(Reuters) - Spectrum Pharmaceuticals forecast a steep drop in full-year sales as it expects uptake of its biggest-selling product, colon cancer drug Fusilev, to significantly decline as cheaper generics re-enter the market.
The Nevada company's shares fell more than 36 percent to $7.90 after the bell.
A supply shortage of levoleucovorin, the generic name of Fusilev, has steadily lifted sales of Spectrum's higher-priced drug in recent years. But Tuesday's forecast suggests that trend may be nearing its end.
Hospitals are increasingly turning toward generics of Fusilev, but demand for the drug at clinics remains stable, Spectrum said in a statement.
Since hospitals are typically more cost-sensitive than private clinics, an increase in supply of cheaper, generic levoleucovorin will likely curtail demand for Fusilev, RBC Capital Markets analyst Adnan Butt said.
Spectrum in February forecast a rise in full-year sales, but on Tuesday revised that and estimated sales of $160 million to $180 million - about $100 million less than in 2012.
Analysts on average expect total sales of $297.3 million for the year, according to Thomson Reuters I/B/E/S.
A majority of the impact from a decline in demand for Fusilev will be reflected in the first half of this year, Spectrum said.
The drugmaker expects Fusilev to bring in sales of about $80 million to $90 million this year, down significantly from $204.3 million last year.
(Reporting By Adithya Venkatesan and Zeba Siddiqui in Bangalore; Editing by Supriya Kurane and Richard Chang)