Turtle,
Check this out (It certainly hasn't done much for the share price.):
Citi "Positive FDA Panel Vote; Expect Accelerated Approval. $15 target.BUY 3-Sep-09 09:10 am Flash: ALTH: Positive FDA Panel Vote; Expect Accelerated Approval
o What is new - FDA ODAC panel voted 10 to 4 on the benefit of Folotyn in treatment of relapsed/refractory PTCL patients and that the drug has satisfied requirements for accelerated approval. PDUFA date is Sept 24.
o FDA's issue of the data - The FDA had raised 4 issues, which served as discussion topics for the panel. (1) Clinical meaningfulness of having a majority of partial responses (2) 13 out of 29 responders had DOR of > 14 weeks (3) adjudication on 15 of patients (potential introduction of bias in radiology based response) and (4) heterogeneity of PTCL patient population.
o ODAC panel commentary - Majority of the panel members believed that, irrespective of the RR or the DOR, there is a subset of PTCL patients that may benefit from receiving Folotyn and use it as a bridging agent prior to receiving transplant. Given the poor prognosis of these difficult to treat patient, unmet medical need, and lack of any viable therapies, Folotyn will offer patients an pathway and option for curative therapy, which at present is only via transplants.
o Post marketing study - FDA will require an event-driven study, requiring ~280 events. This will be a randomized trial in CHOP responders, comparing Folotyn to current standard, with survival endpoint. Though ALTH had not yet discussed this trial's protocol with the agency, they had drafted a study design, which includes a planned interim analysis. ALTH did not ascertain as to the timing of the trial's initiation or data release. ALTH noted that the agency will require that the company perform reasonable due diligence for this trial and regulatory approval is not contingent upon it.
o European strategy - ALTH intends to approach the EMEA with the PROPEL data set, but did not exclude use of the post marketing trial to support the European filing.
Conclusion - We believe that based on the today's ODAC panel outcome, Folotyn is likely to get approved (PDUFA Sept 24, 2009) based on the existing dataset.
Investment strategy
We recommend Allos Therapeutics (ALTH) with a Buy/Speculative (1S) rating and a 12-month target price of $15 per share. Its lead drug candidate, PDX (pralatrexate), an antifolate agent for the treatment of refractory or relapsed Peripheral T Cell Lymphoma (PTCL) patients. The Phase II/III trial showed positive data and NDA was submission in 1H09, with PDUFA expected for September 24, 2009. There are currently no FDA approved drugs or therapeutic standards for the treatment of PTCL and the prognosis for these patients is very poor. We have conservatively modeled only PDX revenue contributions for PTCL. ALTH is also developing PDX in additional indications,
such as CTCL, NSCLC, NHL and B cell lymphoma, which may provide upside to our estimates. We have not included revenue contribution from these potential additional indications as well as RH1 for solid tumors/NHL in our model.
Valuation
Our 12-month target price of $15 is derived from using a 35 x P/E multiple on Allos’ 2012 fully-taxed EPS estimate of $0.82 discounted back at 25% per year. We believe using the current median P/E multiple of a range of profitable
biotech companies (including large-, mid- and small-cap names) is the most direct and appropriate method, because in our experience all emerging biopharmaceutical companies are valued based on the assumption that they will join the ranks of profitable companies. We are using the current median
P/E multiple of this group of profitable companies to minimize uncertainties around earnings visibility.
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