We are awaiting the FDA approval of pixantrone for the treatment of relapsed or refractory aggressive non-Hodgkin’s lymphoma (NHL). Cell Therapeutics (CTIC) has requested for priority review, which if granted could lead to an approval decision by the end of 2009 or early 2010.

The FDA has not yet accepted the NDA submission, which we expect to be decided by the FDA in the next couple of months. Pixantrone is currently available in Europe on a named-patient basis.

The NDA submission is a major event for the company but still we doubt its ability to challenge the dominance of Biogen Idec‘s (BIIB) Rituxan in this field. Though Pixantrone belongs to a class of cancer medicines known anthracylines, its molecular structure is different.

In spite of the effectiveness of anthracyclines especially for the treatment of NHL and breast cancer, its usage is however limited, due to severe cardiac toxicity. Since the company does not have any marketable product at present, FDA approval is quite crucial in respect of its future operations

Cash position of the company is not at all comfortable. Though the management expects to break even by fourth quarter this year, we have our doubts. Its financials present a different picture altogether. The company posted a net operating loss of $11 million in April and May, more than the company’s guidance of $9.5 million. Cell Therapeutics has undertaken several cost cutting initiatives reducing the operating expenses by 72%. The company sold its rights to its only marketed product Zevalin to Spectrum Pharmaceuticals (SPPI).

Cell Therapeutics is in a very tight liquidity position, though it recovered a bit due to the issuance of preferred stock and Zevalin rights sale. But this cannot continue for long and without a proper revenue stream, survival will become difficult for the company. The company is under great pressure to raise additional cash to fund its operations, which seems to be quite difficult at current financial conditions.

The company has yet to submit NDA for another candidate under development, Opaxio for the treatment of women with lung cancer. Any successful partnership related to these two programs (pixantrone and Opaxio) with a cash rich entity should be able to solve the liquidity crunch for the company. We continue to maintain our Hold rating.

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