It’s time to talk about survival strategy if you’re Seattle-based Cell Therapeutics. The company (NASDAQ: CTIC) suffered a humiliating public beatdown yesterday from an FDA advisory panel, which said unanimously that the company’s lymphoma drug, pixantrone, isn’t ready for the U.S. marketplace.
Even though the FDA doesn’t have to make a formal decision on this application until April 23, the agency didn’t hide its feelings about the application. FDA’s cancer drug boss, Richard Pazdur, issued a blistering critique, saying Cell Therapeutics was essentially asking for approval of pixantrone based on “a single incomplete trial.” He added that the PIX301 trial looked more like an exploratory mid-stage study than the kind of rigorous proof from a Phase III trial the FDA demands before it will approve a new cancer drug.
If the application is rejected, what’s next for Cell Therapeutics? The company, which has burned through more than $1.4 billion of investors’ money since 1991, has no marketed products and nothing else in the pipeline with a chance of generating sales anytime soon. Cell Therapeutics had a little more than $37 million in cash in the bank heading into this year, which isn’t quite enough to run the business through September, according to the company’s annual report.
“After spending $1.4 billion of shareholders’ money, maybe it’s best for Cell Therapeutics to return what’s left to shareholders and call it a day,” says David Miller, president of Seattle-based Biotech Stock Research, an independent firm that specializes in covering small public biotech companies.
There isn’t much room to maneuver. Cell Therapeutics lost about half of its stock market valuation yesterday after the FDA panel vote, so it will be much more difficult and expensive if it wants to raise new capital by selling new shares to investors. The company has a whopping 616 million shares outstanding already, valued at 47 cents apiece at yesterday’s close, giving it a market valuation of $290 million. That valuation probably isn’t sustainable for long, Miller says. He notes that the stock opened at 12 cents a share immediately after the FDA panel vote, and climbed after that, which was probably the result of derivatives traders exiting their positions in the company, rather than a valuation that’s based on the company’s cash in the bank plus its technology. When those forces return to the stock, the company’s market valuation will likely fall below $100 million, Miller says.
So, if you’re CEO James Bianco, how do you get your company out of this jam? He has shown the ability to pull an 11th hour escape once before, keeping the company alive last year when it was down to its last few weeks of cash by selling off a key asset, closing down a facility, resorting to layoffs, and raising more cash.
The company didn’t respond to an interview request yesterday, so I figured I’d try to assess Cell Therapeutics’ options by sorting through the company’s documents and previous public statements. Here’s what I gathered about its other drug candidates, largely from the company’s annual report:
—Pixantrone in Europe. The company hasn’t yet applied for approval of pixantrone in the European Union, although it has shown interest in doing so. The company plans to file the equivalent of a new drug application to market pixantrone in Europe for relapsed or aggressive forms of non-Hodgkin’s lymphoma in mid-2010, according to its annual report.
But this isn’t a quick fix. European regulators tend to take at least as long to review applications as their U.S. counterparts, meaning that even in a best-case scenario, in which the EU looks favorably on data that the FDA advisory panel shot down, pixantrone wouldn’t likely start generating sales in Europe until mid-2011.
—Paclitaxel poliglumex (Opaxio). This was once Cell Therapeutics’ lead treatment in development, formerly known as Xyotax. The drug is designed to combine a common chemotherapy drug with a polymer that’s supposed to keep it stable in the bloodstream so it minimizes side effects, then gets absorbed into tumors, where it drops its toxic cell-killing payload. This drug failed to show it could help lung cancer patients live any longer in a string of three pivotal clinical trials that enrolled 1,700 patients combined.
Anyone who invested back in the Xyotax days will remember the pain when the stock rose to more than $10 in anticipation of positive results, and then collapsed when the first pivotal trial failed. Here’s a story I wrote for The Seattle Times in May 2005 when this data underwhelmed researchers during a presentation at the American Society of Clinical Oncology. When the company tried to resurrect the drug a year later, it fell flat again. By November 2006, Cell Therapeutics halted enrollment of female patients in a trial called Pioneer after patients on the drug appeared to be dying at a faster rate than those in the control group.
Despite that string of failures, the polymerized paclitaxel isn’t completely finished. It is now being tested in a pivotal trial that’s outside the control of the company, under the purview of the Gynecologic Oncology Group, a physician-based collaborative. This trial, called GOG0212, has enrolled 600 out of a planned 1,100 patients, the company said in its annual report.
Whether this trial can ever generate statistically valid results is unclear. This study began back in March 2005 and was supposed to be completed by April 2008, according to a posting on clinicaltrials.gov. The slow pace of enrollment in the pixantrone trial, and its ultimate inability to recruit enough patients, was one of the major objections the FDA and its advisory panel raised to pixantrone. The company has asked the physician group to speed things up by performing an interim analysis to see if the drug had a decent chance of hitting its goal of helping patients live longer, but the request was denied, according to the annual report. Cell Therapeutics has also planned to discuss the parameters of a pivotal trial of the polymer paclitaxel in esophageal cancer patients in 2010.
None of that sounded promising to Miller.
“That’s a dead drug,” he says.
—Brostacillin. This is a small-molecule chemotherapy drug developed by a Cell Therapeutics subsidiary, Systems Medicine, based on a genomics approach. It has been studied in 230 patients to date, the company said in its annual report. One mid-stage study of the drug in patients with relapsed forms of sarcoma met its goals, and led to another mid-stage study being conducted by a European physician group. Results from that second trial are expected sometime in 2010.