Cell Therapeutics Teeters on the Brink as Cash Runs Out on Promising Cancer Drugs
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like other anthracycline chemotherapy drugs but with a modification to make it less toxic on the heart, was shown to work. In patients who failed to respond to all previous rounds of chemotherapy, about 20 percent on pixantrone went into complete remission, compared with 5.7 percent who did that well on another round of chemo. The effect was verified by a second measurement, which showed patients on pixantrone were able to keep their tumors from spreading for 4.7 months, compared with 2.6 months for those in the control group.
Cell Therapeutics is now racing to put together an application to the FDA in the first part of this year, and is hoping the FDA will assign it a six-month expedited review time that it sometimes gives to potential lifesaving therapies, Bianco told investors earlier this week. While the company assembles its application, the Swiss drug giant Novartis is doing its due diligence on the drug. If Novartis decides to exercise an option to co-market the product, it could pay Cell Therapeutics a $7.5 million fee by the end of this month, Bianco said. That could lead to a total of $40 million in milestone payments in 2009, require Novartis to pay the bills for commercializing the product, and leave Cell Therapeutics with a double-digit percentage royalty on sales, he said.
Even assuming Cell Therapeutics gets every possible break from the FDA, and Novartis throws the company a life-preserver, the company will still need to escape from its debt, which amounts to $124 million and is due in 2010 and 2011, according to regulatory filings. This debt load was supposed to convert into equity shares for investors, leaving the company debt-free, so long as Cell Therapeutics was successful with its former lead compound, paclitaxel poliglumex (Opaxio). That drug ended up failing to reach its goals for lung cancer patients in three consecutive pivotal trials in the first half of 2005, which devastated the company’s stock price, and left it on the hook to pay that debt. The company now hopes shareholders will approve a transaction at a Feb. 27 meeting that will clear much of the debt off its books, Bianco says.
Even though he acknowledged that the company is on a “tight-wire” at this week’s investment conference, Bianco makes it sound like he has no doubt the company will survive. He said the company expects to reach the break even point in its cash flow by the fourth quarter of 2009, adding, “We’re clearly on our way to turn into a profitable company in 2010.”
Last week, in an op-ed piece in The Seattle Times, he insisted that his company remains on track: “I have always followed a single principle—walk by faith, not by sight—to guide me and CTI, through both good and tough times,” Bianco wrote. “Those companies with lasting vision and/or noble missions, whether they be Starbucks or Nordstrom, even when they stray, find their way back to enduring success.” We’ll find out soon if the company’s vision will endure, or whether someone else with more resources will pick up CTI’s drugs off the bargain rack to bring them to patients in need.