This Biotech’s Well Never Runs Dry

Cell Therapeutics (Nasdaq: CTIC  ) plunged 25% after pricing a secondary offering of $60MM worth of convertible preferred notes. Originally announced at $40MM yesterday, the dilution is 50% worse than anticipated, converting to a price of $1.40 per share. The money will be used to launch lymphoma drug Pixuvri, and to fund studies of potential myelofibrosis pacritinib.

Fool.com analyst David Williamson labelled Cell Therapeutics a stay-away stock after its drug Opaxio received orphan drug status, and shares popped earlier this week. With shares up double digits, and management's strong history of dilution, it was less than a week before the pop was met with a cash raise. With less than $15MM on Cell Therapeutics' balance sheet, the funds were sorely needed -- but even with the company's improved financial footing, this is one stock that Dave just can't get excited about. For the full story and Dave's expert analysis, be sure to check out the video below.

 

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Dave Williamson has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 05, 2012, at 7:26 PM, kthor wrote:

    is it me or no volume?

  • Report this Comment On October 05, 2012, at 7:30 PM, oracleatdelphi66 wrote:

    Fool’s view of CTI growth and value opportunities is as usual limited. Pixuvri, which addresses an unmet medical need, was approved for marketing in the EU this year and sales launch for this drug has begun. But CTI also has 3 other late stage product candidates: pacritinib, a highly selective JAK2 inhibitor which could address another unmet medical need in the myleofibrosis space could go into a phase 3 trial this quarter; tosedostat, is part of a new class of cancer targeted agents, is also a candidate for a phase 3 trial; and opaxio, which is already in a phase 3 trial for ovarian cancer could have interim data in first quarter of 2013. So there are multiple opportunities for success.

    This financing gives the company substantial capital to deploy for support of these late clinical stage programs and an opportunity to create long term value. It was also conducted by a leading global investment bank and brought in new investors. If the company hadn't taken the long term view, Pixuvri may have never been available to patients who had no approved therapies for its indication. ---Dan Eramian, CTI

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