Spectrum Pharmaceuticals (SPPI) Stock: Why It Fell Over 20% Today

By Amit Chowdhry ● Sep 23, 2022
  • The stock price of Spectrum Pharmaceuticals (SPPI) fell by over 20% pre-market today. This is why.

The stock price of Spectrum Pharmaceuticals (SPPI) fell by over 20% pre-market today. 

Why: Spectrum Pharmaceuticals announced that it has entered into a 5-year debt financing agreement with investment affiliates managed by SLR Capital Partners, LLC (SLR) for a term loan facility of up to $65 million. And the company believes this transaction, combined with Spectrum’s existing cash balance, provides sufficient capital to optimize the commercial launch of ROLVEDON (eflapegrastim-xnst) injection, which received U.S. Food and Drug Administration (FDA) approval on September 9, 2022, as well as fund Spectrum’s operations through 2024.

Terms: Under the terms of the agreement, Spectrum will have access to up to $65 million in debt financing, divided into four tranches, the first of which was a $30 million loan drawn upon closing on September 21, 2022. And the remaining $35 million will be made available in three additional tranches subject to the achievement of pre-specified regulatory and financial milestones. The tranches are available for drawdown at Spectrum’s discretion at various points until November 15, 2023.

The loan facility maturity date is September 1, 2027, and payments consist of 36 monthly interest-only payments, followed by 24 monthly payments of principal and accrued interest. And the Company holds the option to extend the interest only period for an additional year if certain financial milestones are achieved. In connection with the financing, and with each advance of the loan, Spectrum will issue warrants to the lenders under the financing to purchase shares of the Company’s common stock in an amount equal to 1.00% of the applicable lender’s loan amount divided by an exercise price calculated as of the applicable funding date.

Advisor: Armentum Partners served as financial advisor to the company on the transaction. 

KEY QUOTE:

“We are pleased to announce this financing agreement and to partner with SLR, an experienced healthcare and life sciences lender and investor. This capital commitment immediately strengthens our balance sheet and is anticipated to provide the additional resources necessary for a successful launch of ROLVEDON. We expect this transaction will further extend our cash runway through 2024, offering operational flexibility during our transition to a commercial stage company.”

— Tom Riga, President and Chief Executive Officer of Spectrum Pharmaceuticals