European Setback for Allos - Analyst Blog
23 January 2012 - 11:00PM
Zacks
Allos Therapeutics
Inc. (ALTH) suffered a setback when the Committee for
Medicinal Products for Human Use (CHMP) of the European Medicines
Agency (EMA) did not recommend the conditional approval of Allos’
sole marketed product Folotyn (pralatrexate injection). Allos is
looking to get Folotyn approved in the EU for treating patients
suffering from peripheral T-cell lymphoma (PTCL) whose disease
progressed after at least one prior systemic therapy.
The European marketing
authorisation application, under review since 2010, included data
from a phase II study (PROPEL). The negative opinion of the CHMP
had an adverse impact on Allos’ stock price. We note that Folotyn
is already available in the US for the PTCL indication.
Allos intends to submit a request
for the re-examination of the CHMP’s opinion shortly. The company
further stated that it along with partner Mundipharma will work
closely with the CHMP during the re-examination.
We remind investors that Allos
inked a co-development and commercialization deal with Mundipharma
in May 2011 for Folotyn. Per the terms of the deal, the sole
responsibility of commercializing the drug in the US and Canada
lies with Allos. Mundipharma is responsible for commercializing
Folotyn in the rest of the world. Mundipharma has already filed
marketing applications in countries such as Australia, South Korea
and Switzerland.
Sequential improvement in
preliminary Folotyn sales
Earlier in the month Allos
announced preliminary (unaudited) sales data for the fourth quarter
and full year 2011. The company made the announcement at the 30th
annual healthcare conference of JPMorgan (JPM).
The actual, audited, results for the fourth quarter and full year
2011 are expected in March 2012.
Per the preliminary figures,
Folotyn net sales are expected to improve 17% sequentially to $15.4
million. Moreover, Folotyn net sales are expected to improve 43.4%
year over year to $50.5 million in 2011. Allos continues to expect
operating costs and expenses (excluding cost of sales, cost of
license and other revenue and non-cash stock-based compensation
expense) in the range of $82 million to $84 million in 2011. Allos
ended 2011 with $97.8 million in total cash, cash equivalents and
investments and zero debt.
Our
Recommendation
Currently, we have a long-term
recommendation of Neutral on Allos. We believe that Allos must
reduce its dependence on Folotyn and develop additional products to
sustain growth. We see limited upside potential until Allos is
successful in expanding its product portfolio. The stock carries a
Zacks #2 Rank (Buy rating) in the short run.
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