Allos Narrows Loss - Analyst Blog

Allos Therapeutics Inc.’s (ALTH) suffered a loss of 1 cent as opposed to a loss of 17 cents per share incurred in the year-ago quarter. A surge in revenues coupled with lower costs led to the narrower loss in the final quarter of 2011. The Zacks Consensus Estimate hinted at a loss of 8 cents per share.

Quarterly Results

Total revenues in the reported quarter climbed 44.4% to $16.9 million. Net product sales at Allos climbed 17% sequentially and 31.6% year over year to $15.4 million (including some infrequently occurring items). Excluding those items, net product sales grew 8% sequentially to $11.0 million.

Allos derives its product revenues from selling Folotyn for treating patients with relapsed or refractory peripheral T-cell lymphoma (PTCL). License and other revenues pertaining to the Mundipharma deal for the co-development of Folotyn accounted for the balance. The Zacks Consensus Estimate was $16 million. Both selling, general and administrative (SG&A) and research & development (R&D) expenses were on the downswing during the quarter, declining 47.2% and 44.5% due to the company’s prudent cost management strategy.

Annual Results

For full year 2011, Allos suffered a loss of 24 cents as opposed to the year-ago loss of 74 cents. Higher revenues (up 130% to $81 million) and lower costs (down 6.6% to $106.7 million) led to the narrower loss in 2011. The Zacks Consensus Estimate for 2011 hinted at a loss of  36 cents on revenues of $72 million.

Allos exited 2011 with $97.8 million in cash, cash equivalents and investments and no debt as opposed to a cash balance of $109.5 million and zero debt at the end of the third quarter of 2011.

Forecast for 2012

Allos expects revenues from Folotyn sales in the range of $50-$55 million for 2012 (up 16%-28% over 2011 levels excluding infrequent items). For 2012, R&D expenses (excluding non-cash stock-based compensation expense) are projected to be approximately $27 million for 2012 (up 42% from 2011 levels) as Allos continues to develop Folotyn for other indications.

For 2012, SG&A expenses (excluding non-cash stock-based compensation expense), are projected to be approximately $48 million (down 20% from 2011 levels). The reduction is primarily due to the expected fall in personnel and other costs. Allos expects license and other revenue from the Mundipharma agreement to be approximately $9 million in 2012.

Our Recommendation

Currently, we have a long-term recommendation of Neutral on Allos. We believe that Allos must reduce its dependence on Folotyn and develop additional products to sustain growth. We see limited upside potential until Allos is successful in expanding its product portfolio. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.

ALLOS THERAPEUT (ALTH): Free Stock Analysis Report

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