Triathalon participants get a shiny medal for completing a hellish three-part race. Marathon runners get bragging rights to all their friends that they finished 26.2 grueling miles. However, shareholders of Cell Therapeutics (Nasdaq: CTIC) may show the most impressive endurance factor of them all.
Cannonball
If you've been brave enough to stick with Cell Therapeutics over the past decade, you'd have lost 99.98% of your investment – not counting commission costs. Now that's what I call commitment … or perhaps a need to be committed. Either way, shareholders clearly had to be sweating what would undoubtedly be another sizable quarterly loss, and Cell Therapeutics did not disappoint.
Unlike previous quarterly reports, at least this time the company made concrete strides to rein in costs and streamline its clinical studies. For the quarter, because of lower expenses and fewer dividends paid out to preferred shareholders, the company reported a loss of $22.5 million, or -$0.14 per share. This compared with a year-ago loss of $53.6 million, or -$0.48. Not surprisingly, the company put up a goose egg in the revenue department for the quarter. Cell Therapeutics' accumulated deficit since inception now stands at a whopping $1.67 billion -- and still shareholders hold out hope.
The butterfly
Shareholders' hope is dependent on the resubmission and hopeful approval of pixantrone. According to the company's quarterly report, Cell Therapeutics anticipates resubmitting pixantrone without any further clinical trials to the FDA for approval as early as April 2012. The company also announced encouraging results for its cancer therapy Opaxio for its treatment of malignant brain tumors and positive phase 2 results for tosedostat.
In the end, though, it all comes down to the bottom line and, in Cell Therapeutics' case, funding. While the company was able to secure an additional $30 million in financing through a hefty share offering, it's very unlikely that this cash will buy the company a significant amount of time, even with the recent expense reductions. Cell Therapeutics ended the quarter with $38.9 million in cash, including $5.8 million of the recent $30 million equity offering. Based on Cell Therapeutics' reduced burn rate, this cash may last it only about nine months.
Biotech investors are often drawn like moths to a light source when it comes to single-digit companies that are in late-stage trials because of the all-or-nothing chance of striking it rich. Investors in Human Genome Sciences (Nasdaq: HGSI), Vanda Pharmaceuticals (Nasdaq: VNDA), and Dendreon (Nasdaq: DNDN) know this all too well, after each company's stock vaulted considerably higher following an FDA approval. Before that approval, the survival of each company was definitely in question.
The dog paddle
Cell Therapeutics is a completely different case. The company appears to have a much shakier pipeline than any of these bio-rockets had at the time. Plus, none of those companies could boast an accumulated deficit since inception of $1.67 billion. Shareholders again seem to be holding onto hope that Cell Therapeutics will make a name for itself in the cancer field. As for me, I think they're holding on to fool's gold.
Is Cell Therapeutics worth the gamble here? Share your ideas in the comments section below, and consider tracking Cell Therapeutics by adding it to your watchlist.
