Continue Reading Below
As of 1:28 p.m. EDT, shares of Spectrum Pharmaceuticals (NASDAQ: SPPI), a biotech developing treatments for various blood disorders and cancers, are up by over 21% on elevated volume. The drugmaker's shares are rising in response to its better-than-expected second-quarter earnings report that hit the wires in after-hours trading yesterday.
Despite having multiple anti-cancer agents on the market, Spectrum has had serious trouble transforming any of its products into viable growth drivers in the past few quarters. In the second quarter of 2017, though, the company's broad product portfolio finally showed some signs of life, topping consensus on revenue by a healthy 12.4% for the three-month period.
Spectrum's unexpectedly strong quarter can largely be attributed to an uptick in the sales of its multiple myeloma drug Evomela. During the second quarter, for instance, the company reported that Evomela's sales came in at $10.1 million, which is a noteworthy 60% increase compared to the first quarter of 2017.
Continue Reading Below
Before investors get too excited, however, there is the problematic issue of the company's rather short cash runway. Because of Spectrum's heavy investment in clinical assets such as the late-stage chemotherapy-induced neutropenia medicine Rolontis, it has been losing over $20 million per quarter of late. Unfortunately, Spectrum exited Q2 with only $138.6 million remaining in cash and cash equivalents.
Put simply, Spectrum will probably have to tap the public markets for a sizable chunk of change within a year's time, which could put the brakes on the stock's upward momentum in a big way. Therefore, investors may want to stick to the sidelines with this speculative biotech stock for the time being.
10 stocks we like better than Spectrum Pharmaceuticals
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Spectrum Pharmaceuticals wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 1, 2017