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How Much To Extend Life? Allos Therapeutics Says $30,000 per Month

Allos Therapeutics anticipates a January commercial launch for Folotyn, the first and only drug currently approved by the FDA for relapsing or refractory peripheral T-cell lymphoma (rrPTCL). A successful rollout is not guaranteed, however, as Folotyn is also one of the most expensive chemotherapeutic agents on the market -- with treatment costs of approximately $30,000 per month.

PTCL comprises a biological diverse group of white blood cell cancers affecting approximately 5,600 new patients a year in the U.S., with an estimated prevalence of between 15,000 to 20,000 patients. According to the medical literature, there is no cure and a significant number of first-line CHOP -- cyclophosphamide, doxorubicin, vincristine and prednisone -- responders with the malignancies relapse or become refractory after treatment, leading to an overall survival rate of 25 percent to 40 percent (depending on subtype) and an average survival of one to three years.

With the runaway cost of healthcare under intense debate, critics complain that the price being charged by Allos for treatment with Folotyn (pralatrexate) is excessive -- especially since clinical benefit, such as improvement in progression-free survival or prolonging life, has not been demonstrated. In the pivotal PROPEL trial that led to FDA approval, duration of response was, on average, 9.4 months and the mean overall survival time was 14.7 months.

The cost of Folotyn (pralatrexate injection) runs about $120,000 a year, a price tag that few drugs for incurable, rare cancers can match. Rituxan (rituximab) costs up to $23,500 for a six -cycle treatment for use in chronic lymphocytic leukemia (most common type of adult blood cancer in the Western world); Gleevec (imatinib), which is used both on and off-label for a variety of blood cancers, costs roughly $92,000 per year for a 400 mg/day dose.

On a conference call last month with analysts last month, Allos chief commercial officer Jim Caruso said the company remained confident that its pricing strategy for Folotyn was aligned with prescriber treatment priorities -- the wholesale cost would not deter user support and adoption (see Table 1).

Table 1.
Caruso opined, too, that every dime that comes back to the company goes out again to support the drug and expanded clinical work for other blood cancers. Sadly, that is not entirely accurate, according to a read of regulatory filings. Notwithstanding an accumulated deficit of $350.3 million, management past and present has helped themselves to handsome salaries and bonuses -- irrespective of success or failure!

The top three executive officers at the company -- including Caruso -- each earned total compensation greater than $1.2 million in the last two years. For the nine-months ending September 2009, monies spend on corporate and administrative expenses totaled $26.3 million -- 39 percent more than monies spent on drug development initiatives (25 specialty sales reps were recently hired). In the comparable 2008 period, SG&A spend was $15.8 million and R&D expenses totaled $17.7 million.

"You got to get it while you can," the late-great singer Janis Joplin screamed. According to internal forecasts, the second-line rrPTCL market is expected to grow from $352 million in 2009 to only $428 million by 2013 (assuming an average - off label -- treatment cost of $76,000 per patient/ year). Allos is likely heading Janis' advice, as there are a number of promising treatments being looked at in patients with rrPTCL (after failure with conventional chemotherapy), including blockbuster drugs oncologists are already comfortable with in other blood cancer -- like Velcade (bortezomib) and vorinostat, a Merck drug currently being marketed under the name Zolinza for the treatment of cutaneous T cell lymphoma (about $7,200 per month).

Caruso noted on the earnings call that an internal analysis suggested pushback on cost by insurers would not be an issue: internal reimbursement analysis estimated 66 percent of rrPTCL patients were covered by Medicare, four percent by Medicaid, and the remainder by private insurance. The National Comprehensive Cancer Network (NCCN) updated its clinical practices guidelines on October 15 to include Folotyn as a suggested treatment, too. "The NCCN is recognized by the Centers for Medicare and Medicaid services and private payers as a mandate of reference for oncology coverage policy," stressed Caruso. "Managed care medical directors, pharmacy benefit directors, and other healthcare professionals also reference the NCCN compendium when making treatment and reimbursement decisions."

Folotyn is speculated to selectively enter cells expressing RFC-1, a protein found in overdrive on certain types of cancer cells, triggering cellular death. As RFC-1 is also found in other blood cancers and solid tumors, Allos has an active clinical trial program designed to ultimately expand Folotyn's commercial opportunities beyond the limited rrPTCL market. If physicians and payers rebel -- and push back -- against that $30,000 price tag, however, Folotyn's life cycle could be grimmer than most patients with rrPTCL.

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