Cell Therapeutics Closing Italian Branch, Cutting 62 Jobs
Seattle-based Cell Therapeutics is shutting down its drug research center in Italy to try to hold onto what little cash it has left. The company is starting a collective dismissal procedure under Italian law, and negotiations with trade unions, at its facility in Bresso, outside of Milan, where it has 62 employees.
Cell Therapeutics has sought to sell the Italian operation, which does animal testing before drugs can enter clinical trials, although it hasn’t found any takers. The company (NASDAQ: CTIC) expects the cuts will help it save $14 million in operating costs. The moves will leave 122 employees at the company’s Seattle headquarters, says spokesman Dan Eramian.
The company has gotten itself into a cash crunch, and has been scrambling to survive the past couple months. Cell Therapeutics disclosed in a regulatory filing earlier this month it only had enough cash to operate until the end of February. That forced the company to sell a partial ownership stake last week in its only marketed product, Zevalin, for $6 million upfront and $12 million more within three months to Spectrum Pharmaceuticals. But that deal only provides a short reprieve, because Cell Therapeutics is still saddled with $124 million in debt on its balance sheet, and reported having just $16 million in cash left as of Dec. 31. It is in an extremely weak position to hit up investors for any new cash infusion, given its 18-year history of burning through more than $1.2 billion in capital. Its current stock price is 6 cents.
Cell Therapeutics first got the Italian research facility—and many cultural headaches and long flights that came with it—as part of its $230 million acquisition of Novuspharma in 2003. That deal gave it the lymphoma drug pixantrone, which is now the centerpiece of the company’s strategy. Pixantrone has shown some positive results in a pivotal clinical trial, although Cell Therapeutics is now racing against the clock to whip together an application to the FDA that it hopes will create enough value to justify keeping the doors open a while longer.