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Cell Therapeutics' Clever Fundraising: Our Drug Failed, So Please Give Us Dough

CTIC for saleCell Therapeutics (CTIC) must have the most talented fundraisers on the face of the earth. I don't know how else to explain the fact that this little biotech raised $20 million a week after its lead drug was ripped apart by an FDA advisory committee.

Over the last two decades, CTI has pulled in roughly $1.4 billion -- and the biotech has virtually nothing to show for it.

There's Pixuvri (pixantrone), the non-Hodgkin's lymphoma drug that just got unanimously rejected by its FDA advisory panel. Let's think for a minute about just how bad that is. Advisory panels are staffed by doctors who are out in the field treating patients -- these guys are desperate for new drugs. When the FDA takes a hard line on a drug, they're the ones who come to its defense. When not one of them thinks your drug should be approved, well, then it probably shouldn't.

And even before the panel rejection, the writing about pixantrone was on the wall. CTI bragged that the drug had met its endpoint in a Phase III trial, but enrollment in that trial had been stopped before it was even halfway finished, throwing the statistical plan off kilter. Meanwhile Novartis had been sitting on -- but not exercising -- an option to the drug since 2006, and while CTI repeatedly claimed to be in late-stage partnering talks, no one ever actually stepped up and signed a deal.

CTI's other main asset is Opaxio (poliglumex paclitaxel, formerly called Xyotax), a reformulated chemotherapy drug that previously failed a trio of Phase III lung cancer trials and is now being studied for ovarian cancer. There's also Brostallicin, an earlier-stage drug off-loaded long ago by Pharmacia.

And who could overlook CTI's messy balance sheet: while the company has managed to pay down some of its debt, the cost has been dilution, with more than 600 million shares now outstanding.

Despite all of that, CTI managed to raise $20 million this week through a registered direct offering to three institutional investors. The company is largely held by retail investors, so the fact that they talked institutional guys into buying this deal is impressive. I suppose it just goes to show that you should never bet against CTI. These guys can sell ice to Eskimos -- they've been doing it for 20 years and they'll probably be doing it for 20 more.

For Sale photo by Flickr user bsabarnowl, CC.