Spectrum Pharmaceuticals Up 10% On Activist's Letter

Spectrum Pharmaceuticals, Inc. SPPI gained 10 percent Tuesday after an activist said the company could fetch more than $7.95 a share in a sale.

The company focused on hematology and oncology changed hands recently at $6.68, up $0.62 (10.2 percent).

Armistice Capital disclosed a 5.4 percent stake in Spectrum Monday and called on its management to sell the company.

"Multiple parties will offer to pay upwards of a 40 percent premium" to the the company's Friday closing price of $5.68 a share, Armistice's Steve Boyd said in a letter to Spectrum's management.

Spectrum hadn't issued a response as of Tuesday afternoon to the letter, which asked that Spectrum hire an investment bank and "initiate a formal process to sell the company."

With a current market capitalization of $410.6 million, Spectrum shares are off 12 percent in the past year.

Boyd called the company "dysfunctional" with overpaid management that is "disorganized and disjointed."

Spectrum has offices in three states as well as in Japan and India.

"I was shocked that the top eight executives frequently reside in seven different locations," Boyd said in his letter, addressed to Chief Executive Rajesh C. Shrotriya.

But Boyd said Spectrum has "a valuable commercial asset and an under appreciated pipeline" including Evomela treatment for Multiple Myeloma and apaziquone for bladder cancer.

Spectrum's best-selling drug Fusilev recently lost orphan-drug exclusivity for osteosarcoma and colorectal cancer while key patent protection for the drug was lost in a court ruling earlier this year.

In the year ended December 31 Spectrum posted revenue growth of nearly 20 percent to $186.3 million while its net loss narrowed to $45.7 from $62.1 million.