Talon Therapeutics Looks Undervalued Following FDA Approval Print E-mail
By Brian Wilson, Contributor   
Friday, 10 August 2012 04:03
icon_fdaapprovalShareholders of Talon Therapeutics (OTC: TLON) saw a pleasant surprise on August 9th when the FDA approved the company’s flagship product, Marqibo, three days earlier than expected. The initial decision date under the PDUFA was on August 12th, which was set after an initial three month delay that was announced back in April. We can now put all the drama over Marqibo’s NDA aside; however, because the FDA has given Talon the green light it’s been waiting on for years. The bears that were selling in anticipation of a rejection were indeed wrong.

Marqibo is a targeted version of a generic chemotherapeutic agent known as vincristine, which has been around for nearly fifty years. This has diminished investor excitement over Marqibo’s development, and investors who’ve followed the drug in the past may remember the FDA rejection in 2005 for the treatment of relapsed non-Hodgkin’s lymphoma that allowed Talon to license Marqibo on the cheap.

Despite its history, and a very mixed advisory panel vote back in March (with 7 in favor of approval and 4 again), Marqibo is now set to enter the Acute Lymphoblastic Leukemia market. Competing drugs for Acute Lymphoblastic Leukemia include a large number of candidates, but two that are mentioned in an overview of the disease at the Mayo Clinic website are Novartis’ (NYSE:NVS) Gleevec and Bristol-Meyers’ (NYSE:BMY) Sprycel, both of which are used for other types of cancer as well.

Talon’s Marqibo is special, however, since it was developed for use in older adults (aged 60 or older). This demographic has been difficult for conventional ALL therapies, which include radiation and chemotherapy which can cause complications quite easily in older patients. Comments by Talon indicate that the company is expecting to reach approximately 2,000 US patients per year with the current FDA approval.

There is also hope that Marqibo will be able to tap into the ~2 million patient market that generic vincristine sells to. This may be possible due to Marqibo’s ability to deliver a dosage of vincristine itself that is much more potent while having the same safety profile as the original. Since chemotherapy leaves patients especially frail, this is a vital aspect of the treatment’s success. It seems that patient’s great tolerance is paving the way for Marqibo to finally succeed.

We are also going to see an NDA to bring Marqibo to market for front-line treatment of non-Hodgkin’s lymphoma after additional phase III data is collected and compiled to address issues brought up in 2005, when it was rejected.

Even if Talon’s penny-stock status may seem daunting, there is substantial value that is locked into Marqibo that apparently isn’t recognized by main stream investors. It is certainly optimistic to say that a very significant portion of vincrinstine’s enormous pool of sales could be quickly given to a replacement drug that barely made it past FDA approval right off the bat, but I also want to point out that it wouldn’t take much market penetration to bring this 21.5 million dollar company to profitability. Remember that approval down the road in non-Hodgkin’s lymphoma treatment could also weigh in quite heavily on the company’s value.

Ultimately, it would seem likely that TLON shares will see higher ground as Marqibo finally gets brought to cancer patients. Speculators might want to play the eventual NDA on non-Hodgkin’s lymphoma treatment too.

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