The Most Important Thing for This Biotech

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Here's the bad news: Spectrum Pharmaceuticals (NAS: SPPI) sold only $21 million worth of its non-Hodgkin's lymphoma drug Zevalin over the first nine months of last year, essentially flat over the year-ago period and a long way from blockbuster.

Here's the good news: Spectrum Pharma has been making changes that should kick-start Zevalin's growth.

In November, the FDA removed a bioscan requirement from Zevalin's label. The inconvenient bioscan procedure, which required a test dose to be administered before the therapeutic dose, hampered sales, causing two different companies to let go of the drug. Biogen Idec (NAS: BIIB) developed the drug and sold it to Cell Therapeutics (NAS: CTIC) , which sold it to Spectrum Pharma.

I don't think removal of the bioscan requirement will suddenly make Zevalin an instant blockbuster. There's potential; its biggest competition is Biogen and Roche's (OTC: RHHBY) Rituxan, a multibillion dollar product, albeit with an approval for rheumatoid arthritis that Zevalin isn't appropriate for. But even 10% -- a couple of hundred million -- would be a vast improvement.

Specturm is also trying to expand Zevalin's use into other cancer-patient populations. In a study published this week of aggressive lymphoma patients being prepared for stem-cell transplants, Zevalin plus chemotherapy produced better survival rates than did chemotherapy alone. Two-year survival was 59% in Zevalin-treated patients versus 37% for chemotherapy alone. With the small trial size, the difference wasn't statistically significant, but it was good enough to warrant a larger trial. Spectrum is already testing the drug in two other phase 3 trials in other lymphoma patients.

Spectrum has drugs in its pipeline like Fusilev, which is currently the top seller thanks to the lack of availability of a related generic, but Zevalin is the mid-term future of the company and what investors should be watching.

Spectum has been on a tear since October, essentially doubling. It might keep going up -- predicting investor behavior in biotech is tough -- but I'm not willing to put my CAPS score on the line just yet. Instead I've made a call with a start limit of $13.50 -- yep, we've got that capability -- so if the stock drops below that level my outperform CAPSCALL will automatically be enacted. Play along at home with your own CAPS call on Spectrum Pharma or any other company you have an opinion about. It's free. It's fun. And, of course, it's Foolish.

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At the time this article was published Fool contributorBrian Orelliis in the top 3% on CAPS and holds no position in any company mentioned.Click hereto see his holdings and a short bio. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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