Allos Narrows Loss - Analyst Blog
09 November 2011 - 12:30AM
Zacks
Allos Therapeutics
Inc.’s (ALTH) third quarter 2011 loss of 11 cents per
share was narrower than the year-ago loss of 18 cents and the Zacks
Consensus loss estimate of 15 cents per share. The narrower loss
was primarily attributable to higher revenues recorded in the third
quarter of 2011.
Quarterly
Results
Total revenues in the reported
quarter jumped 73.2% to $14.2 million driven by increased sales of
Allos’ sole marketed product, Folotyn. Marketed for treating
patients with relapsed or refractory peripheral T-cell lymphoma
(PTCL), Folotyn recorded sales of $13.2 million, up 61%. Management
stated that increased awareness of the drug among patients led to
the higher sales. Licensing and other revenues accounted for the
balance. Total revenue beat the Zacks Consensus Estimate of $13
million.
Operating costs and expenses
(excluding cost of sales and stock based compensation expense)
declined 12.6% to $20.9 million in the reported quarter. Selling,
general and administrative expenses were flat year over year at
$18.7 million. Research and development (R&D) expenses fell
30.6% to $5.0 million.
Another interesting development at
Allos took place in October 2011 when the proposed merger between
Allos and AMAG Pharma (AMAG) was called off
following insufficient shareholder votes for the deal. Following
the termination, Allos received $1.8 million (net) from AMAG to
make up for merger related costs.
Forecast for
2011
For 2011, Allos lowered its
guidance range for operating costs and expenses (excluding cost of
sales, cost of license and other revenue and non-cash stock-based
compensation expense). The expenses are now expected in the range
of $82 million to $84 million as opposed to the earlier guidance
range of $95 million to $98 million. Reduced expectations for
R&D and sales and marketing spend led to the lower
projection.
Our
Recommendation
Currently, we have a long-term
recommendation of Outperform on Allos. We believe that the
termination of the deal with AMAG is a positive for Allos as it
will be able to focus its entire attention on making Folotyn a
success. Moreover, the merger did not have enough strategic
rationale behind it in the first place.
In our view, the current price
represents an attractive entry point for long-term investors.
Our long-term recommendation is
justified by the Zacks #1 Rank (Strong Buy rating) carried by the
stock in the short run.
ALLOS THERAPEUT (ALTH): Free Stock Analysis Report
AMAG PHARMA INC (AMAG): Free Stock Analysis Report
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