Cell Therapeutics: Product Developments in Line, But Liquidity Problems Remain

Dec.29.09 | About: CTI BioPharma (CTIC)

In an attempt to guard itself against hostile takeover, Cell Therapeutics (NASDAQ:CTIC) adopted a shareholder rights plan. The plan, to be effective from Jan 7, 2010, has been designed so that a potential buyer has to discuss any offer with Cell Therapeutics' board of directors before approaching the shareholders directly. Cell Therapeutics will give out options that would enable its shareholders to buy a fraction of a share of preferred stock in case of an acquisition of more than 20% of the company's shares. In case of an acquisition, the board of Cell Therapeutics will decide whether to redeem the rights for common stock at a higher price. However, this will not be allowed for a potential acquirer.

Cell Therapeutics is awaiting the US Food and Drug Administration's (FDA) Oncologic Drugs Advisory Committee’s (ODAC) decision to be taken on Feb 10, 2010. The committee will review the New Drug Application (NDA) for pixantrone for the treatment of relapsed and refractory non-Hodgkin's lymphoma (NHL). Although the FDA is not required to follow the panel’s recommendation, a positive opinion will always weigh in its favor when the FDA meets to decide pixantrone’s approvability status.

As a reminder, in Aug. 2009 the FDA accepted for review the NDA filed by Cell Therapeutics. The company is seeking FDA approval (NDA filed in Jun 2009) for pixantrone for the treatment of relapsed and refractory NHL. The company was granted a ten month standard review and has been assigned a Prescription Drug User Fee Act (PDUFA) date of Apr 23, 2010.

We expect a favorable opinion from the FDA panel especially after the presentation of positive pixantrone data at the 2009 American Society of Hematology (ASH) Annual Meeting. We were pleased to note that in patients in a follow-up period of at least 9 months from the end of treatment, pixantrone provided a 250% relative improvement in 1 year progression free survival or PFS (21% vs 6%) over comparator and a 115% increase in median overall PFS (5.6 months vs 2.6 months). Moreover, at 21 months post treatment, 14% of pixantrone patients remained free from disease progression compared to 3% in the comparator arm.

Additionally, in July 2009 Cell Therapeutics initiated the process of obtaining marketing approval for pixantrone in Europe for the treatment of relapsed or refractory aggressive NHL.

Although the picture is not so gloomy on the product development front, we remain concerned about Cell Therapeutics’ liquidity position. The company is under great pressure to raise additional cash to fund its operations, especially at a time when it is preparing for the potential launch of pixantrone in 2010.