Cell Therapeutics Cuts Jobs - Analyst Blog

Cell Therapeutics (CTIC) recently reduced its workforce by 36 employees. The reduction in staff strength along with the elimination of other planned expenses is likely to result in savings of about $16 million in 2010. The company now expects operating expenses in 2010 to be approximately $60 million, a 21% reduction from its earlier projection.
 
Earlier this month, Cell Therapeutics received a complete response letter (CRL) from the US Food and Drug Administration (FDA) for Pixuvri (pixantrone dimaleate), its lead pipeline candidate. This setback led the company take the decision on retrenchment to reduce expenses.
 
The company was seeking approval for pixantrone for the treatment of relapsed or refractory aggressive non-Hodgkin’s lymphoma (NHL) in patients who have not responded to other treatment options.
 
Although Cell Therapeutics will request a meeting with the FDA to fix the design of the follow-on trial, it the company has a long way to go before being in a position to resubmit its application for Pixuvri. Meanwhile, it has decided to pursue an expanded access program for pixantrone while it conducts an additional study.
 
Cell Therapeutics is also looking at obtaining marketing approval for pixantrone in Europe where the drug has received orphan drug status. However, the possibility of approval there too, is remote, given the regulatory hurdle witnessed in the US. The company is meeting its clinical experts for their feedback and guidance for the marketing application, which is expected to be submitted in the third quarter of 2010.
 
Cell Therapeutics was banking heavily on the approval of pixantrone. The company does not have any marketed product at present; it earns revenues primarily from licenses and contracts.
 
We are also concerned about the company’s liquidity position. While operating expenses are likely to increase with the need for additional trials, the recent steps taken by the company should reduce expenses to some extent.  We have a Neutral recommendation on the stock.
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