Cell Therapeutics (Nasdaq: CTIC) recently jumped 15% on word that the European Commission signed off on the conditional marketing authorization for its non-Hodgkin B-cell lymphoma treatment, Pixuvri.

It seems some investors just don't seem to get the differences between the EU and U.S. approval process.

The European Medicines Agency's Committee for Medicinal Products for Human Use, or CHMP, is nothing like the Food and Drug Administration's advisory committee. About the only characteristic they have in common is that they both have "committee" in their name. CHMP makes "recommendations" to the EC the way advisory committees make recommendations to the FDA. But unlike advisory committee recommendations, which the FDA often disregards, the EC authorization is nothing more than a rubber stamp of the CHMP decision.

The EC's approval was therefore a non-event. It was expected right around this time, too, so I don't see how Cell Therapeutics is more valuable today than it was yesterday before the approval. The only drug I know of that didn't get an EC approval after a positive CHMP recommendation -- Johnson & Johnson's (NYSE: JNJ) antibiotic Zeftera -- happened because new information surfaced between the two events. I guess that was possible for Cell Therapeutics, but it certainly doesn't necessitate a 15% risk adjustment to the price.

It's not just Cell Therapeutics investors who seem to be discounting for no reason; InterMune (Nasdaq: ITMN) saw the same phenomenon happen when the EC signed off on Esbriet. If only it happened with every biotech, there would be an opportunity for nearly risk-free arbitrage.

If investors are going to risk-adjust Cell Therapeutics for something, I'd suggest it be for potential sales in the EU. Pixuvri is approved for "multiply relapsed or refractory aggressive non-Hodgkin B-cell lymphomas." In laymen's terms, that means it'll be used after patients have failed other drugs such as Rituxan, which is co-owned by Biogen Idec (Nasdaq: BIIB) and Roche, Sanofi's Campath, and Teva Pharmaceuticals' (Nasdaq: TEVA) Treanda. Add in the tough reimbursement and pricing pressures in the EU, and Cell Therapeutics looks like it has a tough uphill battle in front of it.

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