Bad News for Allos

Zacks

Allos Therapeutics Inc. (:ALTH) suffered a setback when the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (:EMA) reiterated the negative opinion issued by it in January 2012, regarding the conditional approval of Allos’ sole marketed product, Folotyn (pralatrexate injection), in the EU.

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.

We note that Folotyn is already available in the US for the PTCL indication. The drug received accelerated approval from the Food and Drug Administration (:FDA) in September 2009.

We remind investors that Allos sought a re-examination of the negative opinion issued by the CHMP. By sticking to its negative opinion, the CHMP has dealt a severe blow to the company’s hopes of boosting Folotyn’s sales.

We note 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 for 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 like Australia, South Korea and Switzerland.

Meanwhile, Allos will be acquired by Spectrum Pharmaceuticals (SPPI) for $1.82 per share in cash, in addition to one contingent value right. The deal is expected to close in the second quarter of this year.

Our Recommendation

Currently, we have an Outperform Recommendation on the stock. The company carries a Zacks #1 Rank (short-term Strong Buy rating).

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