ALTH Allos Therapeutics, Inc. (MM)

Allos Therapeutics Inc.’s (ALTH) first quarter 2011 loss of $0.14 was narrower than the Zacks Consensus Estimate of a loss of $0.15 per share. The year-ago loss was $0.20 per share. The lower loss per share was attributable to higher revenues and lower operating expenses recorded in the first quarter of 2011.

Quarterly Results

Net product sales (revenues) in the reported quarter climbed 47% to $10.9 million. Revenues fell short of the Zacks Consensus Estimate of $12 million. The entire revenues at Allos in the quarter came from sales of its sole marketed product, Folotyn.

Folotyn is marketed in the US for treating patients suffering from relapsed or refractory peripheral T-cell lymphoma (PTCL) since January 2010. Even though Folotyn is currently the only FDA-approved drug for PTCL, it will have to compete with Celgene Corporation’s (CELG) Istodax, which is under review in the US for the same indication.  We note that Folotyn is under review in Europe.

Operating costs and expenses (including stock-based compensation expense) in the reported quarter declined 6.7% to $26.1 million. Selling, general and administrative expenses fell marginally to $17.6 million in the first quarter of 2011 due to lower costs incurred on selling Folotyn. Research and development expenses fell 19.3% to $7.5 million.

Allos exited the first quarter of 2011 with $79.5 million in cash, cash equivalents and investments and no debt.

Allos Inks Deal

Apart from announcing financial results, Allos announced that it inked a deal with Mundipharma International Corporation Ltd. to co-develop 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 rest of the world. Allos will receive an upfront payment of $50 million later in the month and potential milestone payments up to $310.5 million pertaining to the deal. The deal will strengthen Allos’ balance sheet.

2011 Guidance

Allos also provided guidance for 2011. Allos forecasts 2011 net product sales in the range of $48 million-$55 million. The company continues to expect total operating costs in the range of $95 million–$98 million (excluding cost of sales and non-cash stock-based compensation expense).

Allos expects to end 2011 with cash, cash equivalents and investments in the range of $88 million-$96 million. The cash balance guidance includes the upfront payment and the expected funding of the development costs for Folotyn by Mundipharma in the remainder of the year. Allos did not provide any earnings guidance for 2011.

Our Recommendation

Currently, we are Neutral on Allos. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.

 
ALLOS THERAPEUT (ALTH): Free Stock Analysis Report
 
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