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Buy, Sell, or Hold: Cell Therapeutics

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Cell Therapeutics (Nasdaq: CTIC  ) ended last week on a high note, with its shares up 15% on Friday following news that Pixuvri, its experimental non-Hodgkin's lymphoma drug, should receive a decision on its marketability by the European Medicine Agency by mid-February.

If Cell Therapeutics can keep this up, it'll only need to gain roughly 44,000% more to get back to where its stock price was 10 years ago. Suffice it to say, I think this company's shareholders deserve the ultimate endurance award.

Regardless of whether you're a bull or bear, traders on both sides of the coin have reason to be excited about Cell Therapeutics in 2012. Let's take a look at some of the things that could make you want to buy, sell, or possibly hold Cell Therapeutics this year, and at the end I'll weigh in with my take.

Optimists are clearly focused on the expected verdict by the Food and Drug Administration on pixantrone. Cell Therapeutics failed to meet its own clinical trial guidelines with the drug, but won approval to resubmit its study without running a new or additional study.

Although it's difficult to assume that the FDA will vote any differently this time around, the sheer possibility that the results could be different this time around has shareholders and Cell Therapeutics management jazzed. Having lost 99.98% of its value over the past decade, any sort of good news would propel the stock higher. If approved, pixantrone would likely be rolled out in the U.S. within months and the company could potentially even find a buyer for the drug.

As a noted bear on Cell Therapeutics, I would normally point out here how the company has no marketable drugs and an accumulated deficit of $1.7 billion since inception. I'd also usually point out that the company is notorious for diluting shareholder value by completing secondary share offerings with some regularity. But I'm not going to do that this time around …

I'm actually going to take the "what if pixantrone gets approved" approach. Even if pixantrone pulls a rabbit out of its hat and gets by the FDA, it's going to be met by a slew of competitors including Rituxan, which is co-owned by Biogen Idec (Nasdaq: BIIB  ) and Roche (OTC: RHHBY); Campath, offered by Sanofi (NYSE: SNY  ) ; and Treanda, which is owned by Teva Pharmaceuticals (Nasdaq: TEVA  ) . These companies have far deeper pocketbooks than CTI has, and their feet are deeply entrenched in this sector of cancer treatment. Investors in these companies should not feel overly threatened by a new underfunded player in the space, but it is important to always keep an eye on potentially disruptive competition.

If you're holding Cell Therapeutics' stock, clearly everything is riding on the FDA's decision. If you've been holding for a long time, clearly you don't have much to lose. If you recently bought in, however, you're weighing another FDA failure versus what could be a bargain-basement price if pixantrone is approved.

And now for my take …

The verdict
I think it's finally time for the FDA to take the remaining 0.02% that Cell Therapeutics has left. Fool biotech hound Brian Orelli has done some fantastic reconnaissance work on Cell Therapeutics for years and I agree with him wholeheartedly that there's probably not a miracle up the company's sleeve heading into its FDA decision on pixantrone in April. I remain steadfast in my thinking that Cell Therapeutics will not survive and I will maintain a CAPScall of underperform on the stock throughout 2012.

What's your take on Cell Therapeutics? Share your thoughts in the comments section below and consider adding Cell Therapeutics to your free and personalized Watchlist so you can keep track of the latest news with the company.

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Fool contributor Sean Williams has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of Teva Pharmaceutical. Motley Fool newsletter services have recommended buying shares of Teva Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that always puts its readers first.

Read/Post Comments (2) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 23, 2012, at 10:07 PM, jonesnj0 wrote:

    Wow Still Bashing 25 times in the last 6 months your buddies must be very short!

    Ever hear of EMA? NO?

    You seem to have left out the fact that they are now discussing labeling issues and next month they could give Approval!

    Thats why the stock is going up!

    Ever hear of Pixantrone trials 1 & 2? NO? thats where PIX beat all of you so called competition drugs by at least 24% C/R 65% S/R 2 years Google PIX 203

    How About CHOP 92% 3 Year S/R?

    How about there were Zero survivor's in the non pix arms, But 16 patients are still living today because of PIX!

    I would be very afraid if I were your Short Buds!

    The only thing I could see that you were right is the fact Bianco could care less about share holders and has sold shares constantly!

    Reality is you Bash the drug constantly you leave out all the good facts!

    Does anyone actually believe anything you write?

    I know I don't.

  • Report this Comment On January 24, 2012, at 12:55 PM, Hufington wrote:

    To be fair, your article should have explained why a highly trained NIH radiologist would mis-identify a women’s ovary for a non-responsive tumor, a mistake a first year medical student would never have made. Then address why the OND reversed Dr. Pazdur in regards to the second phase 3 clinical trial, and then went on to recommended the independent radiological review of the PIX301 data. It tells me that ODAC received bogus efficacy data from the NIH, which greatly influenced the panel decision.

    There has not been enough emphasis on this error made by the NIH and how these kinds of errors, by government sanctioned entities are allowed to stifle drug development and eventual deployment to patients who need these treatments.

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