentially the Most Signi cant Advance in Bladder Cancer Treatment in More Than 30 Years
Apaziquone continues to be a top priority for Spectrum. We originally licensed apaziquone for less than $100 thousand and have already generated more than $80 million in up-front licensing fees and development expense reimbursements, with the potential for more than $450 million in milestones and additional royalties on worldwide sales.
The registrational Phase 3 studies in bladder cancer, being conducted under a Special Protocol Assessment, are nearing completion. We would expect to le a New Drug Application late in 2012 with a potential FDA approval in 2013.
Solid Foundation for the Future
We are excited about the strong foundation we have created for our future growth. Spectrum has two revenue-generating drugs, each with signi cant growth catalysts. Our marketed drugs are further supported by a solid and robust late-stage pipeline. In addition to our commercial infrastructure for approved drugs, we have assembled an integrated in-house scienti c team, including formulation development, clinical development, medical research, regulatory affairs, biostatistics and data management. We also leverage the expertise of our worldwide partners to assist in the execution of our strategy.
As little as four years ago, we had a portfolio of only early stage oncology drugs in development, and little cash on hand. Through a series of strategic steps, Spectrum Pharmaceuticals today is an oncology-focused biotechnology company with two marketed drugs, two drugs in late-stage clinical development with potential FDA fi lings over the next 18 to 24 months, and a solid and robust pipeline of novel drug candidates. The next two years represent a critical in ection point for the further transformation of our Company.
I would like to thank you for your continued support of Spectrum Pharmaceuticals. We are committed to delivering results for our shareholders and providing life-saving treatments for cancer patients, the ultimate bene ciaries of our passion and efforts. We stand con dent in our strategy, our people, and our future. We would not be where we are today if it wasn’t for the dedication of our employees and the support of our Board of Directors and shareholders. We look forward to reporting continued progress in the coming years.
Sincerely,
Rajesh C. Shrotriya, M.D.
Chairman of the Board, Chief Executive Offi cer and President
Spectrum Pharmaceuticals, Inc.
