Spectrum Pharma: The Growth Party is Over

HENDERSON, Nev. (TheStreet) --The Spectrum Pharmaceuticals(SPPI) growth party is over.

The bladder cancer drug aqaziquone blew up Thursday after two late-stage clinical trials failed. Spectrum was counting on seeking U.S. approval for apaziquone later this year. That plan now seems dead, as is the $200-300 million in peak annual revenue Spectrum hoped to generate from the drug.

Spectrum is trying to pivot from the apaziquone disaster by acquiring Allos Therapeutics(ALTH) for $108 million, net of Allos' cash on hand. With the Allos deal, Spectrum gains control of the lymphoma drug Folotyn for a decent price. But Folotyn sales of just $50 million in 2011 (the drug's third year on the market) won't fill the hole left by apaziquone.

Shares of Spectrum fell 9% to $11.42 Thursday and are now down 24% for the year. The biotech sector as a whole has been on fire in 2012 but Spectrum isn't keeping pace because very quickly and ominously, the company has become a growth stock without the growth.

Sales of Spectrums' colon cancer drug Fusilev grew more than four-fold last year to $153 million, assisted by persistent supply shortages in leucovorin, a cheaper generic alternative. But Fusilev sales will be lucky to grow 10-15% in 2012 and may actually fall if leucovorin becomes more readily available later this year.