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Health and Healthcare

Drug Company Buyout Follows Failed Drug Trial (SPPI, ALTH)

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By Paul Ausick Published
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Spectrum Phamaceuticals Inc. (NASDAQ: SPPI) has agreed to acquire rival drug firm Allos Therapeutics Inc. (NASDAQ: ALTH) for $1.82 in cash and one Contingent Value Right (CVR), in a deal worth about $206 million, or $108 million net of Allos’s cash. The CVR will pay Allos shareholders an additional $0.11/share if certain conditions are met.

Allos markets a lymphoma treatment, Folotyn, that complements Spectrum’s Zevalin by treating a different form of the disease. Folotyn generated $50 million US sales last year, and the drug is currently being reviewed for approval in Europe.

Spectrum will finance the acquisition from cash on hand and its revolving credit facility. The company said it does not need to issue new shares to finance the deal, which is expected to close in the second quarter.

Spectrum also announced this morning that its experimental bladder cancer drug failed to meet late stage trial targets. The company said that it would request a meeting with the US FDA to “discuss further steps.”

Spectrum’s shares are down about -9.8% in the pre-market this morning at $11.01 in a 52-week range of 6.94-$16.00. Shares of Allos are up more than 27% at $1.82 in a 52-week range of $1.25-$3.28.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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