ALTH Allos Therapeutics, Inc. (MM)

We are maintaining our Neutral recommendation on Allos Therapeutics Inc. (ALTH) with a target price of $2.50.

Allos, founded in 1992 and headquartered in Westminster, Colorado, is a biopharmaceutical company focused on the development and commercialization of small molecule drugs for the treatment of cancer. The company, formerly known as HemoTech Sciences, Inc., changed its name to Allos Therapeutics, Inc. in October 1994.

Allos’ sole marketed product is Folotyn (pralatrexate), approved for treating patients suffering from relapsed or refractory peripheral T-cell lymphoma (PTCL). The drug received accelerated approval from the US Food and Drug Administration (FDA) in September 2009.

While the drug has been available to patients since October 2009, it was launched commercially in January 2010. Even though Folotyn is currently the only FDA-approved drug for PTCL, additional competition could come in the form of Celgene Corporation’s (CELG) Istodax, which is under review in the US for the same indication. 

Folotyn is also being developed for other indications. The company is leaving no stone unturned to make Folotyn a success. In May 2011, Allos signed a co-development and commercialization deal for Folotyn with Mundipharma International Corporation Ltd.

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.

Folotyn is also under review in Europe. If the drug is approved in Europe then the original terms of the deal, which make Allos responsible for funding 60% of Folotyn’s development costs, would be modified to allow for equal sharing.

However, the dependence on one drug for growth concerns us. We believe that Allos, which is characterized by the absence of a decent pipeline, must develop additional products to sustain growth. Consequently, we see limited upside potential from current levels and retain our ‘Neutral’ view on Allos.

Allos Therapeutics, Inc. (MM) (NASDAQ:ALTH)
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