Running a business is all about innovation. Whether it's a biotechnology upstart, a cutting-edge technology company, or a large-scale retailer, innovation is paramount to a business' success. Without innovation, companies run the risk of getting complacent, falling behind their competitors, or, even worse, folding up shop altogether, the way Circuit City did a few years ago.

No company gets a free pass, so when push comes to shove we need to ask ourselves: Will this company innovate or die?

Today, let's take a closer look at Cell Therapeutics (Nasdaq: CTIC) to determine whether the company can adapt its product pipeline or whether it will be pushed into the background.

What's wrong with Cell Therapeutics?
It's not uncommon for biotechnology companies to have deep-reaching pipelines, because the failure rate of pre-clinical and phase 1 candidates are extraordinarily high. And then there's Cell Therapeutics. This company has essentially been running with the idea that crossing its fingers and praying for the best might save its anemic pipeline. Under development for more than half a decade, Cell Therapeutics' lead cancer drug, pixantrone, recently failed to woo the FDA and was denied approval based on company's inability of the company to meet its own clinical testing guidelines. This decision left the company with the choice of either running another clinical trial or resubmitting. Cell Therapeutics has chosen the latter.

In a research field dominated by Sanofi-Aventis (NYSE: SNY), Bristol-Myers Squibb (NYSE: BMY), and Roche, to name a few, Cell Therapeutics currently has zero marketed drugs and a $1.5 billion deficit since inception.

Getting Cell Therapeutics back on track
I'm not the CEO of Cell Therapeutics, but for a moment let's pretend I am. As I see it, the company needs to focus on these three things to turn its business around:

  • Pitch Opaxio: One of the very few other drug candidates aside from pixantrone, Opaxio may show promise in extending the quality of life for ovarian-cancer patients. Unfortunately for Cell Therapeutics, it's running low on cash, so it's not exactly the best idea for the company to be running multiple phase 2/phase 3 trials. Instead, the company should do its best to pitch Opaxio to rivals and either sell the drug outright or form a joint venture that gets Cell Therapeutics an upfront payment.
  • Ditch unnecessary expenses: It's always a dirty thought to wish for a company to lay off its employees, but Cell Therapeutics needs to find new and creative ways to reduce its burn rate. After burning $65 million over the trailing 12 months, it needs to do something quickly.
  • Switch the game plan: Developing pixantrone has cost hundreds of millions and may not pay off in the end. The company would be wise to use any cash it generates from pitching Opaxio or issuing shares to purchase a stake in, or form a joint venture with, its rivals. Clearly, Cell Therapeutics needs cash now, and it may need to sacrifice its immediate drugs to secure its survival.

What's the verdict?
I can't say with any certainty whether my "pitch, ditch, and switch" game plan will work, but I feel pretty confident in saying that what Cell Therapeutics has done so far has not. Cell Therapeutics' primary method of generating cash has been through multiple dilutive share offerings. The company has burned through so much investor money already that I'd be extremely leery here. Barring a sudden turnaround in the FDA's opinion on pixantrone, I don’t see a very bright future for shareholders.

What's your view on Cell Therapeutics? Will pixantrone be its saving grace, or is it time to cut the cord? Share your thoughts in the comments section below and consider adding Cell Therapeutics to your watchlist to keep up with the latest news on the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. 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 doesn't draw blood.