I argued on Twitter, and still believe, that Allos' disappointing Folotyn U.S. sales and lower-than-consensus 2011 guidance outweigh the upfront cash and potential for European Folotyn royalties from Mundipharma, for now.
Folotyn was approved as a treatment for peripheral T-cell lymphoma in September 2009, but Allos has found the market for the drug to be smaller and tougher to penetrate than initially anticipated. Part of the problem is that doctors are using less Folotyn on more advanced, or sicker PTCL patients.
Allos will also soon be getting competition in the PTCL market. Celgene (CELG) is expecting to receive expanded FDA approval for its drug Istodax in June. Two months later, Seattle Genetics' drug Adcetris will also likely receive FDA approval.
Back to Kevin's point, I agree with him that Allos is not overvalued. The stock is reflecting Folotyn's lackluster performance and not giving much credit, if any, for an uptick in sales that may come from the U.S. or Europe. With that said, I'm not sure Allos deserves any optimism about Folotyn, at least until the company starts putting up better sales numbers.Regarding MannKind, I'd argue that the disparity in its $500 million-plus market value relative to Allos is due to MannKind being grossly overvalued.
Angie D. emails, "Adam, thanks for the great job on the FDA advisory panel blogs for Vertex Pharmaceuticals and Merck. They were very helpful, and many of us value your opinions. Where do you see Optimer Pharmaceuticals going this month?" Optimer should go higher as long as 1) FDA approves its antibiotic Dificid for the treatent of C. diff infection on time (May 30) and 2) FDA grants the company a Dificid label which includes data or language about lower C. diff recurrence rate compared to vancomycin. If you recall, the FDA advisory panel on April 6 voted unanimously to recommend Dificid's approval but the same panel was split on how best to characterize the drug's recurrence benefit. I do believe the data demonstrating Dificid's recurrence benefit are clear, it's more a matter of how best to describe it in the label. I predict Optimer and FDA have had enough time to hammer out the Dificid label in time for the drug to be approved on May 30. --Written by Adam Feuerstein in Boston.
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