Allos Therapeutics ( ALTH) plans to submit a new drug application to the Food and Drug Administration for a treatment aimed at brain tumors caused by the spread of breast cancer, even though the product didn't meet the main goal of a study in which it was involved earlier this year.

The company said its decision follows a meeting with the FDA in which Allos presented preliminary safety and efficacy data from a Phase III clinical trial and, specifically, the results in patients with metastatic breast cancer. The drug, efaproxiral, is currently known as RSR13.

Allos released preliminary results of the Phase III trial in April, saying that the difference in overall survival between patients with brain metastases who received RSR13 plus whole brain radiation therapy and those who received only radiation therapy wasn't statistically significant. But at the time, Allos said the trial did show a positive survival benefit among patients with metastatic breast cancer.

The NDA filing will be based on the subset of metastatic breast cancer patients. In the Phase III study, there were 115 such patients in this subgroup. The overall study of 538 patients showed no survival benefit for RSR13. In others words, Allos is taking a subgroup of just 115 patients -- and one that wasn't an intent-to-treat subgroup -- and using that as the basis for an FDA filing.

Small Test Group

Some industry observers have indicated that the FDA appears more willing of late to consider new drug candidates. But with such a small test group in the case of Allos, the agency could eventually ask for more data from the company to let the public know that it hasn't allowed its standards to lapse.

(Adam Feuerstein, a columnist for TheStreet.com's sister site RealMoney.com, offered some insight on Allos and the FDA in the Columnist Conversation today.)

Allos, a small biopharmaceutical company based in Colorado, said it expects to complete the application in the fourth quarter of this year.

"When using a Cox analytical model to estimate the treatment effect of RSR13 with whole brain radiation therapy on survival among all patients, a survival benefit is demonstrated," the company said in a press release. "However, we have elected to focus our NDA submission on the data from the metastatic breast cancer patients because of the overall strength and consistency of the results."

The company said that "further analysis of the intent-to-treat data using a Cox multiple regression analysis indicates that RSR13, when combined with whole brain radiation therapy , resulted in a statistically significant 22.5% reduction in risk of death."

Shares of Allos were sharply higher in afterenoon trading, climbing $1.29, or 56%, to $3.60. The stock went as high as $4.15 earlier in the session and has a 52-week range of $1.66 to $9.89. Volume was very heavy, with more than 6 million shares changing hands. On an average day, fewer than 400,000 Allos shares trade.

Trimming Costs

Additionally, Allos said it would need to implement certain restructuring measures to complete the application for RSR13 and to maintain its development timeline for PDX, another experimental cancer treatment. The company will cut its workforce by about 30%, and Allos will record a one-time charge associated with the restructuring.

Allos also said it expects to reduce its cash burn to between $6 million and $7 million a quarter and said its loss from operations for 2003 should be in the low-$30 million range, including restructuring charges and noncash compensation.

The announcement from Allos regarding RSR13 comes just before the important American Society of Clinical Oncology meeting, and at a time when a number of drug and biotech companies are pushing new therapies for cancer.

For instance, AstraZeneca's ( AZN) Iressa and Millennium Pharmaceuticals' ( MLNM) Velcade, both cancer treatments, recently received FDA approval.

Earlier this month, Genentech ( DNA) said its experimental drug Avastin "markedly" improved the survival of patients with colon cancer when used alongside chemotherapy. And this week, investors were glad to hear that ImClone Systems ( IMCLE) received a $6 million payment from Germany's Merck KGaA for achieving a manufacturing milestone under the firms' license agreement for the prospective cancer drug Erbitux.

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