The Best in Excuses & Lies -- by Cell Therapeutics

In July 2006, the 10Q Detective skeptically observed that senior management at Cell Therapeutics had “a history of spending as much time raising capital as it [seemed to] spend on actual clinical testing of its flagship drug, XYOTAX, for the treatment of non-small cell lung cancer and ovarian cancer.”

Cell Therapeutics (CTIC-$4.17) waited until after the close of trading on Friday to announce its filing for a $150 million mixed shelf registration statement. Ostensibly, the Company “plans to use the proceeds from the offering for clinical development of drug candidates, commercialization activities, and general corporate purposes.”

The price of CTIC dropped 10.1% on the news, as investors finally seem to be tiring of the hollow promulgations of founder and CEO James Bianco.

1. Clinical Development. In April and May 2007, respectively, management said the FDA granted fast-track designation for its (i) lung cancer candidate XYOTAX, a biologically- enhanced version of one of the most used cancer drugs, Taxol, for the treatment of PS2 (poor performance status) women with first-line advanced non-small cell lung cancer and normal estrogen levels, and (ii) pixantrone, a novel anthracenedione, being investigated for the potential treatment of relapsed or refractory indolent non-Hodgkin's lymphoma (NHL).
   
   Management predicts that it will have interim data for both drugs by mid-2008. Meanwhile, the FDA has not even signed off on a study design for either drug candidate.
   
2. Commercialization Activities. The Company does not even have a drug to license or to sell.
   
3. General Corporate Purposes. Another misleading quote, for aside from jetting around the country, management does not seem to be accomplishing much of anything.

In fiscal 2006, CTIC generated $80,000 in revenue, and had an accumulated deficit of approximately $961.1 million.

Nevertheless, CEO James A Bianco still took home $2.3 million, including a $260,000 cash bonus; $219,832 for personal use of chartered aircraft for his spouse and a family member; and, $146,320 for tax reimbursements (bonuses paid, tax preparation fees, health club dues and insurance premiums).

In February 2007, the board authorized a reverse 1:4 stock split (effective April 2007). CEO Bianco confidently said: “A reverse split coupled with the significant phase III product and regulatory milestones we anticipate achieving this year could have a significant benefit by making the stock more available to a wider cross section of institutional fund investors.”

A track record of blunders, coupled with a share price below $5.00 per share, will not make the stock more appealing to institutional fund investors.

CTIC has endured several Phase III disappointments, but still manages to land on its feet. Long-suffering shareholders, however, continue to watch the averages hit new highs, while CTIC sits at a 52-week low.

Trust me, Wilbur. People are very gullible. They'll believe anything they see in print.
– Charlotte, the spider, to Wilbur, the pig. (Charlotte's Web – E. B. White)

Editor David J. Phillips does not hold a financial position in Cell Therapeutics. The 10Q Detective has a Full Disclosure Policy.