Spectrum tanks after the FDA rejects its blood cancer drug

Spectrum CEO Rajesh Shrotriya

The FDA rejected Spectrum Pharmaceuticals' ($SPPI) treatment for blood cancer, battering the company's market value as management promises to quickly get back on track.

The drug is a reformulated take on the chemotherapy melphalan, sold as Alkeran, that uses a proprietary binding technology to improve tolerability and allow for higher dosing. Spectrum's treatment, dubbed Evomela, is an intravenous therapy designed to be used alongside stem cell transplant to treat patients with the blood cancer multiple myeloma.

In its rejection letter, the FDA didn't cite any deficiencies in Evomela's clinical data, according to Spectrum, but the company didn't disclose the rest of the agency's feedback. Spectrum also declined to provide a timeline for an eventual reapplication, with CEO Rajesh Shrotriya saying only that the company will "work swiftly with the FDA to address" the problems, remaining "committed to bringing Evomela to the market for patients."

The FDA's move sent Spectrum's shares down more than 30% on Friday morning, dimming investors' belief that the company can shuttle Evomela onto the market.

Spectrum bought the drug from Ligand Pharmaceuticals ($LGND) in 2013, paying $3 million up front and promising up to $50 million more tied to clinical and regulatory success.

- read the statement

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