Armistice Capital: First time for everything featuring Spectrum Pharma

Steven Boyd’s Armistice Capital filed his first activist campaign this month, with a 5.4% stake in Spectrum Pharmaceuticals. Boyd worked at Senator Investment Group, York Capital and SAB Capital before starting Armistice in 2012. He’s done well on the passive side, waging a number of 13G campaigns, but this is the first time he’s trying his hand as an activist.

Recall that we noted the fund sent a letter to CEO and Chairman Dr. Rajesh Shrotriya in mid-May.

Armistice has laid out a host of grievances against the company’s board and executives, most notably in terms of compensation. As the stock has dropped by nearly 50% over the past three years, Dr. Shrotriya has earned over $20 million (5% of the market cap) in compensation.

On the night that a court ruled against SPPI in a case that opened up its most prominent drug, Fusilev, to generic competition, the company filed an 8-K announcing $2 million in bonuses and increases in base salaries for its top four executives.

The backup plan, a company-wide buyout. But Working against us:

  • Top 5 drugs making up nearly 90% of sales are already showing declines

  • Any big move to the upside triggers options and convertibles exercise of these options and convertible bonds, diluting the share count by up to a third.

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