FDA's Early Verdict on Cell Therapeutics' Pixuvri Comes as No Surprise

 |  Includes: CTIC, NVS
by: EP Vantage

The FDA’s verdict on Pixuvri was decisive, early and unsurprising: Cell Therapeutics’ (NASDAQ:CTIC) flagship product for aggressive non-Hodgkin’s lymphoma needs a new trial because the results from an incomplete and invalid pivotal study are insufficient to pass muster with the regulator.

As often happens, the complete response letter Friday drew immediate comments from Cell Therapeutics, stating it will initiate a new trial and, to conserve a dwindling cash pool, cut its monthly burn rate in 2010 to no more than $4.4m from an estimated $7.2m. James Bianco, the Washington company’s chief executive, also said Cell Therapeutics will ask partner Novartis (NYSE:NVS) to restructure the current licensing deal.

Unanimous adcom

Rejection of Pixuvri, known generically as pixantrone, was widely expected following a unanimous negative advisory committee decision in March. Its phase III trial in advanced or refractory aggressive NHL made the panel’s decision pretty simple: It enrolled fewer than half of the planned patients, and then ended early in violation of a special protocol agreement with the FDA. It also raised some safety concerns (Testing times for Cell Therapeutics after adcom rejection of Pixuvri, March 23, 2010).

Since the adcom vote, shares in Cell Therapeutics have been trading in a range between 50 and 75 cents, and the complete response letter did little to change that. Shares closed down 6% Friday at 62 cents, and Monday in early trading were slightly higher at 65 cents. What this seems to show is some investors in Cell Therapeutics are at least holding out hope despite what appears to be a very uncertain future for the company.

Given how deep the regulatory concern, it is no surprise that the FDA beat its PDUFA date by two weeks. Now Cell Therapeutics finds itself with limited options, despite having $51m in cash at the end of February and an additional $21m from a share offering in March (Event – Adcom will clarify Cell Therapeutics’ strategic moves, January 20, 2010). The company’s own auditors have already raised going concern warnings - it has $40.4m in debt coming due July 1, 2010 - and it also now has to contend with lawsuits from investors who claim the company did not disclose vital details about the main trial.

Starting over

In a conference call Friday that accentuated only the positive, Dr. Bianco highlighted an enthusiastic response to Pixuvri from European regulators, where the company expects to submit a marketing authorization application in the third quarter.

For eventual US approval, Dr. Bianco said the company plans on initiating a new trial of Pixuvri in combination with rituximab in 200 NHL patients in the US, taking advantage of an expanded access program and using community cancer centers rather than academic hospitals to speed the institutional review board process.

Dr. Bianco predicted starting enrollment in September, completing in the first or second quarter of 2011, and 18 months of study before a readout of data on the primary endpoint, progression free survival, and a cost of $20-$24m.

He also said the company has begun talking with Novartis, which has an option to license the drug for $7.5m upfront and $104m in milestones, about restructuring the deal into a co-development, co-promotion arrangement to share some of the costs.

However, that may be too much to ask of the Swiss company, given Pixuvri’s fortunes so far.