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Editor's Note: This article has been adjusted to remove mention of Sarepta Therapeutics (NASDAQ: SRPT), which raised more capital in October and therefore has a longer cash runway. The Fool regrets the error.

Biotech stocks face a number of challenges. They have to deal with competition from other drug developers, especially if they target common therapeutic indications. And biotech stocks need to meet or exceed predesigned primary endpoints for their clinical trials if they want to have any hope of succeeding. Finally, and perhaps most importantly, they need to be able to keep the lights on with capital raises if they aren't currently profitable.

Averting a cash crunch
Raising money is incredibly tricky for biotech companies that are still in the clinical stages of developing their pipelines because not all capital-raising options may be available. Some drug developers will turn to collaborations and licensing agreements as a way to raise funds. Others may turn to financing vis-à-vis lines of credit or term loans -- though this isn't a possibility for some biotech companies. By far the most common method used by biotech companies to boost cash is to sell shares of their common stock. While effective at raising cash, stock offerings can dilute the value of existing shares, thus hurting investors.

Nearly 90% of all publicly traded biotech stocks aren't yet profitable, meaning there are probably a lot of somewhat nervous investors out there wondering if their companies have what it takes to survive over the long-term. Here is one biotech stock you'll want to keep a close eye on that could be facing cash crunches in 2016.

Image source: CTI BioPharma.

CTI BioPharma is a predominantly clinical-stage cancer drug developer that took more than two decades to get its first approved drug, Pixuvri, a treatment for multiply relapsed aggressive B-cell non-Hodgkin lymphoma, on pharmacy shelves in Europe. It's also in the process of developing pacritinib, a JAK2 inhibitor that could prove effective in treating symptoms associated with a rare type of bone marrow cancer known as myelofibrosis. A rival JAK2 inhibitor already on the market, Jakafi, has demonstrated efficacy by reducing median spleen size in myelofibrosis patients, so there's hope a similar approach from CTI will also demonstrate success.

The problem for CTI BioPharma is that it's been losing money hand over fist for almost 24 years. As of the third quarter its accumulated deficit (calculated by adding up its operating losses since inception) topped $2 billion, and its only revenue-producing product, Pixuvri, has generated a mere $4.8 million in total sales year-to-date.

CTI BioPharma has turned to the secondary market to issue common stock often during its tenure as a publicly listed company. Since the end of 2010 its share count has ballooned from a little over 25 million to 176 million as of the end of the third quarter of 2015.

The biggest concern is that CTI ended Q3 with just $46.4 million in cash and cash equivalents, yet it's burned through $69 million in operating cash flow over the trailing 12-month period. With next to no improvement expected in the near term for its bottom line, I'd guess that CTI is facing a cash crunch next year if it doesn't issue more shares or monetize some aspect of its pipeline.

Consider CTI BioPharma a must-watch stock for 2016 considering what looks like an impending need for capital.