Seattle-based Cell Therapeutics will find out in seven days whether it has a legitimate shot at getting a new cancer drug on the U.S. market. This company has a long and controversial history, and it is guaranteed to generate noise over the next week from stock market bulls and bears. So I figured it might be useful to gather some of the relevant facts in advance of this modern version of Roman theater, otherwise known as an FDA advisory panel.
The main event starts at 8 am Eastern time/5 am Pacific on February 10. That’s when the Oncologic Drugs Advisory Committee, a panel of cancer drug experts that advises the FDA, will gather in a suburban Washington, DC, hotel. There, they’ll hear testimony about, and likely vote on, Cell Therapeutics’ application to market pixantrone (Pixuvri) as a new therapy for patients with relapsed, aggressive forms of non-Hodgkin’s lymphoma. The FDA isn’t required to follow the public advice of its expert panels, although it usually does.
Cell Therapeutics (NASDAQ: [[ticker:CTIC]]) has survived more than one near-death experience in the past, and CEO Jim Bianco has described 2009 as a “tight-wire act.” So pretty much the whole farm is riding on this panel vote. The company, which ran down to less than a couple of weeks of cash at one point last year, doesn’t have any marketed products generating cash at the moment and nothing besides pixantrone with a legitimate shot at imminent FDA approval. Amazingly, it has burned through more than $1.4 billion of capital since its founding in 1991 without ever becoming profitable. Yet the company has been so prodigious at convincing investors to keep writing checks, and so popular with the fast-money crowd, that it now has an astonishing 574 million shares outstanding. That’s more than Celgene (NASDAQ: [[ticker:CELG]]), a profitable maker of blood cancer drugs, which has a market capitalization of $26 billion.
The question of little Cell Therapeutics, and whether it will ever get within hailing distance of profitability, really hinges on a single study of 140 patients that doctors review next week.
“We do expect U.S. approval,” Cell Therapeutics president Craig Philips told investors on January 14, during a presentation at the JP Morgan Healthcare Conference in San Francisco.
Before diving into the nitty-gritty of the medical evidence, a little bit of business background is necessary. Cell Therapeutics obtained pixantrone in 2003 when it paid $236 million to acquire Italy-based Novuspharma. The drug is a modified form of an anthracycline chemotherapy. Anthracyclines are potent cell-killing agents commonly used in patients newly diagnosed with lymphomas. They can induce long-term remissions, but they also can cause heart failure if they are used more than once. Novuspharma designed pixantrone to have the cell-killing power of an anthracyline infusion, without damaging the heart.
If the treatment is approved, Cell Therapeutics officials estimate the company can tap into a market of about 10,000 U.S. patients each year who are on at least their third round of treatment for aggressive non-Hodgkin’s lymphoma. Cell Therapeutics uses Cephalon’s bendamustine (Treanda), which costs $44,000 per patient, as a comparable benchmark on price, Philips told investors last month. Assuming Cell Therapeutics captures one-third of the patient population, pixantrone could generate
