Friday, February 27, 2009
(Cont'd from above)...

Jim:       I got this $5.64 number, it is under 500 million be careful… from my buddy Adam Forenstein, he is a colleague of mine at TheStreet.com, who runs this bio-tech select newsletter, I am Chairman over there… it has been pantsing the market in terms of performance… Allos is exactly what we want from a speculative stock vs. a cheap single digit stock that is not a bank or an insurer… and it has small molecule cancer drug that is called Pralatrexate, PDX…. which could potentially get FDA approval by the end of the year… PDX is what is known as an orphan drug, that is something that treats a very rare condition… in this case, peripheral t-cell lymphoma, fast spreading cancer affects your blood cells, the white ones… as of right now there are no other drugs to treat this condition… which is why I am willing to get behind Allos… even though Obama has decided to declare war with everything healthcare… look, historically the Democrats have been much more friendly to bio-tech… and even more friendly to those that treat rare or untreatable diseases… which makes Allos more Obama resistant than other bio-tech names… if not Obama proof.

The drug stock sold this week when we say Obama’s war on wealth and corporations budget that includes tougher bargaining by the Feds with the drug companies… for bulk pharma… this doesn’t hurt orphan drugs like the one that Allos is developing… why do I think this… in Europe as well as nearly every other country in the world, drug prices are negotiated with the government already… for orphan drugs the price in Europe is usually the same or even higher than it is in the US… when there are many different drugs to treat a disease, Obama care will pit them against each other to bring prices down… but orphan drugs like Pediatrix Medical Group, Inc. (PDX), no competition… extend lives by treating serious diseases… any price negotiation with the government will be based on the value of a year of a human life… not competition… that is a simple calculation… so Allos has a lot less to fear from Obama from other drug companies.

Now, we have data… on February 4th, Allos released really great data on PDX, that showed that patients who had no success with other therapies… were responding to treatment with the drug for longer than expected… now, make no mistake this is a real life extender… what happened… the news caused the stock quickly to soar above $9... but cause this market is so bad, and because people are so worried about Obama… it just got beaten back down $5.64, it was hammered… right now Allos is actually more than 2 points lower than it was before the data came out… this is the entry point… frankly, I cannot believe that it occurred that it went down… but I also can’t believe that…. who would have ever thought that Citigroup would be a single digit stock, a penny stock, GM, you get the picture… the data on PDX came from phase 2... normally the drug needs to make thru phase III testing before they can be approved by the FDA, or submitted… but because PDX treats a condition that treats a condition that is only diagnosed in abut 5000 people in the US… it is getting fast tracked… Allos will probably file the drug for approval before the end of next June, next data point… and if the FDA bestows its blessing… it could be on the market by the end of the year… even analysts who are on the sidelines expect PDX to be approved 2010... to treat peripheral t-cell lymphoma Allos could get sales of $200 to $400 million a year of PDX… depending on pricing of the drug…. and according to Forenstein, the company intends to be aggressive against pricing.

I don’t like Allos just because it has a drug that could make a nice chunk of change treating one small type of cancer… I like it because this drug could have multiple indications… right now Allos is testing PDX on other forms of non-hoganes lymphoma, lung cancer… if it has any real success then we are talking about big money for Allos and its shareholders… start small, get used big off label, and then take off… that is the stuff of Genetics Avastin, the blockbuster cancer wonder drug… that is how it started… PDX is a chemotherapy drug that interferes with the ability of cancer cells to divide… ultimately killing them… Allos has designed PDX to be more potent than other chemotherapy drugs in its class… like the widely-used Methotextrine… so its potential for treating other cancers could be enormous… one of the long cancer trials pits PDX against Genetics Tarsava… and if the results of the PDX are more effective… the drug will become exponentially more valuable… because it could be used as a first line therapy… you know what that is… that is a thunder dome drama… two drugs enter, one drug leaves… and my money is on Allos.

Now Allos has about $90 million in cash… or a little more than a buck a share… more than enough to get thru 2009... the last private placement was a place was a group of guys called Baker Brothers… who are hard core bio-tech investors… and that money should carry them thru until the approval for PDX… Allos reports on Tuesday… this is not an important report… still, I don’t want you to buy ahead of it… I just want you to listen to the conference call… this is extremely speculative… it doesn’t even have any sales yet… just want to hear if everything is on track… hopefully to get some dates to anticipate to when it will submit its new drug application… when more data will be released… at $6 a share I think it is a bargain… but that means that I think you will be nuts to pay $7... limit orders… be patient… that is why we use the Taft-Hartley weekend cooling off period for post speculative Friday.

Here is the bottom line…

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