It has been more than a year since shares in Cell Therapeutics Inc. (NASDAQ: CTIC) tanked following a unanimous 9-0 vote by the FDA rejecting the biotechnology company’s drug pixantrone for the treatment of non-Hodgkin’s lymphoma. Since that time CTIC has had a hard time regaining any semblance of trust by investors as shares have yet to climb above the 1.00 listing requirement of NASDAQ and are actually sitting at less than half that value, currently around the 0.43 – 0.45 range, and while that is better than their 50-day moving average of 0.34 and their 200-day moving average of 0.38 it is nowhere near the level shareholders were banking on when the company was expressing optimism about the potential for pixantrone. So it’s no wonder that their news on Monday regarding the initiation of their “randomized pivotal trial of pixantrone for the treatment of relapsed/refractory diffuse large B-cell lymphoma (“DLBCL”)” inspired little reaction from shareholders.
Going through the FDA approval process is an expensive endeavor for any biotech but for a company that has no products on the market the stakes are even higher. This usually means they will take extra precautions to ensure they have met the requirements outlined for their trials and deliver the results that the FDA requested. In the case of CTIC and their Phase III trial with pixantrone there was a catastrophic degree of mistakes that essentially made the biotech appear incompetent at best and possibly a bit manipulative and deceptive.
While the FDA rejection is old news it is still important to look back at where CTIC dropped the ball so as to see if they have made the necessary changes that could actually put them on track for approval. They went to the FDA with a 140-patient study known as Extend or PIX301 insisting the treatment was capable of treating patients with relapsed forms of non-Hodgkin’s lymphoma, specifically the treatment was capable of wiping out tumors. The study showed that 14 of the 70 patients on pixantrone had a “complete response” compared to 4 out of 70 who had the same response in a control group.
That may sound encouraging yet the study was designed to enroll 320 patients over 36 months, instead CTIC had to halt the study after 45 months settle with less than half the intended patients enrolled. Right away the FDA considered the study incomplete and upon investigation the chief of cancer drug reviews at the FDA, Richard Pazdur, picked apart CTIC’s findings noting that just eight of the patients enrolled in the study were from the U.S. despite CTIC arranging for 28 U.S. sites to enroll patients. This is important to the FDA because patients in the U.S. tend to receive more pre-treatments which can affect their prognosis.
It was also discovered that 5 of the 14 patients who saw their tumors wiped out with the treatment of pixantrone actually had slow-growing tumors, not the fast-growing aggressive tumors that the patients in the study were supposed to have. On top of this there were six patients who quit taking pixantrone during the study because they had white blood cell depletion, an issue that wasn’t encountered in the control group. The study also produced severe heart toxicity in the enrolled patients, bringing up further questions about the safety of pixantrone.
CTIC CEO James Bianco argued that pixantrone had “produced a favorable benefit to risk profile” for patients with no other options. Bianco also insisted that CTIC did its best to speed up enrollment, increasing the number of clinical sites, hiring regional firms to recruit patients, and engaged in Web-based outreach to clinical trial investigators.
The reason all of this is significant is simply because while CTIC insists they did everything they could to get pixantrone approved as a treatment for patients suffering from relapsed forms of non-Hodgkin’s lymphoma this was the best they could do. What is there that gives any investor the confidence that CTIC’s latest trial, PIX-R or PIX 306, in which they will compare “a combination of pixantrone plus rituximab to a combination of gemcitabine plus rituximab in patients with relapsed or refractory DLBCL who have received one to three prior lines of therapy” will produce better results.
This time around the trial is “targeting to enroll approximately 350 patients over 18 months and will include patients who have failed at least one line of previous therapy and patients who are not candidates for myeloablative chemotherapy and stem cell transplant.” CTIC has said they expect to have 60 sites open for enrollment by the end of April 2011.
Now in addition to the PIX 306 trial CTIC is also awaiting word on their appeal of the FDA’s decision to reject the findings of PIX301. Earlier this month CTIC announced they had met with officials of the FDA’s Office of New Drugs to argue their case and by the end of the day the OND requested that CTIC provide additional analyses from the PIX301 study. CTIC has said they intend to submit that information and they anticipate a decision on their appeal in the second quarter of 2011. As history has shown the chances of winning that appeal are already small and the debacle that was PIX301 certainly doesn’t improve those odds.
So how can CTIC even afford to stay in business with no products on the market and a fourth quarter loss reported at $34.1 million, nearly $7 million higher than their 2009 fourth quarter? In 2010 the company lost $147.6 million and by the fourth quarter they had almost 200 million more shares on the market than they did a year prior. Well in February the company entered into a securities purchase agreement to sell up to $25 million worth of shares of its non-convertible preferred stock, warrants to acquire up to 25.9 million shares of common stock, and an additional investment right to acquire up to $25 million worth of shares of its convertible preferred stock. That did little to please shareholders but CTIC has no other means of raising money.
Despite its seemingly precarious situation CTIC announced on March 14, 2011 that they had entered into a co-development and license agreement with Chroma Therapeutics Ltd. providing CTI with exclusive marketing and co-development rights to Chroma’s drug candidate tosedostat, is an oral, aminopeptidase inhibitor that has demonstrated significant anti-tumor responses in blood related cancers and solid tumors in phase I-II clinical trials, in North, Central and South America. According to the release the two companies expect “to commence a phase III clinical study in the United States and Europe in elderly patients with relapsed or refractory acute myeloid leukemia (“AML”) for potential approval by the U.S. Food and Drug Administration (“FDA”) and the European Medicines Agency (“EMA”).”
CTIC simply shells out $5 million upfront and a milestone payment of $5 million when the AML pivotal trial is initiated, which is expected to occur in the fourth quarter of 2011. CTIC will also pick up 75% of the development costs with a $50 million funding cap for the first three years.
The bottom line is any kind of benefit that CTIC could provide shareholders is in the distant future, as it stands they will almost certainly be facing pressure from NASDAQ soon to get their share price up and if news regarding the advancement of their drugs treatments and the recent agreement with Chroma doesn’t push them higher then investors know what the next step may be.