ALTH Allos Therapeutics, Inc. (MM)

We are maintaining our Neutral recommendation on Allos Therapeutics Inc. (ALTH) with a target price of $3.50.

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 was formerly known as HemoTech Sciences, Inc. and 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.

The drug has mostly been used to treat 3^rd line or greater PTCL patients or in the salvage setting since its launch. Allos is, however, looking to establish Folotyn as a second-line therapy for treating PTCL patients. Folotyn is also being developed for other indications. The company is leaving no stone unturned to make Folotyn a success.

Allos is seeking to enter into a partnership outside the US to co-develop and commercialize Folotyn. The signing of lucrative deals with established pharma and/or biotech players would not only boost Allos’ cash position, it would also provide the company with the necessary marketing muscle.

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.

 
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