Spectrum Pharmaceuticals Inc (SPPI) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Spectrum Pharmaceuticals third-quarter 2012 financial results conference call. At this time all lines are in a listen-only mode. Later we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder, today's conference call is being recorded. I would now like to turn the call over to your host, Shiv Kapoor, Vice President, Strategic Planning and Investor Relations. Please go ahead.

Good morning and thank you all for joining us today for Spectrum's third-quarter 2012 financial results conference call. I am Shiv Kapoor, Vice President of Strategic Planning and Investor Relations for Spectrum Pharmaceuticals. With me today are Dr. Raj Shrotriya, Chairman, CEO and President; Ken Keller, Chief Operating Officer; Brett Scott, acting Chief Financial Officer; Dr. Steve Fruchtman, Chief Medical Officer; Jim Shields, former Chief Commercial Officer; and other senior members of the Spectrum management team. Here's an outline of today's call. First, Dr. Raj Shrotriya will provide you with the highlights of the third quarter and discuss overall direction and strategy. Brett will then provide a summary of our third-quarter financial performance. Following this, Ken will review commercial and pipeline progress of the Company in the quarter. And then we will open the call to questions.

Before I pass the call over to Dr. Shrotriya, I would like to remind everyone that during this call we will be making forward-looking statements regarding future events of Spectrum Pharmaceuticals, including statements about the product sales, profits and losses, the safety, efficacy, development timelines and clinical results of our drug products and drug candidates that involve risks and uncertainties that could cause actual results to differ materially. These risks are described in further detail in our reports filed with the Securities and Exchange Commission. These forward-looking statements represent the Company's judgment as of the date of this conference call, November 7, 2012, and the Company disclaims any intent or obligation to update these forward-looking statements. However, we may choose to update them, and if we do so, we will disseminate the updates to the investing public.

For copies of today's press release, historical press releases, 10-K's, 10-Q's, 8-K's, other SEC filings and other important information, please visit our website at www.SPPIRX.com. I would now like to hand the call over to Dr. Shrotriya.

Thank you, Shiv, and good morning, everyone. As we begin our call today, let me say that our thoughts are with all those who are impacted by hurricane Sandy. We know that several of our employees, patients and shareholders were affected, and we wish them the very best in the days ahead. We are very pleased to be reporting our eighth consecutive profitable quarter. We are very excited about the Company's direction and our growth prospects. We continue to achieve robust revenue growth and profitability while maintaining a strong fiscal discipline.

Four years ago we were primarily a FUSILEV Company with limited cash. Today Spectrum has FUSILEV, we have ZEVALIN worldwide rights, we have recently acquired FOLOTYN through the Allos acquisition, we have a robust, maturing pipeline and a strong balance sheet. Spectrum has developed and continues to grow into a much more diversified Company. The breadth of our products and the potential of our pipeline are good for patients and further add value for shareholders, as that [gives risk] both clinical and financial. We now have three products on the market, including FOLOTYN, and we have two additional later-stage products, in addition to our diversified portfolio of several drugs in clinical trials. The fundamentals of our current business remains strong and we expect to end this year with pro forma revenues of greater than $300 million.

This quarter is the first time we are reporting sales of the combined entity, and I'm very pleased at this seamless execution of the integration. While there is much more work to do, I'm thrilled with how quickly and efficiently we are being able to integrate the best assets of our combined companies. Prior to the closing of the Allos acquisition in September, we expected that there would be up to $40 million to $50 million in synergies. I'm pleased to report that we are now confident that in 2013 we expect to achieve $50 million or more in efficiency gains.

While fiscal discipline remains core to our strategy, we are continuing to create an environment where excellence is rewarded. We have been able to attract leaders who can bring us to the next level of growth. For example, Ken Keller, our Executive Vice President and Chief Operating Officer who will speak shortly, recently came to us from Amgen, bringing a proven track record of more than 20 years, including leading commercial launches of multiple billion-dollar drugs. Ken will discuss ways in which we have further bolstered our senior management team for continued success. Now I will hand the call to Brett, who will review our financials. Following Brett, Ken will give an overview of our commercial and research operations.

Thank you, Dr. Raj, and good morning to everyone on the call today. I am delighted to report this is Spectrum's eighth consecutive profitable quarter. We closed the quarter with cash, cash equivalents, investments and accounts receivable of more than $237.5 million after paying $133.3 million for the Allos acquisition, net of Allos cash. Now let's review the results for the quarter ended September 30, 2012. All numbers are approximate. Consolidated revenues include FOLOTYN sales for the period of September 5 through September 30 of 2012.

For the three-month period ended September 30, 2012, we had total revenues of $69 million compared to $51 million in the third quarter of 2011, an increase of 35%. Product revenues were $66 million as compared to $48 million in the third quarter of 2011, an increase of 37%. FUSILEV sales were approximately $52 million and ZEVALIN sales were approximately $8 million, with FOLOTYN sales being $6 million for the period in September, which included net product sales of approximately $3 million for use in a clinical trial being conducted by an unrelated party. Net income was $21 million, or a $0.36 per basic and $0.33 per diluted share, as compared to net income of $20 million, or $0.38 per basic and $0.34 per diluted share in the third quarter of 2011. On a non-GAAP basis net income was $27 million, or $0.47 per basic and $0.42 per diluted share, as compared to $23 million, or $0.42 per basic and $0.38 per diluted share for the same period in 2011.

Total research and development expenses for the third quarter were $10 million as compared to $7 million in the same period of 2011. On a non-GAAP basis, research and development expenses for the third quarter were $9 million as compared to $7 million for the same period in 2011. Selling, general, and administrative expenses for the third quarter of 2012 were $23 million as compared to $16 million in the same period of 2011. $5 million of this increase was due to costs incurred in the Allos transaction, and transitional services relating to the sales of ZEVALIN outside the United States. On a non-GAAP basis, selling, general and administrative expenses for the third quarter of 2012 were $17 million as compared to $15 million in the same period of 2011.

Now to the nine-month period ended September 30, 2012. Total revenues for the nine months were $198 million, a 41.2% increase over the same period of 2011. Product revenues were $188 million, a 44% increase over the same period in 2011. FUSILEV sales were approximately $160 million, with ZEVALIN sales being approximately $23 million and FOLOTYN sales of $6 million. Net income was $86 million, or $1.47 per basic and $1.32 per diluted share, compared to net income of $40 million, or $0.77 per basic and $0.70 per share diluted in the nine-month period of 2011. On a non-GAAP basis, net income was $74 million, or $1.27 per basic and $1.15 per diluted share, as compared to net income of $62 million, or $1.18 per basic and $1.08 per diluted share for the same period in 2011.

Total research and development expenses for the nine-month period ended September 30, 2012, were $29 million as compared to $21 million in the same period of 2011. Selling, general, and administrative expenses were $65 million compared to $47 million in the same period in 2011. This increase is, in part, attributable to one-time costs associated with the Allos transaction and acquisition of the ex-US ZEVALIN rights. Further, in response to investor inquiries from past quarters, we have included additional disclosures in our quarterly report on Form 10-Q regarding the components of gross-to-net revenue.

And just a quick update on our stock buyback program. We purchased 705,000 shares for a total of $8.6 million in the third quarter ending September 30, 2012. In summary, our revenues were up a strong 35% over the same quarter last year. We ended the quarter with a strong financial position of $237.5 million in cash, cash equivalents, investments, and accounts receivable. I now will hand the call over to Ken Keller.

Thank you, Brett, and good morning, everyone. I'm pleased to be part of the Spectrum team. I joined the Company because I was very excited by its growth prospects. Everything I've learned since I started has reconfirmed and added to my excitement about what lies ahead. I've been impressed by the people, the energy, the commitment I see across the organization, and the potential we have here to build an exceptional success story. I look forward to contributing and helping patients benefit from our current and future medicines.

I'll focus my comments on the three areas that we think are most important to share with you. First, I'll report on the substantial progress we made integrating Allos into Spectrum. Then I'll review how we have refit our commercial organization to drive the future growth of ZEVALIN, FUSILEV and our newly acquired cancer therapeutic, FOLOTYN. I'll close with a brief update on the progress we've made advancing our pipeline. As our CEO, Dr. Raj, has stated earlier, we are confident we will achieve at least $50 million in efficiency gains and possibly more through several changes. Some of the most significant and immediate synergies are being realized through the elimination of duplicative administrative and management roles. Headcount for both companies in 2011 was approximately 390 people. Today as one Company our headcount stands at approximately 200 people. The integration progress is not yet complete. There is still work to be done and we expect to see further benefits and cost savings in 2013. This acquisition has also provided us the opportunity to look throughout both companies and upgrade our skill sets and talents across the organization. By taking the best from both we are now becoming a far more effective and efficient Company.

The second area I want to cover today is the progress we made in building and refitting our commercial organization to accelerate the growth of our three marketed oncology drugs. We are starting this process from a solid foundation. Because of changes in buying patterns, there can be some fluctuation in FUSILEV sales, as we saw this quarter. Importantly, FUSILEV demand remains strong despite readily-available supplies of generic leucovorin. Market research shows that 75% of physicians say that generic leucovorin is available without difficulty. It is clear that physicians are continuing to choose FUSILEV even when other options are available. This quarter there was a 13% increase in the number of accounts ordering FUSILEV. When we look at market penetration over the past 12 months, FUSILEV penetration is up from 29% in the last quarter to 31% in this quarter, and we believe there is room for improvement.

A recent market survey suggested that 60% of physicians treating colorectal cancer patients have not yet been contacted by a Spectrum sales representative. We can and we will change that. The beauty of our marketed portfolio is that all three drugs -- FUSILEV, ZEVALIN and FOLOTYN -- can be effectively promoted by a single sales representative. We have cross trained all our sales representatives and we are bringing them all together as a single team next week. This synergy allows us to right size the footprint of our sales team and promotional investments to optimize the reach and the frequency of our selling messages. This is something that just wasn't cost effective for a team that was promoting a single product.

We've redesigned our commercial team based on two core principles. First, we have made the critical decision to have our commercial team be customer-facing heavy and headquarters light. This is consistent with our focus on managing our expenses prudently. Second, we have built this selling model that decentralizes key decision making to better meet the needs of our customers regionally. We have established six regions in the US, each led by a regional sales manager who will have all key resources at their disposal. Each of these individuals is or will be a seasoned professional in the oncology space. The new commercial team will have more than 90% of its total headcount in direct contact with our customers. Total sales headcount will exceed 60 people, which essentially doubles the number of sales professionals promoting all three of our drugs.

These changes, coupled with our expanded product portfolio, have enabled us to attract additional top talent. We have recently recruited Joe Turgeon as our new Senior Vice President as commercial operations and Joe is with us today. Joe has over 25 years of experience as commercial leader, over 20 years in the oncology space. He was most recently the Vice President of sales for Amgen. Joe has led teams that have been accountable for generating revenue exceeding $6 billion. This is the quality of the people that Spectrum is now able to attract.

Now I'd like to share just a few highlights from the progress we've made in our clinical development program. We have a robust and maturing pipeline with ten drugs in development for unmet medical needs. At the upcoming American Society of Hematology meeting there will be 15 presentations on FOLOTYN and ZEVALIN, including two oral presentations on ZEVALIN. The new ZEVALIN data will focus on its use across the disease paradigm from first-line use to relapse and refractory disease to more aggressive diffuse large B-cell lymphoma to the transplant setting. This illustrates that lymphoma experts' interest in ZEVALIN remains high and thought leaders are actively exploring ways to take advantage of ZEVALIN's unique efficacy, one-time treatment and well-recognized safety profile. Second, we have opened our first sites for Phase II programs for both SPI-2012, our conjugated granulocyte colony-stimulation factor. This is a head-to-head study versus Neulasta. And SPI-1620, our novel endothelin agonist for lung cancer and biliary tract carcinoma. We expect to initiate these trials in the next few months.

And third, in the past quarter we completed a phase I clinical stud of RenaZorb, which is a novel, oral phosphate binding agent designed using nanoparticle technology for patients with renal insufficiency. We expect data from this trial in the next three months. That brings me to the end of my prepared statements and now I will hand the call back to our CEO, Dr. Shrotriya.

Thank you, Ken, for providing such a comprehensive and compelling overview of the key commercial opportunities at Spectrum and select [by plan] programs advancing at our Company. Our strategy can be summed up succinctly. We succeed best in our combined mission to help patients and to increase shareholder value when as a Company we can continue to lower our financial and clinical risks by focusing on clinical unmet medical needs. Spectrum has proven its ability to manage an increasing diverse portfolio of products and promising drug candidates. We continue to acquire and develop drugs in fiscally-prudent manner. I want to underscore that we are a cash generating business and we do not anticipate needing to raise capital to run operations. Before I want to open the call to questions I want to say that we expect to remain -- to keep growing our revenue and profits in 2013. I will now open the call for questions.

Thank you.

(Operator Instructions).

Our first question comes from Adnan Butt with RBC Capital.

I'll begin with the FUSILEV. Of course, can you expand a bit more on the down sequential quarters? How do we reconcile that with share being up and market penetration being up? And then, secondly, if my (inaudible) math is correct would you expect, based upon the pro forma guidance given, for FUSILEV to be up sequentially in the fourth quarter?

Adnan, as we said in the past, net sales will fluctuate based on timing of orders from wholesalers. What we watch and monitor very closely is underlying end-user demand. Underlying demand is stable. In fact, the number of accounts ordering Q3 were the highest ever, as stated by Ken. We have more accounts ordering today than ever before.

Our research shows that the large majority of physicians report that genetic Leucovorin is not difficult to obtain, so this demand is not solely driven by lack of other options, and we see that there are ways to further penetrate this market. Ken further stated that more than 60% of doctors have not yet been called upon by our doctors, so we expect our sales of FUSILEV to remain strong and keep growing quarter after quarter and year after year.

Okay, I appreciate it, and I think I came to the same conclusion when we did the survey. In terms of being able to penetrate -- in terms of being able to reach more and more of the targeted physicians, is 60 the right size number, or is that something that you will continue to look at?

I will have -- ask Ken to comment on this.

Thanks, Dr. Raj. With the increased sales force size we'll have 60 people that will be selling all three of our products. Plus, just to remind you, we still have a contract sales organization that is also out there. So when you look at the footprint and our share of voice, we should expect a significant increase in the number of physicians that we reach and that can only help as we go forward.

Okay. So you think the 60 probably is the right size number now in terms of accounts that you're targeting?

Yes. I think 60 selling the three products, plus the CSO, is the right size. We will look at it as we go on and we will learn from it and we'll adjust as we have to.

Then if I can ask a question on FOLOTYN and get back in queue. Are you able to break out the pro forma number that FOLOTYN would have posted had it been a full quarter? Secondly, any change in demand trends for FOLOTYN at this time and where would you expect FOLOTYN to go? Thanks.

So, Brett, are you ready to answer the question about the pro forma numbers?

Yes, I think FOLOTYN numbers, at least for the -- through September 30 on a pro forma basis would be approximately $37 million.

Adnan, is that your question?

Sure, I was wondering what --

For nine months.

For nine months, correct. Yes.

Okay, that's fine, I can figure out the math. And then finally if I can ask a pipeline question and then get back in queue. When do you expect to have the final Belinostat data?

So, we're expecting that by the -- before the end of this year we should have Belinostat data available.

Okay. Thanks. I'll get back in queue.

As I said, six patients are still on this study and the data log is expected to occur by the end of this month or early in first week of December.

Thanks a lot.

Our next question comes from Joe Pantginis with ROTH Capital Partners.

Thanks for taking the question and the update and congratulations on the continued growth. While you continue to grow the FUSILEV franchise I wanted to see if you can add some additional color regarding -- especially when you're doing all of these different surveys -- what competitive pressures you are seeing and specifically might anticipate, especially from the newly approved drug from Sagent?

The only competition that I'm a aware of that all the generic companies are trying to increase their production, they have increased their production, (inaudible) imported drug and has been calling our customers and calling their clients and customers that they have got -- they're loaded with generic Leucovorin that they've imported, and now Sagent has been approved. Last year we know that APP was improved.

In addition to that, there are other companies -- several companies, and typically generic companies compete with themselves. In fact, I'm looking for a day when the market is over-flooded with all genetic Leucovorin supplies and they fight with each other and kill each other and Spectrum's FUSILEV will keep performing on its growth trajectory that it has been doing in the past. And all the naysayers, all the people who believe that somehow FUSILEV sales are going to go fall off the cliff, we have proven them wrong for eight quarters and you must take my word for it. We have proved it forever.

FUSILEV is approved by the FDA in April of 2011. It's a pure isomer, there are benefits. Doctors will see no need to use a cheaper product. Of course, there are hospitals and there are patients who would use a cheaper brand and genetics are here to stay, but FUSILEV is also here stay. It's a branded, (inaudible) product that has been in use in Japan and Europe [several for sales overseas.]

The drug has been in market for 15 years (inaudible) Leucovorin and its sales of $150 million to $200 million ex-US. And they don't have what we have (inaudible). In other words -- anybody who says that Spectrum's discounting drugs, they're wrong because, in fact, our ASP has been going -- quarter after quarter ASP has been going up.

That shows that Spectrum, in fact, has not discounted and any anomaly that they're seeing the sales from (inaudible) data are here or there is primarily because if we sell FUSILEV to government hospitals there is a government mandated price at which we have to sell. For FUSILEV that price happens to be $87, while the wholesale price is $200, or $183 up ASP.

So I think people have to understand this is a complex way, the way the [units are reported] and net sales. We report net sales. In fact, this year we reported both gross and net sales in this quarter and we plan to do that in the future.

Okay, that's great. Thank you. And then that actually is very helpful. And then maybe just a financial question. As you look at your -- as you're right-sizing your sales for us and you link that to R&D and G&A run rates, what do you think we might be looking at here because you're also increasing the amount of some of your clinical trials?

So I think at this time I can only say that -- Ken has just joined the operations as Chief Operating Officer. He is busy looking at budgets. He and Steve Fruchtman and Brett and many other people are diving right at this time into the budget so I think we will have more clarity in the next three to four months.

Okay. Lastly, real quickly, I'm just curious if there's any updates with regard to the data analyses that were ongoing behind the seasons for any Apaziquone, or any potential plans between you and Allergan?

Yes. So I think as we have said before, Joe, that we have -- we are planning to have a meeting with the FDA sometime in the future and see what strategy we can develop. As you know, when the two studies have combined, then the data is highly significant in favor of Apaziquone. However, the stand-alone two studies do not make the b value of less than 05. At this time this is work in progress and we will keep you posted.

Okay. Thanks a lot again.

Our next question comes from Jason Kantor with Credit Suisse.

Could you break out for us the US versus ex-US ZEVALIN? And you've now had that out there for a while, could you give us some sense of what, if anything, is going on or changing in the marketplace there? Thanks.

Yes. Again remember this is the first time we are reporting sales this way. We don't have at this time -- the number is small, it's $8 million. When you start talking the sales ex-US, we're talking Japan, we're talking Europe, and we're still breaking down as to how much comes from where.

So we don't have -- the number is so small, $8 million, that at this time really not focusing on how much we are getting from a given country. Just as we don't look at how much comes from Florida and how much comes from Florida and how much comes from Tennessee to make up our sales in the US We are looking at it as a brand that Spectrum owns worldwide, so we are able to report the worldwide sales.

Right, but aren't your margins very different in the stuff that you are selling outside the US is worse than what you are selling in the US?

Again, remember our revenues are in excess of $200 million a year and these sales that are coming from there are --

Got it. Okay.

We are just starting to build our infrastructure in Europe and Japan.

And maybe you can speak to -- you just completed a merger. It took a lot longer than I think you probably thought it would, but what is your appetite for doing more deals? What kind of deals are you looking for? Are you looking to specifically build out in other regions like this Europe, or are you focused pretty much on just getting new commercial rights? Could you give us some sense strategically where you want to go?

Our plate is full at this time. We have four drugs in the market, we have two drugs in later-stage development. We have already 10 drugs in clinical trials, so our plate is full at this time. You rightly said, the FTC delay in Allos acquisition took us four months more than we thought it will and basically was trying to educate FTC. FTC was concerned that Spectrum would have a monopoly in PTCL market, and we just had to educate them about this. Once they were satisfied, they blessed the deal.

We are always looking for opportunistic deals. Our focus remains that we want do deals that are accretive to our operations and our sales force, instead of getting one drug in the bag now they are getting three drugs and if we can have four or five drugs, we will certainly welcome that. But we should be able to afford it because we always want to focus on our burn at the same time while we're bringing -- adding value to the Company.

Got it. Okay, thank you.

Our next question comes from Ren Benjamin with [Durell & Company. ]

Congratulations on the quarter. Can you talk to us a little bit more about the activities that's going on regarding ZEVALIN and the worldwide rights? What sort of sales infrastructure might be going into that on a worldwide basis? Can you just help us understand what's happening ex-US?

Ren, I'll ask -- since Ken has been on board a little over two months, he has been focusing on all of our commercial and development pipelines and Ken has a lot of ideas that I would have Ken answer this question.

We made some very good progress, both in Japan and in Europe, and in Japan we're working with Fuji RI to extend our promotional footprint there. In the past Fuji has focused on the neuralgia medicine audience and now they are actually going to be promoting ZEVALIN to the hematology audience. They have a very large sales team, they're an embedded sales team and that's getting up and going as we're speaking. In fact, I was out in Japan just a few weeks ago to kind of touch it with my own hands.

Over in Europe, we are setting up our own organization in Europe and that organization will be a small team but a team that will be focused on the four biggest counties, the ones that have the most potential, and that is a work in progress. Those people will be live for us right around the first of the year.

And, Ren, please remember that this drug has not been promoted in last four years. Ever since it got approval by Bayer, the drug has not been promoted. They decided to get out of hematology, oncology business so this drug has really been orphaned. The only -- and still you see at the American Society of Hematology meeting the last two years, two meetings there were 19 papers presented from Europe. So the (inaudible) in Europe has kept doing research, funding by self, with ZEVALIN and there's exciting new data is coming.

So we are quite excited to get global owner of this drug and, therefore, any clinical research we do in US or in Europe can be put to better use to educate doctors and patients with this drug. We are excited about it.

Yes, I know. And the data that we keep seeing keeps -- pretty much backs up all the excitement that you have, as well as the physicians who are working with it. I guess related to that, when we think about the sales force and the efforts of the sales force, should we think about the efforts as roughly one-third, one-third, one-third split among the three marketed products, or is there, let's say, more of a focus on ZEVALIN or more of a focus on FOLOTYN going forward?

Again I'll let Ken answer this question.

The new Senior Vice President of the commercial organization, Joe Turgeon, will look into that, but early on as I look at it, you've got great synergies with these three products. Every single account that we walk into has the ability pretty much to use all three of these products, but the doctors will be different. So when you look at FOLOTYN and you look at ZEVALIN, those are really the same doctors for the most part and that's just beautiful synergy.

FUSILEV is used ubiquitously across the board. When we look at designing the IC plan, which is really what you're talking about here, we will do it in a way that is tailored and structured to what works in that regional area. That's the beauty of having this regional focus.

For example, in some territories that are very academic focused, we will put most of our efforts on ZEVALIN and FOLOTYN. In other areas that don't have that academic focus, we may tip it a little bit more for FUSILEV. But really the strength of this is our ability to tailor it to the regions that -- and specific doctors and areas.

Okay. And just switching gears to the pipeline. Raj, you have talked about the extensive pipeline, the fact that you have a couple of agents that are in late-stage testing. But at one point there was also quite a bit of focus on streamlining the pipeline and maybe jettisoning some compounds, keeping others. You mentioned there are 10 products in the pipeline in development. Can you just give us maybe the top compounds that are in focus right now that you think will drive value in the next 12 months or so?

So, Ren, you're right. We have a lot of real estate, wonderful properties and we are now trying to sort out as to which one needs more attention. Clearly, the drugs that are in phase IIb, we have drugs in phase IIb and late phase II trials. For example, the drug for prostate cancer, drug for brain tumor, or GBM, and this white blood cell (inaudible) drug.

These are all drugs that are in later stage of development and they all show very promising activity. They're drugs like [Zanizar]. You have heard of [Zanizar] for a long time. We completed (inaudible) testing now phase 1 clinical trial has been completed. We will have data within the next two months.

So we are constantly visiting our pipeline. And now that Ken and Joe and others can focus on further strategizing and seeing which drugs need to be moving faster, that will happen. In fact, we have a quarterly strategic planning process that is in place and you will hear more about these things in future quarters.

Okay. And I know that we have ASH coming up so we have, what, 15 or so presentations at ASH. Three months from now we will have data from RenaZorb. Can you give us more of a longer-term horizon between the next -- in the next 6 to 12 months what data from which programs will we be expecting?

Yes. Steve, do you want to talk about the data that's coming within the next six months?

Sure, and thank you, Dr. Raj, for that opportunity. As Ken mentioned in his prologue we are very excited about some of our [nano] products, specifically 1620. We anticipate opening a randomized trial in two indications; lung cancer and biliary tract cancer. We anticipate results of that trial to be mature some time late 2013.

In addition, our head-to-head [bio] better perhaps for (inaudible) factor for recovery of the white count 2012. As was also mentioned previously, we will have a head-to-head trial against Neulasta. Sites are being identified to participate in that trial, as well. And some time in 2013, late 2013 we should have some results in that trial, as well.

Our more mature products, Ozarelix in the prostate cancer, patients are being recruited and, again, sometime in late 2013 we anticipate results with that, as well as (inaudible) GBM, as well. In addition, for ZEVALIN we continue our development program. As was mentioned by the questioner, there's a lot of excitement at ASH.

We are looking for broadening our indications with ZEVALIN, looking with FUSILEV b cell lymphoma. A patient has been randomized on that trial, as you've heard, to resist. So we have an exciting developmental pathway for ZEVALIN, as well. Again, RenaZorb phase I trial just completed and we anticipate going head to head against standard of care shortly at some point in 2013.

Thank you, Steve. I'll just add that our protocols of FOLOTYN and FUSILEV trying to reduce the leukocyte with using FUSILEV has now been completed and we're waiting for first patient to be entered. In fact, the protocol is ready, the investigators are ready to go.

So we are planning to have number of pilot studies -- is a small pilot studies where patients will be given FOLOTYN and FUSILEV and we arrive at the optimum dose -- or optimum strategy -- how to reduce leukocyte, as we think we will be able to achieve our goals because we already have some pilot data. In fact, Mark, one of the investigators published a small study in 18 patients where he was able to keep these patients on FOLOTYN by giving FOLOTYN -- FUSILEV.

So we are quite excited about the possibility of getting more value out of FOLOTYN if we can reduce the leukocyte and we can do it with the help of FUSILEV. And if we can do that, in fact, our plans are to expand indications not only for ZEVALIN, but also FOLOTYN, because then FOLOTYN can be utilized for lung cancer and breast cancer. Remember, FOLOTYN is a super methotrexate and methotrexate has activity in a wide variety of cancers and we plan to exploit fully the potential of FOLOTYN.

Perfect, thank you for that. Just one last question and I apologize if it's silly, but just to help me understand. When we're talking about pro forma numbers of being greater than $300 million, what is the pro forma component? Is it full year's worth of FOLOTYN sales that's being added on to full year of FUSILEV ZEVALIN sales?

Yes. Pro forma means that now that we own the asset global ZEVALIN and FOLOTYN, we will be able to report pro forma revenue combining all the drugs, all the US sales, at our next -- in our K.

So to answer your question, you're absolutely right. The pro forma revenue that we're speaking about assumes that we were -- we have sales from each of these products for a full year of 2012.

Excellent, great. Thank you very much and congrats.

Our next question comes from Difei Young -- Yang with WallachBeth. Please go ahead with your question.

First one is on the SG&A expenses for Q4. Now that integration with Allos has been completed, how should we think about modeling in terms of SG&A moving forward?

We are still looking at this process. We closed -- as you know, Allos only -- it's only been a month since we closed the transaction and it's too early for us to give you a very good estimate for Q4. But hang in tight, we will be talking about this more and we'll give you a good estimate of the combined Company guidance, especially for expenses, sometime in January.

Thank you. So now let me circle back on the FUSILEV. So FUSILEV, with Sagent launching their generics and possibly Teva comes back to market, it sounded like -- if I hear you correctly, it sounded like your is (inaudible) losing major market share is back to the generics. Could you help us understand why this time around it might be difference from previous times where when the generics comes back to market, essentially the FUSILEV revenue tanked?

So, Difei, actually your observation is not quite correct, it really is really wrong. The only time the sales of FUSILEV went down that was before Spectrum got approval for colorectal cancer. That was before 2011. So if you go back and look, FDA had given us a special permission to promote drug, sell drug for CIC before we got approval in 2010. Sales went down because we couldn't promote it, we couldn't even send it to the doctors even if they ordered it, because we were not approved. FDA turned the tap on and off.

So actually FDA called us -- one day FDA called me at 1;30 at night and said, Raj, we have shortage of generic Leucovorin can you sell FUSILEV and I said no, we are not approved for colorectal cancer. He said, no, we [appointed] special permission to do that, so special permission was given from FDA to sell for a finite amount of time. In 2008 December we sold for about two week, in 2009 we sold for about two months, in 2010 we sold for about six months.

In 2011 we sold in first quarter when we actually had to import FUSILEV from Europe. We went to Pfizer to get -- FDA actually allowed us to import FUSILEV from Europe because our manufacturers couldn't keep up with demand. So what you are talking about the sales went down when the generic came up, that was because the FD -- because we could not sell the drug at that time. Since April 2011 it is a different story. Our sales have never, ever gone down; they have gone only one way, going up.

Yes, thank you very much. I appreciate the color. So you're saying those two times potentially there was off-label usage permitted by the FDA to deal with the shortage situation. And so the revenue run up for FUSILEV back then was really due to generics and this time it's more likely to deal -- to be because of the promotional effort?

Yes. Well, I think this is two things to keep in mind. Why is it that the generic Leucovorin supplies go on and off all the time? Because the people who make these, this is typical of generic drugs. They don't make money so they make them when they can, they bundle them and sell them.

Our drug was approved in 2011, it has got a J code. We have a sales force. We are the only people who have the sales force dedicated to promote FUSILEV. Our drug is more expensive. ASP plus 6% is $183 for Q3. And also we learned from what happened in 2010. That was a good experience because at that time we had only one contract manufacturer making FUSILEV for us. Now we have multiple manufacturers approved by the FDA because we said never ever we would run out of a drug that is in demand for cancer patients. Therefore, now we have multiple supplies of this drug and I have assured people that there will never ever be a day when there will be a shortage of FUSILEV.

Thank you very much. Just a quick follow-up question with regards to the J codes for this product. So you're saying FUSILEV has its own J code. What about generics, do they share one J code, or do they each have their own?

No. Rick, do you want to answer this question?

The J code for generics is a bundled J code. All the generics are under one. The J code does two things. It recognizes the uniqueness of FUSILEV as a different product, different molecule, number one. And number two, it allows for proper and adequate reimbursement when used in its indication. So we can expect for the treatment of colorectal cancer that FUSILEV under its unique J code will be reimbursed with no foreseeable issues in the near future.

Thank you very much for the clarification and congratulations for a great quarter.

Our next question comes from Joe Pantginis with ROTH Capital Partners.

Raj, when you talk about the increasing demand and the number of accounts increasing for FUSILEV I was wondering if you could merge that with your announcement several months ago about your plans to increase the manufacturing capacity for FUSILEV. I was just wondering where that stood. Are those initiatives complete, are they still ongoing? Like you said, you have the ability to meet demand now. So thanks a lot.

So we indeed have multiple manufacturers that have been approved by the FDA. We have on more manufacturer that is being approved as we speak. They are still not on line. The materials they have produced is not for commercial sale, but I'm hoping that within the next several months that will be approved by the FDA. So all of the other manufacturers are supplying our drug at this time. And at any given time we have millions of vials in our inventory to be able to supply should there be a sudden increase in demand for any reason.

Great. Thank you very much.

Our next question a follow-up from Ed Arce with MLV & Company.

Congrats on closing the acquisition and moving forward as a combined entity. I just was struck by the comment earlier about having 60% or so of the colorectal cancer physicians in the US have not yet been detailed in the year-and-a-half that you have been approved, and just wondering if the sales force of the 60 reps plus the CSO is the right size? And also if you could tell us what you think the size of the number of accounts are that you're targeting?

Before I ask Ken to answer this question, let me give you some historical perspective. So the first time we ever hired a (inaudible) sales force -- they're not employees of Spectrum but they come to us from (inaudible) sales -- that was in September of last year, that's exactly a year ago. So it means that we got approval in April and there was nobody selling the drug from April to September, and in September we had a dedicated sales force. And then, then on, only they promoted this drug. In fact, our ZEVALIN sales force never ever promoted this drug. I will ask Ken to talk about it as to what his -- going forward what his plan is.

What we know is that the size of this team in the past was too small; it's clear by the market research we have. Physicians just aren't learning about FUSILEV enough. So now we have a sales force that is more than twofold larger than it was and we will evaluate as we go forward.

The way that I'm looking at this is when I compare it to other oncology product sales forces, 60 gets a lot closer to the right size number. We'll have to look exactly where we end up in two or three months from now, but I'm very optimistic that this -- I know for sure this will increase our footprint and our share of voice and we will reach more customers. Then depending on our progress we will make adjustments as we go forward.

Okay, great. Thanks.

I'd like to turn back over to Dr. Raj for closing comments. I am showing no further questions in the queue.

In closing, I would like to thank you, again, for joining us on this call at a very exciting time in the Spectrum evolution. We have transformed our sales and we will continue to transform the Company, increasing our presence in the marketplace, growing our commercial pipeline and advancing our drug candidates in development. We are looking forward to a great future for Spectrum and continued fulfilment of our mission to meet the needs of cancer patients. Please stay tuned, the best is yet to come. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.