ALTH Allos Therapeutics, Inc. (MM)

Recently, Allos Therapeutics Inc. (ALTH) announced the commencement of a late-stage registrational study (n=549: PDX-017) to evaluate its drug Folotyn in patients with previously undiagnosed peripheral T-cell lymphoma (PTCL).

Allos intends to study those patients in the trial who have achieved an objective response on being initially treated with CHOP (cyclophosphamide, doxorubicin, vincristine, and prednisone)/CHOP-like regimen.

We remind investors that Folotyn, Allos’ sole marketed product, is already available in the US (as a monotherapy) for the treatment of patients with relapsed and/or refractory PTCL. We note that the drug received accelerated approval from the US Food and Drug Administration (FDA) for the indication in 2009. The drug was commercially launched in the US in January 2010.

The accelerated approval program permits the FDA to clear drugs targeting cancer or other life-threatening diseases on the basis of initial positive results from clinical trials. Since Folotyn has been cleared under the above-mentioned program, Allos needs to conduct post-approval studies regarding the clinical benefit of the drug in patients suffering from T-cell lymphomas and also evaluate whether treatment with Folotyn poses a serious risk of altered drug levels due to organ impairment.

By commencing the late stage registrational study Allos has fulfilled one of its post-marketing obligations. If Allos tastes success with this study then it intends to utilize the data to gain approval for Folotyn for treating patients with previously undiagnosed PTCL after being treated with a CHOP/CHOP-like regimen. Moreover, data from the study is also expected to be utilized to convert the current accelerated approval for relapsed and/or refractory PTCL to a full approval. We note that Folotyn is currently under review in the European Union for the treatment of patients with relapsed and/or refractory PTCL.

The commencement of the registrational trial for previously undiagnosed PTCL patients follows Allos’ agreement with the FDA in March 2011, under the agency’s Special Protocol Assessment (SPA) program, regarding the study’s design.

We believe that investors will focus more on Allos’ impending merger with AMAG Pharmaceuticals (AMAG) rather than the label expansion efforts for Folotyn. Per the terms of the deal, Allos' shareholders will receive 0.128 shares of AMAG per share of Allos.

The all-stock deal, expected to close by year-end, will involve a one-time cost in the range of $35 million - $38 million. Following the deal, AMAG shareholders will own approximately 61% of the combined company while Allos shareholders will own the balance.

Our Recommendation

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

 
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