8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549

_______________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 1, 2019

SPECTRUM PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-35006	93-0979187
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11500 S. Eastern Ave., Ste. 240, Henderson, NV	89052
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code: (702) 835-6300

Not Applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.01    Completion of Acquisition or Disposition of Assets.

Spectrum Pharmaceuticals, Inc. (the “Company”) previously announced on January 17, 2019, that it had entered into an agreement, by and among Acrotech Biopharma LLC, a Delaware limited liability company (the “Buyer”), Aurobindo Pharma USA, Inc., a Delaware corporation (the “Parent Guarantor”), and the Company (the “Purchase Agreement”). Pursuant to the Purchase Agreement the Buyer would acquire certain assets and liabilities related to various hematology/oncology products of the Company, including BELEODAQ ®, EVOMELA ®, FOLOTYN ®, MARQIBO ®, FUSILEV ®, KHAPZORY™ and ZEVALIN ® (the “Product Portfolio”). The Purchase Agreement also required the Buyer to make offers of employment to certain employees of the Company that provide services relating to the Product Portfolio, as further discussed below.

On March 1, 2019, the Company completed this previously announced sale under the terms of the Purchase Agreement (the “Completed Transaction”); consequently, the Company received an upfront cash payment of $158.8 million from the Buyer, of which $4 million will be held in escrow for six months to settle potential liabilities, as defined in the Purchase Agreement. The Company is also entitled to receive additional contingent milestone payments of up to $140 million from the Buyer. These contingent milestone payments are triggered upon the achievement of certain milestones, including the receipt of certain U.S. Food and Drug Administration regulatory approvals related to MARQIBO ® and the achievement of certain net sales targets related to MARQIBO ® and KHAPZORY™ by the Buyer. The milestones must be achieved within the five-year period following March 1, 2019.

Additionally, on March 1, 2019, under the terms of the Purchase Agreement, 89 then-Company employees were (or will be) terminated within 90 days. However, the majority of these individuals have transitioned to the Buyer as its new employees, concurrent with the Completed Transaction. The Company has retained a core group of commercial leadership talent for the future launches of ROLONTIS® and poziotinib.

The Company intends to use the proceeds from the Completed Transaction to advance and expand its in-development drug pipeline, as well as providing for general working capital requirements.

Item 8.01    Other Events

On March 1, 2019, the Company issued a press release announcing the Completed Transaction. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits.

(b) Pro forma financial information.

Filed herewith as Exhibit 99.2 to this Form 8-K are the unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2018, and the unaudited Pro Forma Consolidated Statements of Operations for the years ended December 31, 2018, 2017, and 2016, respectively, of the Company to give effect to the Completed Transaction.

(d)     Exhibits.

Exhibit No.	Exhibit Description
99.1	Press release dated March 1, 2019
99.2	Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2018, and Unaudited Pro Forma Consolidated Statements of Operations for the years ended December 31, 2018, 2017, and 2016, respectively, of Spectrum Pharmaceuticals, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		SPECTRUM PHARMACEUTICALS, INC.
Date:	March 7, 2019	By:	/s/ Kurt A. Gustafson
			Kurt A. Gustafson Executive Vice President and Chief Financial Officer

EX-99.1

COMPANY CONTACTS

Shiv Kapoor

Vice President, Strategic Planning & Investor Relations

702-835-6300

Spectrum Pharmaceuticals Announces the Completion

of the Sale of its Marketed Portfolio

HENDERSON, Nev. – Mar. 1, 2019 –Spectrum Pharmaceuticals, Inc. (NASDAQ-GS: SPPI), a biopharmaceutical company focused on novel and targeted oncology therapies, today completed the sale of its portfolio of seven FDA-approved hematology/oncology products to Acrotech Biopharma L.L.C., a step-down subsidiary of Aurobindo Pharma Limited, India.

“The completion of this sale marks a significant pivot point in Spectrum’s history as we focus our efforts on our two promising late stage assets, ROLONTIS^® and poziotinib,” stated Joe Turgeon, President and CEO of Spectrum Pharmaceuticals. “This transaction puts us in a strong capital position for the next chapter of our growth.”

Under the terms of the agreement, Acrotech will make a $158.8 million up-front cash payment which represents the original payment of $160 million less certain purchase price adjustments for certain R&D activities. In addition, the company is eligible to receive up to $140 million in milestone payments. Spectrum has also reduced its staff by approximately 40 percent with the majority of impacted staff transitioning to Acrotech. Spectrum has retained a core group of commercial leadership talent to launch ROLONTIS^® and poziotinib.

The seven products included in the sale are: FUSILEV^® (levoleucovorin), FOLOTYN^® (pralatrexate injection), ZEVALIN^® (ibritumomab tiuxetan), MARQIBO^® (vinCRIStine sulfate LIPOSOME injection), BELEODAQ^® (belinostat) for injection, EVOMELA^® (melphalan) for injection, and KHAPZORY^TM (levoleucovorin).

Jefferies LLC acted as exclusive financial advisor to Spectrum. Paul Hastings LLP acted as exclusive legal counsel to Spectrum.

AboutSpectrum Pharmaceuticals, Inc.

Spectrum Pharmaceuticals is a biopharmaceutical company focused on acquiring, developing, and commercializing novel and targeted drug products, with a primary focus in hematology and oncology. Spectrum has a strong track record of successfully executing across the biopharmaceutical business model, from in-licensing and acquiring differentiated drugs, clinically developing novel assets, successfully gaining regulatory approvals and commercializing in a competitive healthcare marketplace. Spectrum has a late-stage pipeline with novel assets that serve areas of unmet need. This pipeline has the potential to transform the company in the near future. More information on Spectrum is available at www.sppirx.com.

11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI

Forward-looking statement - Certain statements in this press release may constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended to date. These forward-looking statements relate to a variety of matters, including, without limitation, statements that relate to Spectrum’s business and its future, including the Company’s ability to complete the reported transaction within 90 days, or at all, the cash proceeds expected to be received from the transaction, including the amount and likelihood of receipt of any regulatory- and sales-based milestone payments, the Company’s planned use of the proceeds from the transaction, including the Company’s ability to advance development of its two late-stage pipeline assets and enhance its business development efforts with the expected proceeds, the results expected to be realized from the planned staff reduction, the future potential of Spectrum’s existing drug pipeline and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Spectrum and are subject to significant risks and uncertainties that could cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. Risks that could cause actual results to differ include, but are not limited to, the uncertainties inherent in regulatory approval of the transaction, risks related to our ability to meet the regulatory- and sales-based milestones set forth in the transaction documents and other risks that are described in further detail in the Company's reports filed with the Securities and Exchange Commission. The Company does not plan to update any such forward-looking statements and expressly disclaims any duty to update the information contained in this press release except as required by law.

SPECTRUM PHARMACEUTICALS, INC. ^®, FUSILEV^®, FOLOTYN^®, ZEVALIN^®, MARQIBO^®, BELEODAQ^®, EVOMELA^®, and ROLONTIS^®are registered trademarks of Spectrum Pharmaceuticals, Inc. and its affiliates. KHAPZORY^TM, REDEFINING CANCER CARE™ and the Spectrum Pharmaceuticals' logos are trademarks owned by Spectrum Pharmaceuticals, Inc. Any other trademarks are the property of their respective owners.

© 2019 Spectrum Pharmaceuticals, Inc. All Rights Reserved

11500 S. Eastern Ave., Ste. 240 • Henderson, Nevada 89052 • Tel: 702-835-6300 • Fax: 702-260-7405 • www.sppirx.com • NASDAQ: SPPI

EX-99.2

SPECTRUM PHARMACEUTICALS, INC.

Pro Forma Consolidated Financial Statements

(Unaudited)

On March 1, 2019, Spectrum Pharmaceuticals, Inc. (the “Company”), completed the sale of its seven commercialized drugs, including FUSILEV ®, KHAPZORY™, FOLOTYN ®, ZEVALIN ®, MARQIBO ®, BELEODAQ ®, and EVOMELA ® (the “Product Portfolio”), to Acrotech Biopharma LLC, a Delaware limited liability company (the "Buyer"). Upon transaction closing, the Company received $158.8 million in an upfront cash payment (of which $4 million will be held in escrow for six months), and is entitled to receive up to an aggregate of $140 million for the Buyer's achievement of certain regulatory and sales-based milestones relating to this product portfolio (the "Acrotech Transaction").

The unaudited Pro Forma Consolidated Balance Sheet is presented below and was derived from the Company's historical consolidated financial statements, in order to give effect to the Acrotech Transaction as if it occurred on December 31, 2018. The unaudited Pro Forma Statements of Operations were derived from the historical consolidated financial statements in order to give effect to the Acrotech Transaction as if it occurred on January 1, 2016. The pro forma adjustments remove all of the assets, liabilities, and results of operations attributable to the Product Portfolio, and give effect to an adjustment to reflect the net cash proceeds, restricted cash, and gain from the Acrotech Transaction. The unaudited Pro Forma Consolidated Balance Sheet and the unaudited Consolidated Statements of Operations do not purport to be indicative of the results as of such date, or for such periods, nor are they necessarily indicative of future results that would have been obtained if the sale had been completed as of the dates indicated in the notes to these Pro Forma Consolidated Financial Statements.

The pro forma adjustments are based on the best information currently available and various assumptions that management believes are factually supportable, reasonable, and directly attributable to the Acrotech Transaction. These adjustments are expected to have a continuing impact on the Company's consolidated results; however, such adjustments are subject to change with additional information and analysis. The unaudited Pro Forma Consolidated Balance Sheet and the unaudited Pro Forma Consolidated Statements of Operations should be read in conjunction with the historical financial statements and notes thereto contained in the Company's 2018 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission ("SEC") on February 28, 2019.

SPECTRUM PHARMACEUTICALS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

As of December 31, 2018

(In thousands, except share and per share amounts)

(Unaudited)

	Historical			Pro Forma Adjustments				Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	157,480		$	154,764		(a)	$	312,244
Restricted cash	—			4,000			(a)	4,000
Marketable securities	46,508			—				46,508
Accounts receivable, net of allowance for doubtful accounts of $67	29,873			—				29,873
Other receivables	3,698			—				3,698
Inventories	3,550			(3,550		)	(b)	—
Prepaid expenses and other assets	9,579			(2,006		)	(b)	7,573
Total current assets	250,688			153,208				403,896
Property and equipment, net of accumulated depreciation	385			—				385
Intangible assets, net of accumulated amortization	111,594			(111,594		)	(b)	—
Goodwill	18,061			(18,061		)	(b)	—
Other assets	10,158			(2,970		)	(b)	7,188
Total assets	$	390,886		$	20,583			$	411,469
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	69,460		$	—			$	69,460
Accrued payroll and benefits	9,853			—				9,853
Contract liabilities	4,850			—				4,850
FOLOTYN development liability	2,311			(2,311		)	(b)	—
Total current liabilities	86,474			(2,311		)		84,163
FOLOTYN development liability, less current portion	9,686			(9,686		)	(b)	—
Acquisition-related contingent obligations	4,345			(4,345		)	(b)	—
Deferred tax liabilities	1,469			(1,469		)	(e)	—
Other long-term liabilities	5,650			—				5,650
Total liabilities	107,624			(17,811		)		89,813
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding	—			—				—
Common stock, $0.001 par value; 300,000,000 shares authorized; 110,525,141 issued and outstanding at December 31, 2018	110			—				110
Additional paid-in capital	886,740			—				886,740
Accumulated other comprehensive loss	(3,702		)	—				(3,702		)
Accumulated deficit	(599,886		)	38,394			(c)	(561,492		)
Total stockholders’ equity	283,262			38,394				321,656
Total liabilities and stockholders’ equity	$	390,886		$	20,583			$	411,469

SPECTRUM PHARMACEUTICALS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31, 2018

(In thousands, except share and per share amounts)

(Unaudited)

	Historical			Pro Forma Adjustments				Pro Forma
				(d)
Revenues:
Product sales, net	$	104,466		$	(104,466	)		$	—
License fees and service revenue	4,867			(4,867		)		—
Total revenues	109,333			(109,333		)		—
Operating costs and expenses:
Cost of sales (excludes amortization of intangible assets)	26,756			(26,756		)		—
Selling, general and administrative	90,700			(28,010		)		62,690
Research and development	94,956			(19,799		)		75,157
Amortization of intangible assets	28,098			(28,098		)		—
Total operating costs and expenses	240,510			(102,663		)		137,847
Loss from continuing operations	(131,177		)	(6,670		)		(137,847		)
Other income (expense):
Interest expense, net	(340		)	—				(340		)
Change in fair value of contingent consideration related to acquisitions	1,927			(1,927		)		—
Other income, net	9,580			—				9,580
Total other income	11,167			(1,927		)		9,240
Loss from continuing operations before income taxes	(120,010		)	(8,597		)		(128,607		)
(Provision) benefit for income taxes from continuing operations	(1		)	30			(e)	29
Net loss from continuing operations	$	(120,011	)	$	(8,567	)		$	(128,578	)
Net loss per share from continuing operations:
Basic	$	(1.16	)	$	(0.08	)		$	(1.24	)
Diluted	$	(1.16	)	$	(0.08	)		$	(1.24	)
Weighted average shares outstanding:
Basic	103,305,911							103,305,911
Diluted	103,305,911							103,305,911

SPECTRUM PHARMACEUTICALS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31, 2017

(In thousands, except share and per share amounts)

(Unaudited)

	Historical			Pro Forma Adjustments				Pro Forma
Revenues:				(d)
Product sales, net	$	116,178		$	(116,178	)		$	—
License fees and service revenue	12,189			(12,189		)		—
Total revenues	128,367			(128,367		)		—
Operating costs and expenses:
Cost of sales (excludes amortization of intangible assets)	42,859			(42,859		)		—
Cost of service revenue	4,359			(4,359		)		—
Selling, general and administrative	84,267			(19,508		)		64,759
Research and development	65,895			(14,370		)		51,525
Amortization of intangible assets	27,647			(27,647		)		—
Total operating costs and expenses	225,027			(108,743		)		116,284
Loss from continuing operations	(96,660		)	(19,624		)		(116,284		)
Other (expense) income:
Interest expense, net	(6,798		)	—				(6,798		)
Change in fair value of contingent consideration related to acquisitions	(4,957		)	4,957				—
Other income, net	389			—				389
Total other income (expenses)	(11,366		)	4,957				(6,409		)
Loss from continuing operations before income taxes	(108,026		)	(14,667		)		(122,693		)
Benefit for income taxes from continuing operations	16,778			(5,233		)	(e)	11,545
Net loss from continuing operations	$	(91,248	)	$	(19,900	)		$	(111,148	)
Net loss per share from continuing operations:
Basic	$	(1.07	)	$	(0.24	)		$	(1.31	)
Diluted	$	(1.07	)	$	(0.24	)		$	(1.31	)
Weighted average shares outstanding:
Basic	85,115,592							85,115,592
Diluted	85,115,592							85,115,592

SPECTRUM PHARMACEUTICALS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31, 2016

(In thousands, except share and per share amounts)

(Unaudited)

	Historical			Pro Forma Adjustments				Pro Forma
Revenues:				(d)
Product sales, net	$	128,596		$	(128,596	)		$	—
License fees and service revenue	17,848			(17,848		)		—
Total revenues	146,444			(146,444		)		—
Operating costs and expenses:
Cost of sales (excludes amortization of intangible assets)	27,953			(27,953		)		—
Cost of service revenue	7,890			(7,890		)		—
Selling, general and administrative	88,418			(28,096		)		60,322
Research and development	59,123			(16,688		)		42,435
Amortization of intangible assets	25,946			(25,946		)		—
Total operating costs and expenses	209,330			(106,573		)		102,757
Loss from continuing operations	(62,886		)	(39,871		)		(102,757		)
Other (expense) income:
Interest expense, net	(9,435		)	—				(9,435		)
Change in fair value of contingent consideration related to acquisitions	(649		)	649				—
Other income, net	887			—				887
Total other (expense) income	(9,197		)	649				(8,548		)
Loss from continuing operations before income taxes	(72,083		)	(39,222		)		(111,305		)
Benefit for income taxes from continuing operations	2,313			(96		)	(e)	2,217
Net loss from continuing operations	$	(69,770	)	$	(39,318	)		$	(109,088	)
Net loss per share from continuing operations:
Basic	$	(0.96	)	$	(0.54	)		$	(1.50	)
Diluted	$	(0.96	)	$	(0.54	)		$	(1.50	)
Weighted average shares outstanding:
Basic	72,824,070							72,824,070
Diluted	72,824,070							72,824,070

SPECTRUM PHARMACEUTICALS, INC.

NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Description of the Transaction and Basis of Presentation

The unaudited Pro Forma Consolidated Balance Sheet and the unaudited Pro Forma Consolidated Statements of Operations are derived from the historical Consolidated Financial Statements of the Company, which were included in its Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019. In accordance with SEC rules and regulations, the unaudited Pro Forma Consolidated Balance Sheet was derived from the Company's historical consolidated financial statements in order to give effect to the Acrotech Transaction, as if it occurred on December 31, 2018. The unaudited Pro Forma Consolidated Statements of Operations were derived from the historical consolidated financial statements in order to give effect to the Acrotech Transaction as if it occurred on January 1, 2016.

Pro Forma Adjustments

(a) Represents cash proceeds received at the closing of Acrotech Transaction, of which $4 million is held in escrow.

(b) Represents the removal of the assets and liabilities related to the Product Portfolio from the unaudited Pro Forma Consolidated Balance Sheet.

(c) Represents the non-recurring estimated gain that would have been recorded if we had completed the Acrotech Transaction on December 31, 2018.

(d) Amounts reflect the pro forma effect of eliminating the results of operations of the Product Portfolio for the years ended December 31, 2018, 2017, and 2016, respectively, from the presentation of continuing operations in these unaudited Pro Forma Consolidated Statements of Operations.

(e) The pro forma benefit for income taxes from continuing operations for the years ended December 31, 2018, 2017, and 2016, respectively, was computed under the “with-and-without” approach. Under the “with-and-without” approach, the pro forma income tax expense or benefit was determined by excluding the tax effects of tax adjustments solely attributable to the assets and liabilities of the Product Portfolio. The pro forma adjustments represent the removal of these amounts for the years ended December 31, 2018, 2017, and 2016, respectively, from the unaudited Pro Forma Consolidated Statements of Operations, and the removal of deferred tax liabilities from the unaudited Pro Forma Consolidated Balance Sheet as of December 31, 2018, associated with intangible assets of the Product Portfolio.