Allos developing drugs to make radiation therapy more effective

WESTMINSTER ? Doctors have been treating cancer with radiation for about 100 years, ever since William Roentgen discovered X-rays and Marie and Pierre Curie discovered radioactivity.

Allos Therapeutics Inc. (Nasdaq: ALTH) is developing tools to make radiation therapy more effective. Its flagship product, RSR13, works by increasing the amount of oxygen in tumors undergoing radiation therapy.

Allos originated in Virginia in 1992 and moved to Denver in 1994. After its initial public offering (IPO) in 2000, the company relocated to Westminster in 2001.

?Allos relocated to Westminster primarily because it was central to our employee base,? said spokesperson Monique Greer. ?We moved from Denver because we simply outgrew the space we were in and needed a place that could accommodate our future growth needs.?

Prior to IPO funding Allos raised $30 million in venture capital financing, said Mike Hart, Allos president and chief executive. The IPO garnered $90 million, he said. ?It’s given us the resources to grow,? Hart said. The company went from 25 to 90 employees since the IPO.

Between the additional $15 million private placement and a $7 million per month burn rate, at the end of the third quarter of 2002 Allos had $65 million, Hart said.

The 10-year-plus development cycle is normal for drug development, Hart said. ?That’s what it takes to develop any drug from start to finish.?

Because they are typically hypoxic, or oxygen-deprived, most cancers are resistant to radiation. RSR13 helps to deliver oxygen-rich hemoglobin to tumors prior to radiation therapy.

Radiation with RSR13 is designated for patients with cancer that has metastasized, or spread, from a primary tumor. Radiation is used when tumor involvement is so vast it’s impossible to operate.

In August Allos completed enrollment of 538 patients for the Phase 3 trial of RSR13. The Phase 3 study was designed to compare the safety and efficacy of whole brain radiation combined with RSR13 to whole brain radiation alone for treatment of brain metastases. Allos will follow these patients for six to eight months and then analyze the data.

If the data is positive, the Phase 3 clinical trial should lead to approval by the Food and Drug Administration (FDA), Hart said. The earliest date for approval would be summer 2004, he said.

David Bouchey thinks Allos has a winning product. Bouchey is an analyst who follows companies in cancer, cardiology and viral diseases for the Denver branch of investment banking company C.E. Unterberg, Towbin.

Other companies are developing radiation therapy enhancement products, but nobody else has anything like RSR13, he said. He cites Sunnyvale, Calif.-based Pharmacyclics Inc. that is developing products that increase the damage that radiation does.

?Allos is far and away the best because it’s the smartest,? Bouchey said. ?Radiation oncologists have known for 50 years that the most critical factor for radiation is oxygen. Hypoxic tumor cells take two and a half to three times as much radiation to kill. The single reason radiation fails is because you don’t get all the hypoxic cells.?

Allos’ success would be a ?major coup for Colorado,? Bouchey said. The state’s most successful biotechnology firms — Roche, Amgen, OSI — aren’t native to Colorado, he said. If Allos succeeds, it would enhance the state’s portfolio of health-care firms like Atrix Labs, Colorado Medtech and Ribozyme, he said.

It also would make it easier to attract more biotechnology firms and good talent to Colorado, he said.

?If I was thinking about joining a biotech startup in San Francisco, if it flops there’s 100 companies like it in the same area that I could go to,? Bouchey said. ?That’s been a problem here, especially in Boulder. People come to Boulder because it’s a great place to live, but if the company can’t keep them employed where are they going to go??

Bouchey said it’s a sad fact of life that radiation therapy is a growth industry. He said about half of all cancer patients are treated with radiation and that market will likely grow because:

· More Americans are reaching high risk age categories for cancer;

· Doctors’ ability to detect and define a tumor’s location is getting vastly better because of imaging technologies;

· There are improvements in radiation therapy that allow the delivery of radiation to exact size and shape of tumors.

?Allos is leading that charge,? Bouchey said. ?It’s kind of hard to believe a little company next to the Butterfly Pavilion could be that important, but it could be.?Contact Caron Schwartz Ellis at (303) 440-4950 or e-mail csellis@bcbr.com.

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