"There's a possibility Cell Therapeutics (Nasdaq: CTIC) might try to raise additional cash to pay for a drug, but I certainly hope not."
-- Me, a month ago.

So much for hope.

Cell Therapeutics announced yesterday that it's selling $30 million worth of stock for $1.70 per share. It closed Wednesday at $1.96. Talk about an expensive capital raise. The institutional investors buying the shares also got a warrant for every two shares they bought that allows them to buy additional shares at $2.15 each.

Diluting shareholders by 10% doesn't seem like the best move for a company that just went through a reverse stock split last month to bring shares back above $1.00. Shares fell 14%, below the $1.70 that institutional investors paid in the secondary offering. But maybe management doesn't really care about whether it might have to do another reverse split. In the past four years, the company has performed three reverse splits.

Cell Therapeutics gave the usually lengthy laundry list of potential uses for the cash, but the most practical use would be to pay down debt. The biotech has nearly $11 million in convertible notes that come due in December.

The company could stick the other $19 million in the bank to help it get through the FDA re-filing of its non-Hodgkin's lymphoma drug, pixantrone. But somehow I doubt that'll happen. Instead, the company seems hell-bent on buying a new drug. In yesterday's press release, the company reiterated that it was in discussions with third parties to license or acquire a drug.

Cell Therapeutics has better options for getting a drug now that it has a few extra dollars to work with, but will the biotech then go through another round of dilutive financing to raise capital to pay for the development? And how close will that push the stock to the magical $1.00 level.

I'd much rather see Cell Therapeutics follow the lead of Dendreon (Nasdaq: DNDN) and MannKind (Nasdaq: MNKD) and put the rest of the pipeline on the back burner until the company gains FDA approval for pixantrone -- or kills it because it's convinced it'll never get on the market.

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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. 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.