Steve Boyd’s Hedge fund Armistice Capital had demanded the Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) to dump its CEO and find a new buyer quickly. The Capital Company with its 5.4% stake in the pharmaceuticals is agitated by the poor performance of Spectrum and is asking for a sweeping change in how the company fulfills its biotech business. According to Boyd, Spectrum is poorly managed, has broken the promises of performance several times and hence desperately need change in the authority.
In a letter to the Board of Spectrum, Boyd has revealed his company’s 3.6 million-share stake and has asked the company to part ways with its money-losing activities related to R & D. The letter also requests the board to appoint a top-tier investment bank for finding a right buyer. Boyd has further written that the existing CEO of Spectrum, Rajesh Shrotiya should give his resignation or he should compromise his personal compensation and align it in the interests of the shareholders.
Spectrum Lost the Patent to Novartis, Sandoz
The Armistice has said that the final dip came in the month of February when the pharmaceutical company’s shares nosedived after some of its patents received invalidation from the Federal Court. The patents were tied to the drug Fusilev, meant for cancer. The process cleared the way for Novartis Sandoz to come up with generic medicines in the same genre.
The invalidation of patent by the Federal Court caused half of the revenue of Spectrum to be imperiled immediately on the night of the decision. In the wake of these changes, the pharmaceutical company offered $2 million cash, as bonuses to its four executives at the topmost level. Boyd in the letter has said that this sort of dysfunctional culture has marred the value of the shareholder.
According to Boyd, Spectrum now requires grooming to make it liable for acquisition. He has suggested that the grooming must include an equal blend of reducing management compensation and the headcount of the employee.