Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is up 13.17% in the market at the moment (June 26 @ 12:16 PM EDT) as news breaks that the company may soon be acquired. Here’s the deal:
SPPI Is Exploring Strategic Alternatives
In news that first broke on Bloomberg, a story broke that Spectrum Pharmaceuticals is considering the sale of the company. According to the report, sources close to the story say that the company is exploring strategic options, including a potential acquisition as takeover interest from others in the industry starts to soar.
In the report, Bloomberg said that the sources provided them with the name Jefferies Group LLC, as the firm that SPPI is working with in consideration of a takeover. Nonetheless, it’s important to keep in mind that this news did not come directly from Spectrum and there is no gaurantee that a takeover will actually take place.
The Time Is Ripe For Biotechnology Acquisitions
When it comes to potential timing for biotechnology acquisitions, now seems to be better than ever, and we’re seeing that in the massive amounts of deals that have taken place this year. In particular, one of the biggest biotech acquisitions so far this year was when Takeda announced that it would be acquiing Shire for a total price of around $62 billion. At the same time, companies like Sanofi and others have spent massive amounts of money on acquisitions recently, with Sanofi spending around $16 billion in recent acquisitions.
Ultimately, the increase in mergers and acquisitions that we’re seeing in the biotech space and several other spaces has to do with President Donald Trump. At the end of the day, investors expect to see continued actions, with the Trump campaign continuing to push for deregulation, further tax reform and protectionist trade policies. Of course, the goal here is to fuel economic growth, but a side effect of the reform taking place under the Trump Administration is a better environment in which to do business, which is fueling acquisitions and has led to a higher dollar amount in acquisitions in Trump’s first year than any other president in history.
What Spectrum Has To Offer Its Suitor
Drug makers that are taking interest in Spectrum don’t just see value in a neat name. No, the company actually has quite a bit to offer to the suitor that acquires it, if such an acquisition were to take place. In fact, the company and its subsidiaries currently have six FDA-approved oncology and hematology products on the market. These products include Fusilev®, FOLOTYN®, Marqibo®, Beleodaq®, ZEVALIN®, and Evomela®.
At the same time, the company has two late stage drugs in development, they include:
- Rolontis® – Rolontis is a brand name for eflapegrastim, which represents the first biological drug at SPPI. It is a long-acting Granulocyte-Colony Stimulating Factor (G-CSF) that takes advantage of LAPSCOVERY, a proprietary platform technology developed by Hanmi Pharmaceutical Co.
- Qapzola® – Qapzola is a brand name for apaziquone. The treatment is currently being assessed as an option for patients with non-muscle, invasive bladder cancer.
Both of these treatments are currently in late stage clinical trials and have proven to be effective in previous clinical trials, providing great value to any company that may acquire these assets.
Finally, the company is working on one more treatment that is in earlier stages. The treatment, poziotinib is a novel, oral, quinazoline-based pan-HER inhibitory that irreversibly blocks signaling through the HER family of tyrosine-kinase receptors. The treatment is currently under development for breast, lung, gastric, and head and neck cancers.
Always Remember The Risks
While SPPI is a strong company with various products on the market, the gains that we are seeing today are ultimately the result of acquisition hopes. Therefore, it’s important to remember that should an acquisition not take place, we could see tremendous declines.
Nonetheless, I believe that the stock represents a strong opportunity as now is the time for acquisitions and SPPI has quite a bit to offer its potential suitors. Nonetheless, only time will tell if the company will actually become the center of a takeover transaction!