Allos Therapeutics shows near and long term potential Print E-mail
By Nick DeCesare   
Monday, 02 May 2011 09:17
So far this year, all three stocks that I suggested to our readers have all moved higher.

Nile Therapeutics (Nasdaq: NLTX) was recommended in March when it was trading around sixty cents and closed Friday with a 30% gain. Avanir Pharmaceuticals (Nasdaq:AVNR)was recommended in April when it was trading at $3.80 a share and closed Friday  with a 15% gain. Finally, Savient Pharmaceuticals was also recommended in April when it was trading at $10.50 and it closed Friday with a 10% gain.

I expect all of those stocks to continue to give our readers great returns in the long run. Now I recommending Allos Therapeutics, Inc. (Nasdaq: ALTH ). I believe that Folotyn, the flagship drug that the company is selling to treating relapsed and refractory T-cell lymphoma, will continue to show excellent growth in the quarters ahead.

The stock price of Allos currently closed Friday at $2.91 a share, which currently assigns a $300 million market cap to this growing company. The stock has declined from a 52 week high of over $8 a share and investors have been left to wonder what has happened. In a nutshell, sales of Folotyn began slowly when it was launched in 2009, for the full year, Folotyn sales were $3.6 million.

However, in 2010, the company reported that sales had grown to $35 million. The stock price has lagged as analysts had expected even more in the early stages of Folotyn’s growth, however, many analysts and fund managers are starting to see the true potential of Allos and believe sales will continue to grow nicely. Analysts from Needham and Brean Murray have maintained Allos stock price targets in the $8.50 range and institutions purchased almost $20 million in Allos stock in the past quarter, very bullish signs.

Cuurently, Folotyn is the only FDA approved product for treating relapsed and refractory T-cell lymphoma, however investors should note that Celgene has recently filed a sNDA for Istodax, a drug now under review by the FDA for the same indication. The target date for completion of that supplemental review is June 17th. If approved, which I believe it will be, Istodax will compete with Folotyn for market share. I believe that with the size of the market that both of these drugs are targeting and the impressive growth of Folotyn, that Allos is well positioned to continue to see an increase in sales despite the competition.

Not only will growing Folotyn sales in the United States continue to help Allos, but they are looking to begin sales growth worldwide as well. In December 2010, Allos reported that their application to the European Union was accepted for review, I expect approval of Folotyn there this year. Allos is also running trials to expand the use of Folotyn for other indications and currently has an SPA with the FDA for process for the design of the Company’s Phase 3 clinical trial of Folotyn in patients with previously undiagnosed peripheral T-cell lymphoma (PTCL). The Phase 3 trial is set to begin this year.

With a price around $3, I believe Allos Therapeutics is one of the most undervalued biotech stocks being traded today. I am very selective with the biotech stocks I recommend to our readers, and Allos is certainly another recommendation this year that I believe will make substantial gains from the current price level. I am excited about the growth of Folotyn and believe the market will begin to see the true potential of Allos Therapeutics in both the near and long term.

Disclosure: Long ALTH

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