Allos Narrows Loss, Awaits Takeover - Analyst Blog

Allos Therapeutics (ALTH) suffered a loss of 11 cents in the first quarter of 2012 as opposed to a loss of 14 cents per share incurred in the year-ago quarter. An increase in total revenue coupled with lower costs led to the narrower loss in the first quarter of 2012. The Zacks Consensus Estimate hinted at a loss of 5 cents per share. The results were announced through a filing with the Securities and Exchange Commission.

Quarterly Results

Total revenue in the reported quarter climbed 4.3% to $11.3 million. Net product sales at Allos fell 10.1% to $9.8 million. Allos derives its product revenues from selling Folotyn. Folotyn (pralatrexate) is marketed for the treatment of patients suffering from relapsed or refractory peripheral T-cell lymphoma (PTCL).

Despite the fall in Folotyn sales,  revenues increased year over year due to the presence of $1.6 million as license and other revenues pertaining to Allos’ deal with Mundipharma (inked in May 2011) for the co-development of Folotyn. The Zacks Consensus Estimate was $14 million.

Both selling, general and administrative (SG&A) and research & development (R&D) expenses were on the downswing during the quarter, declining 12.5% and 29.3%, respectively, primarily due to the company’s prudent cost management strategy.

Allos to be taken over by Spectrum Pharma

On April 4, 2012, Allos announced that it will be acquired by Spectrum Pharmaceuticals (SPPI). Per the terms of the deal, Spectrum Pharma agreed to acquire Allos for $1.82 per share in cash, in addition to one contingent value right (CVR).

Spectrum Pharma has initiated a tender offer to buy the entire outstanding shares of Allos for the above mentioned purchase price. At the time of announcing the deal, expected to close shortly, the companies stated that the CVR makes each Allos shareholder eligible to receive a further 11 cents per share in cash depending on the conditional European approval and achievement of certain milestones of Folotyn.

At the time of announcing the deal, management at Spectrum Pharma had stated that the acquisition, which has been cleared by the Boards of both companies, is expected to boost Spectrum Pharma’s earnings in the final quarter of 2012.

Our Recommendation

Currently, we have an Outperform Recommendation on the stock. The company carries a Zacks #2 Rank (short-term Buy rating).

ALLOS THERAPEUT (ALTH): Free Stock Analysis Report

SPECTRUM PHARMA (SPPI): Free Stock Analysis Report

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