Spectrum Pharmaceuticals, Inc. (SPPI) Sinks On Qapzola Finding

An FDA advisory committee ruled against Spectrum Pharmaceuticals, Inc.'s (NASDAQ:SPPI) cancer drug

by Karee Venema

Published on Sep 14, 2016 at 2:27 PM
Updated on Sep 14, 2016 at 2:27 PM

Unlike this fellow biotech, shares of Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) are sinking, after the company said a Food and Drug Administration (FDA) advisory committee concluded SPPI's cancer drug, Qapzola, did not show substantial improvement over a placebo. While the FDA can still vote to approve the drug in its final ruling in mid-December, SPPI stock is down 5.3% this afternoon at $5.20, after earlier being halted for volatility.

This negative price action is nothing new for SPPI, though. Since hitting its most recent high at $7.16 in early August, the shares have shed more than one-quarter of their value -- due in large part to an earnings-induced bear gap on Aug. 10. In fact, today's plunge has Spectrum Pharmaceuticals on track for its lowest daily close since early March.

On the sentiment front, some short sellers could be kicking themselves for missing out on this latest drop, considering short interest declined nearly 13% in the two most recent reporting periods. However, there's still a lofty 7.4 million SPPI shares sold short, or 7.8 times the stock's average daily pace of trading.

Elsewhere, the shares of Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) could be at risk of getting hit with a round of negative analyst notes. Of the three brokerages covering SPPI, two maintain a "strong buy" rating, with not a single "sell" to be found. Plus, the average 12-month price target of $9.25 stands at a stiff 88% premium to current trading levels. Bearish brokerage notes could create more headwinds for the shares.

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