Cell Terapeutics Rallies on Pixantrone Resubmission Talks, Stock Position
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  • Small-Cap Stock on Watch: Cell Therapeutics Inc. (CTIC)
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    FDA News; Cell Terapeutics stumbles on Delay in Pixantrone Approval

    Cell Therapeutics Inc. (Nasdaq: CTIC) slipped nearly 2% this morning shortly after the company reported that its appeal to the U.S. Food and Drug Administration (FDA) for pixantrone in aggressive non-Hodgkin’s lymphoma would be ruled in the second quarter of 2011. Following discussions with the FDA, Cell Therapeutics announced a new clinical trial of pixantrone, which could likely postpone the drug approval in the U.S. for a period of at least two years and result in additional expenses and dilution to current shareholders.

    Cell Therapeutics shares sank 77% over the last year mainly due to the FDA refusal to approve pixantrone in March 2010, saying there was not enough evidence showing the drug is effective as a treatment for non-Hodgkin’s lymphoma. With a 52-week range of $0.12-$1.11, the March 9 trade was at $0.22, on the lower end of that range.

    Cell Therapeutics is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. The company’s leading drug candidate, pixantrone, is a novel anthracycline derivative for the treatment of non-Hodgkin’s lymphoma and various other hematologic malignancies and solid tumors. The phase III study results on drug achieved the primary efficacy endpoints, which made the company submit a New Drug Application with the FDA. However, the application was rejected, making CTIC to file an appeal last December and schedule additional clinical trials for 2011 and 2012.

    Considering the previous records, the chances that the FDA would revisit the decision on pixantrone and approve the drug in the second quarter 2011 are slim. Therefore, additional clinical trials are inevitable.  The company has already announced a new clinical trial, referred to as the PIX-R or PIX 306 trial, to compare a combination of pixantrone plus rituximab to a combination of gemcitabine plus rituximab in patients with relapsed or refractory diffuse large B-cell lymphoma who have received one to three prior lines of therapy, utilizing progression free survival and Overall Survival as co-primary endpoints of the study. The trial is targeting to enroll approximately 350 patients over a period of 18 months.

    As a result, the approval of pixantrone would most likely occur not earlier than in 2013. The delay would also result in additional research and development expenditures and dilution to existing shareholders. Cell Therapeutics had approximately $22.6 million in cash and cash equivalents as of December 31, 2010. Last February, the company upset its investors with additional dilution, reporting that it entered into a securities purchase agreement to sell up to $25 million worth of shares of its non-convertible preferred stock, warrants to acquire up to 25.9 million shares of common stock, and an additional investment right to acquire up to $25 million worth of shares of its convertible preferred stock.

    Meanwhile, the company plans to promote pixantrone in Europe, where the Marketing Authorization Application for the drug as monotherapy for patients with relapsed or refractory aggressive non-Hodgkin’s lymphoma was validated and is currently under review by the European Medicines Agency based on the pixantrone phase III study results.

    The company had no revenue in Q4 2010 and reported that it lost $34.1 million, compared to $27.4 million in the Q4 2009. Because of dilution, Cell Therapeutics’ per-share loss decreased to $0.4 from $0.5. The company had about 900 million shares outstanding as of February 14, up from 571 million a year ago.

    Besides pixantrone, Cell Therapeutics’ other late-stage drug candidate Opaxio is being studied as a potential maintenance therapy for women with advanced stage ovarian cancer who achieve a complete remission following first-line therapy with paclitaxel and carboplatin. The phase III study on the drug is under the control of the Gynecologic Oncology Group, and is expected to enroll 1,100 patients with 765 patients enrolled as of December 31, 2010. Opaxio is also being studied in phase II trials for the treatment of metastatic esophageal cancer and brain cancer. These trials were completed in 2010 and demonstrated encouraging responses to therapy.

    Cell Therapeutics is also developing brostallicin, which is a new class of cancer drug—a synthetic DNA minor groove binding agent with a unique mechanism of action. Brostallicin is currently in a phase II trial for the treatment of metastatic triple-negative breast cancer. This study is being conducted by the North Central Cancer Treatment Group and is in the process of enrolling patients.

    The company’s current capitalization of nearly $200 million leaves significant room for growth and appreciation, given the market potential of pixantrone. According the Cell Therapeutics, the pixantrone revenue could reach $1 billion a year, in less than three years after the launch.

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